Single audit report, June 30, 1997

~A A~DO
.A I~
111G-/'7

-----State of GeorfJla-----
aerr ~mer. Governor
Sin9fe 7\.udit CJ\9'ort
3une 30, 1997
Prepared by
GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
Oaud"e ~C{)ickers. State.r\ud"itor
- - - - - - - - - - - - - - GeorfJia's Su.te 6free - - - - - - - - - - - - - owr r.[}I"Rwlnflir &ott(Fuss qn 1937, the nw oak was lidopted as the offickl tra at the request of the 'Edmund 'Burke Oapter of the 'Daufftters of the A,merlain ~'Yofutlon. qt flourishes afollfJ the coastaC pCalns and on the lsCands where the first settfers made their homes. !Xany famous Georgians. as earfy as Genera[ .:James 'Edward Orfethorpe. were afU to enjoy It s &eauty.

v CLAUDE L. ICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF A uniTS AND AccouNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400

June 12, 1998

To the Citizens ofthe State of Georgia, The Honorable Zell Miller, Governor of Georgia
and Members of the General Assembly of Georgia
It is my pleasure to submit to you the Single Audit Report of the State of Georgia for the fiscal year ended June 30, 1997.
The Single Audit Report of the State of Georgia discloses the results of the fmancial operations of the State of Georgia reporting entity, as well as its compliance with requirements applicable to Federal financial assistance programs administered by the State.
Fiscal year 1997 proved to be a challenging year as auditors across the nation adjusted to significant audit changes. These changes were brought about as a result ofthe passage ofthe Single Audit Amendments of 1996 and the implementation of Office of Management and Budget Circulation A-133. This report ifs the culmination of extensive planning, coordination, testing and evaluation by many 1nembers of my staff.
We are grateful for all of the support given this office as we corporately strive to promote improvements in accountability and stewardship in state government.

State Auditor

- - - - - - - - S t a t e of Georfjla - - - - - - - -
Toole of Contents Jmc30, 1997

SECTION A- GENERAL PURPOSE FINANCIAL STATEMENTS

Page

Independent Auditor's Report on General Purpose Financial Statements .................................... A-3

General Purpose Financial Statements

Combined Balance Sheet- All Fund Types, Account Groups and Discretely Presented Component Units . 0 0 0 0 0 A-8

Combined Statement ofRevenues, Expenditures and Changes in Fund Balances-

All Governmental Fund Types, Expendable Trust Funds and Discretely Presented Component Units

. 0

0



0



A-12

Statement ofFunds Available and Expenditures Compared to Budget- Budget Fund

0 0 0 0 0

0 0

A-16

Combined Statement ofRevenues, Expenses and Changes in Fund Equity/Fund Balances-

All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units

A-18

Combined Statement ofCash Flows-

All Proprietary Fund Types, Nonexpendable Trust Funds and Discretely Presented Component Units

A-22

Statements ofPlan Net Assets - Pension Trust Funds and Discretely Presented Component Units 0 0 0 0 0 0 0 0 0 A-24

Statement ofChanges in Plan Net Assets- Pension Trust Funds and Discretely Presented Component Units 0 0 0 A-26

Combined Statement ofChanges in Fund Balances- College and University Funds

. 0

0. 0

0

0. 0

0

0. 0

0. 0

0

0

0

0

A-28

Combined Statement ofCurrent Funds Revenues, Expenditures and Other Changes-

College a n d University Funds A-32 0 0 0 0 0 0 0 0 0 0. 0 0. 0 0. 0 0. 0 0 0. 0 0 0 0 0 0 0 0 0. 0 0. 0 0. 0 0 0. 0. 0 0 0 0 0 0. 0 0 0 0 0 0 0

Notes to the Financial Statements A-33 0 0 0 0 0 0 0

0 0 0 0 0

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SECTION B- SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

Schedule ofExpenditures ofFederal Awards . B-5 0 0 0 0 0 0

0 0 0 0

00 0 0 0 0 0

0 0

0 0 0 0 0 0 0 0

0 0 00 0

00 0 0

Schedule ofCluster Programs . B-47 0

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0

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0

0

0

0

0

0

SECTION C- REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS . ............. 0 C-3

SECTION D- REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 . . . . . . . . . . . . . . . . . . . . . 0 0 D-3

SECTION E- AUDITEE'S RESPONSE- SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-3

SECTION F- FINDINGS AND QUESTIONED COSTS

Summary ofAuditor's Results F-5 0

0. 0

0 0

0

0. 0

0. 0 0

0. 0 0

0

0

0 0. 0

0

0

0

0

0

0

0 0

0. 0

0 0. 0

0. 0 0

0

0

Table ofContents

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0

0 0 0 0 0

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0 0

0 0

0 0

0 0. 0 0. 0 0. 0

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0

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0 0. 0 0

0

F-9

Findings and Questioned Costs F-11 0

0 0



0

0

0

0



0

0



0 0

0 0

0 0

0 0

0

0 0

0 0

0 0

0

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APPENDIX "A"

Listing ofOrganizational Units Comprising the State ofGeorgia Reporting Entity.

0

0

0

0

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0

0 0

0 0

0 0

0 0 0

AP-3

Section.?\. Genera[ 9?urpose ~inancia[ Statements

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF A uniTS AND AccoUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400

INDEPENDENT AUDITOR'S REPORT ON GENERAL PURPOSE FINANCIAL STATEMENTS

The Honorable Zell Miller Governor of Georgia
and Members of the General Assembly of the State of Georgia
We have audited the accompanying general purpose financial statements ofthe State of Georgia, as listed in the Table of Contents, as of and for the year ended June 30, 1997. These general purpose financial statements are the responsibility of the State's management. Our responsibility is to express an opinion on these general purpose financial statements based on our audit. We did not audit the financial statements of certain organizations which, combined, represent less than 1% ofthe assets and revenues ofthe general fund, 100% ofthe assets and revenues ofthe capital projects funds, 62% ofthe assets and 29% of the revenues of the internal service funds, 68% ofthe assets ofthe fiduciary funds and less than 1% of the expendable trust funds revenues and 100% of the pension trust funds revenues, and 7% of the assets and less than 1% of the liabilities ofthe general fixed assets and general long-term debt account groups, respectively. In addition, we did not audit certain discretely presented component units which represent less than 1% ofthe assets and revenues ofthe component unit governmental fund types, 83% ofthe assets and 95% of the revenues of the component unit proprietary fund types and 98% ofthe assets and 99% ofthe revenues ofthe component unit fiduciary fund types. The financial statements ofthese organizations and component units were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included for those financial statements, is based solely upon the reports of the other auditors.
Except as discussed in the following paragraph, we conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the general purpose financial statements are free of material misstatement. The financial statements ofthe Employees' Retirement System of Georgia, Georgia Lottery Corporation, Georgia Ports Authority, Georgia State Financing and Investment Commission, and Teachers' Retirement System of Georgia were not audited in accordance with Government Auditing Standards. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the general purpose financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall general purpose financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinion.

The State of Georgia's accounting system is decentralized in nature. The management of each organizational unit is responsible for maintaining accounting records pertinent to its operations and each retains complete responsibility and control over their operations, including revenue collections and disbursements. The State's principal accounting system, the Fiscal Accounting and Control System (FACS), is utilized by 66 state organizations. This accounting system allows for the accumulation of financial data, by state organization, on a basis of accounting prescribed or permitted by the budgetary statutes and regulations of the State of Georgia. Constitutional and statutory provisions of the State of Georgia do not provide for a position or organizational unit responsible for the preparation of statewide financial statements. It was necessary for staff of the Department of Audits and Accounts to consolidate financial information presented in individual organization financial statements and to prepare adjusting journal entries necessary for the production of the general pui-pose financial statements. We are therefore not independent with regard to the preparation of accounting entries required to convert the consolidated budgetary financial statements to general purpose financial statements prepared in accordance with generally accepted accounting principles.
As discussed in Note 1 to the general purpose financial statements, the State of Georgia did not maintain adequate systems to account for or to depreciate (when required) fixed assets in conformity with generally accepted accounting principles. We were unable to determine the effect of these limitations on the general purpose financial statements.
As discussed in Note 1 to the general purpose financial statements, the accounting systems of the State of Georgia did not facilitate recording encumbrances in conformity with generally accepted accounting principles. Contractual obligations for services performed and for goods which have not been delivered at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. The recognition of encumbrances as expenditures and liabilities is not consistent with generally accepted accounting principles. We were unable to determine the effect of these limitations on the general purpose financial statements.
As discussed in Note 1 to the general purpose financial statements, revenues for certain expenditure-driven programs were accrued based on the unexecuted portion of contracts for goods and services. These accruals primarily affected the Intergovernmental and Sales and Services revenue categories. We were unable to determine the effect ofthis departure from generally accepted accounting principles on the general purpose financial statements.
As discussed in Notes 9 and 10 to the general purpose financial statements, the State of Georgia did not maintain adequate systems to identify, classify, and report leases as operating or capital leases in conformity with generally accepted accounting principles. We were unable to determine the effect of these limitations on the general purpose financial statements.
As discussed in Note 1 to the general purpose financial statements, the State of Georgia maintained certain pension trust funds on essentially the cash basis of accounting. This basis of accounting is not in conformity with generally accepted accounting principles. We were unable to determine the effect ofthis departure from generally accepted accounting principles on the general purpose financial statements.
As discussed in Note 1 to the general purpose financial statements, the State's accounting system has limitations in identifying transactions between organizations whose financial activity is included within an individual fund. State accounting policies and procedures allow the recording of revenues, receivables, expenses and payables for such transactions. All such intrafund transactions have not been eliminated as required by generally accepted accounting principles. We were unable to determine the effect of these overstatements on the general purpose financial statements.
A-4

The State of Georgia did not maintain adequate systems to determine the accuracy of the amounts of salesbased taxes collected by the Department of Revenue on behalf of local governments and the disbursements of those taxes to local governments. State statutes require that all sales-based taxes be collected by the Department ofRevenue and remitted to the Office ofTreasury and Fiscal Services. Amounts of sales-based taxes collected on behalf of local governments are subsequently returned to local government jurisdictions based on information compiled by the Department of Revenue from sales tax returns. The Department of Revenue did not maintain adequate information systems to properly identify amounts of sales-based taxes collected on behalf oflocal governments. We were unable to determine the accuracy ofthe sales-based taxes retained by the State of Georgia or the accuracy ofthe amounts collected and subsequently disbursed to local governments for sales-based taxes.
In our opinion, based on our audit and the reports of other auditors, except for the effects of the matters discussed in the preceding paragraphs, the general purpose financial statements referred to in the first paragraph present fairly, in all material respects, the financial position ofthe State of Georgia as of June 30, 1997, and the results of its operations, the cash flows ofits proprietary fund types and its nonexpendable trust funds, and the changes in fund balances of the State's colleges and universities, for the year then ended in conformity with generally accepted accounting principles.
As discussed in Note 2 to the general purpose financial statements, the State of Georgia adopted Statement No. 25 ofthe Governmental Accounting Standards Board (GASB), Financial Reportingfor Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans in fiscal year 1997. In addition, as discussed in Note 4 to the general purpose financial statements, the State implemented GASB Statement No. 28, Accounting and Financial Reportingfor Securities Lending Transactions.
In accordance with Government Auditing Standards, we have also issued a report dated June 12, 1998 on our consideration of the State of Georgia's internal control over financial reporting and on our tests of its compliance with certain laws, regulations, contracts and grants.
The accompanying Schedule of Expenditures of Federal Awards (Section B) is presented for purposes of additional analysis as required by U.S. Office ofManagement and Budget Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations, and is not a required part ofthe general purpose financial statements. Such information has been subjected to the auditing procedures applied in the audit ofthe general purpose fmancial statements and, in our opinion, is fairly stated, in all material respects, in relation to the general purpose financial statements taken as a whole.
Respectfully submitted,
~~
Claude L. Vickers State Auditor
May 19, 1998
A-5

(This page intentionallY left blank)

--Genera[ Wurpose ~inancia[ Statements---

State of GeorfJia - - - - - - -
Combined Balance Sheet
All Fund Tvpes, Account Groups and DiscretelY Presmtcd Componmt Units
June 30, 1997

Assets and Other Debits
Assets: cash and Cash Equivalents cash and cash Equivalents in Nonexpendable Trust Funds Investments Receivables (Net ofAllowances for Uncollectibles) Intergovenunental- Federal Interest and Dividends Notes and Loans Taxes Other Due from Other Funds Due from Primaiy Govenunent Due from Component Units Inventories Prepaid Items Restricted Assets cash and cash Equivalents Investments Receivables Interest and Dividends Loans Advances to Other Funds Advances to Component Units Deferred Compensation Plan Assets Flxed Assets (Net, Where Applicable, of Accumulated Depreciation) Deferred Charges Other Assets Other Debits: Amount Available in Debt Service Fund Amount to be Provided for Retirement of General Long-Term Debt
Total Assets and Other Debits
Uabllltles, Equity and Other Credits
Liabilities: cash Overdraft Accounts Payable and Other Accruals Compensated Absences Payable Claims and Judgments Payable Contracts Payable Salaries/Wrthholding;; Payable Benefits Payable Due to Other Funds Due to Primaiy Govenunent Due to Component Units Accrued Interest Payable Deferred Revenue Capital Leases/Installment Purchases Payable Mortgage Loans under Repurchase Agreements Funds Held for Others Other Liabilities Deposits and Overpayments Advances from Other Funds Advances from Primaiy Govenunent Long-Term Debt Payable (Net ofUnamortized Discounts)
Total Liabilities

Govenunental Fund Types

Special Revenue

Debt Service

Capilal Projects

Primaiy Govenunent

Proprietary Fund Types

Enterprise

Intemal Senice

$ 2,628,862,273 $
600,398,816
1,728,213,699 17,675,652
664,360,025 164,182,456
67,540 41,878,493 72,415,975

1,762,517 $ 668,399

208,653,344 $

$

1,091,615,474

76,983,949 $ 174,978,124

272,299,546 584,772,437

11,480,997

2,802,452

1,865,404

965,443

13,523,053

10,892,781 32,343,724
470,419 11,177,328
659,846

6,925 161,250
88,523,030

230,662

402,588,254

$ 6,006,746,134 s

s s 4,296,320 $ 208,653,344 $ 1,104,061,914

268,518,240

1,315,204,335

s

$

610,639,917

1,540,985,327 568,945,094 453,540,192 28,020,157
1,393,024
158,003,752

40,894,516 349,835

$ 2,106
1,800

$ 3,402,771,814 $

3,906 $

$

20,191,665 $

$

15,779,528

2,349,599

23,716,644

151,931

7,632,640

258,497,047

15,616,910

440,462

13,460,711

120,275

148,196,779

13,117,287 10,618,996

67,317 2,062, 763
581,399

1,335,714

0 $

s 62,207,099 $ 164,256,058

307,474,510

The notes to the financial statements are an integral part ofthis statement
A-8

Fiducimy F\mdType
Trust and Agency

College and University

Accmmt Groups

General

General

Fixed

Long-Tenn

Assets

Debt

Totals(Memorandmn
Only)
Primary Government

Governmental F\md Types

Component Units
Proprietary F\md Types

Fiducimy F\md Types

Totals(Memorandmn
Only)
Reporting Entity

$ 3,449,920,761 $ 473,593,239 $

$

$ 7,112,075,629 $

19,102

19,102

10,024,517,246

101,798,437

12,578,748,933

707,627 87,700,223
4,311,922 86,595,170 60,475,924

44,639,644 46,110
47,843,318
150,351,575

22,788

26,826,099 9,178,825

1,773,560,970 119,705,434 52,155,240 750,955,195 402,256,636 32,343,724 0 537,959 79,881,920 82,277,434

0

314,206,807 139,913

4,234,572,093

2,707,240,447

208,653,344 4,639,920,336

0 6,925 161,250 314,206,807
7,344,631,456 0
88,662,943
208,653,344
4,639,920,336

2,153,739 $ 274,791 102,219
2,859,426 164,256 233,819
73,906,597
6,069,631

235,116,239 $ 121,609,722

2,050,471 $ 28,871,305,417

7,351,396,078 19,102
41,571,938,863

93,106,069 13,591,857 873,890,791
86,743,653
1,393,024
5,433,251 3,991,821

229,029,590 176,832,155
39,650

1,866,667,039 362,326,881 926,148,250 750,955,195 668,691,870 32,343,724 1,393,024 537,959 85,479,427 86,542,724

134,103,413 370,043,252

134,103,413 370,043,252

6,858,741 581,124,003

6,858,741 581,124,003
6,925 161,250 314,206,807

811,115,756 16,455,000 91,426,657

693,725

8,230,347,534 16,455,000 180,089,600

208,653,344

4,645,989,967

$ 14,028,617,483 $ 5,088,849,340 $ 2,707,240,447 $ 4,848,573,680 $ 35,580,761,237 $

85,764,478 $ 3,446,003,249 $ 29,279,951,008 $ 68,392,479,972

$

-$

$

5,518,308

239,920,703

100,463,642

20,110 707,670

5,023,914 20,900,000
3,615,897

23,735 2,657,071,592
6,925

71,566,348 10,940,762
18,961,673 113,283
1,707,821

$ 2,663,348,340 $

14,000 473,228,043 $

$

$

20,191,665 $

897,926,805

203,717,363

311,965,576

697,979

259,195,026

1,570,503,410

574,109,393

622,636,971

32,343,724

0

1,393,024

0

242,780,239

5,319,332

18,322,857

0

2,716,927,781

11,082,114

2,289,220

6,925

0

4,638,839,006

4,640,188,720

0 $ 4,848,573,680 $ 11,921,863,450 $

$ 4,318,785
969,319
36,317

$ 88,686,632
2,694,679
2,472,261 538,791

328,877

183,024

635,000 5,100,312

18,566,782 81,052,557
126,110 30,446,467 281,684,101
8,836,793 15,201,360

161,250

1,461,927,233

11,388,610 $ 1,992,578,040 $

$ 1,850,697
58,985 26,058

20,191,665 992,782,919 315,629,574 259,195,026 1,572,975,671 574,743,486 622,636,971
32,343,724 537,959
1,393,024 18,566,782 324,467,796 23,549,279 30,446,467 2,998,611,882 19,918,907 17,490,580
6,925 161,250

6,1 02,115,953

1,935,740 $ 13,927,765,840

(continued)

A-9

State of Georffia - - - - - - - -
Combined Balance Sheet All Fund Tvpcs, Account Groups and Discrctelv Presented Component Llnits Cconnnued)
June 30, 1997

Primary Government

General

Equity and other Credits: other Credits: Investment in General Flxed .Assets

s

-s

Equity: Net Investment in Plant Colleges and Universities Contributed Capital Retained Earnings Reserved Unreserved Fund Balances Reserved for Encmnbrances Reserved for Advances Reserved for Inventories Reserved for Debt Service Reserved for Disaster Assistance Reserved for Distance Learning and Telemedicine Reserved for Pension Benefits Reserved for Guaranteed Revenue Debt Conunon Reserve Fimd Reserved for Hazardous Waste Trust Fimd Reserved for Lottery for Education Reserved for Midyear Adjustment Reserved for Motor Fuel Tax FUnds Reserved for Revenue Shortfi!ll Reserved for Underground Storage Trust Fimd Reserved for other Specific Pwposes Unreserved, Designated Designated for Liability Trust Fimd Designated for Future capital Outlay Designated for other Specific Pwposes Unreserved, Undesignated Total Equity

s

s

4,820,880 168,175
43,899,457
13,496,656 19,825,508
19,029,945 24,132,040 226,140,670 111,313,936 912,617,015 333,941,806 32,524,619 73,243,786
9,704,819
3,085,000 776,030,008
s s 2,603,974,320

Total Equity and other Credits

$ 2,603,974,320 $

Governmental Fimd ~

Special Revenue

Debt Service

capital Projects

Proprietary Fimd :!!Ees

En~rise

Internal Service

-s s

-s s

-$

-s

s

s

274,506,302

104,262,182

587,211,843 146,011,680

208,653,344

1,311,077

4,292,414
s 4,292,414
4,292,414 $

1,037,148,472

3,395,266

s s 208,653,344

1,041,854,815

s 208,653,344

1,041,854,815 $

s 104,262,182

1,007, 729,825

s 104,262,182

1,007, 729,825

Total Liabilities, Equity and other Credits

$ 6,006,746,134 $

s s s s 4,296,320

208,653,344

1,104,061,914

268,518,240

1,315,204,335

The notes to the financial statements are an integral part ofthis statement.

A-10

Fiduciary Fund Type
Trust and Agency

College and University

Account Groups

General FD<ed

General Long-Temt

Assets

Debt

Totals(Memorandum
Only)
Prirruuy Government

Govermnental Fund Types

Component Units
Proprietary Fund Types

Fiduciary Fund Types

Totals(Memorandwn
Only)
Reporting Entity

s

-$

- s s 2,707,240,447

- s s 2,707,240,447

s 73,906,597

s 270,903

- s 2,781,417,947

$

s s 4,223,590,203

s

392,031,094

9,499,471,214

1,837,849,473

27,948,456

s s s 11,365,269,143

4,615,621,297

0 s

s s s s 11,365,269,143

4,615,621,297

2,707,240,447

s 4,223,590,203 $
392,031,094
27 4,506,302

691,474,025 146,011,680

4,820,880 168,175
43,899,457 208,653,344
13,496,656 19,825,508 9,499,471,214 19,029,945 24,132,040 226,140,670 111,313,936 912,617,015 333,941,806 32,524,619 1,912,404,336

9,704,819

1,037,148,472

3,085,000

811,666,144

s 0

s 20,951,657,340

0 s 23,658,897,787 s

s

s

944,928,794

s 4,223,590,203
392,031,094
1,219,435,096

73,862,000 414,157,204

765,336,025 560,168,884

11,314,857

29,278,015,268

4,820,880 168,175
43,899,457 208,653,344
13,496,656 19,825,508 38,777,486,482 19,029,945 24,132,040 226,140,670 111,313,936 912,617,015 333,941,806 32,524,619 1,923, 719,193

469,271
s 469,271

8,891,451
s 1,453,154,306

9,704,819

1,037,148,472

3,085,000

821,026,866

s 29,278,015,268

51,683,296,185

s s s 74,375,868

1,453,425,209

29,278,015,268

54,464,714,132

s s s s s 14,028,617,483

5,088,849,340

2,707,240,447

4,848,573,680 $ 35,580,761,237

s s s 85,764,478

3,446,003,249

29,279,951,008

68,392,479,972

A-ll

State of GeortJia
Combined Statement of Revenues. Expenditures
and Changes in Fund Balances All Governmental Fund Tvpes, Expendable Trust Funds and
Discrdelv Presented Component Units For the Year Ended June 30, 1997

Primary Government

General

Governmental Fund Types

Special

Debt

Revenue

Service

Revenues: Taxes Licenses and Permits Intergovernmental Federal Other Sales and Services Fines and Forfeits Interest and Other Investment Income Rents and Royalties Contributions and Donations Penalties and Interest on Taxes Unclaimed Property Other

$ 10,483,497,704 $ 351,181,927
5,515,982,683 33,823,194
495,535,328 50,426,165 160,825,540 9,948,603 190,841,985 6,699,639 20,118,021 30,840,942

$
18,373,986 361,311

Total Revenues

$ 17,349,721,731 $

18,735,297 $

0

Expenditures: Current: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Capital Outlay Debt Service: Principal Interest Other Debt Service Charges

$

633,990,021 $

5,700,389,994

6,796,847,561

1,113,788,591

1,124,542,047

263,090,507

170,667,100

48,769,799

3,187,232 $
392,165,000 236,835,498

Total Expenditures

$ 15,852,085,620 $

3,187,232 $

629,000,498

Excess (Deficiency) ofRevenues Over (Under) Expenditures

$ 1,497,636,111 $

15,548,065 $ (629,000,498)

The notes to the financial statements are an integral part ofthis statement.

A-12

Capital Projects

Fiduciary Fund Type Expendable
Trust

Totals(Memorandum
Only) Primary Government

Component Units Governmental Fund Type

Totals(Memorandum
Only) Reporting
Entity

$

$

400,146,643 $ 10,883,644,347 $

$ 10,883,644,347

351,181,927

351,181,927

78,119,890 44,340
1,681,569

21,563,745 146,557
113,951,115 38,650
163,182

5,537,546,428 33,823,194
514,055,871 50,426,165
353,257,856 9,992,943
190,880,635 6,699,639
20,118,021 32,685,693

27,000 2,879,976
375,470 32,388
11,550,110
646,041

5,537,573,428 33,823,194
516,935,847 50,426,165
353,633,326 10,025,331
202,430,745 6,699,639
20,118,021 33,331,734

$

79,845,799 $

536,009,892 $ 17,984,312,719 $

15,510,985 $ 17,999,823,704

$

70,034 $

36,360 $ 637,283,647 $

123,711

5,700,513,705

63,810,821

6,860,658,382

1,113,788,591

1,124,542,047

310,769,347

573,859,854

128,738

170,795,838

48,769,799

373,677,146

373,677,146

44,340 160,980 382,514

392,209,340 236,996,478
382,514

$

374,335,014 $

374,868,977 $ 17,233,477,341 $

$ 33,033,963

637,283,647 5,700,513,705 6,860,658,382 1,113,788,591 1,124,542,047
573,859,854 203,829,801
48,769,799 373,677,146

392,209,340 236,996,478
382,514

33,033,963 $ 17,266,511,304

$ (294,489,215) $

161,140,915 $ 750,835,378 $

(17,522,978) $

733,312,400 (continued)

A-13

--------State ofGeorfJkt--------
Combined Statement of Revenues. Expenditures
and Changes in Fund Balances All Governmental Fund Tvpes, Expendable Trust Funds and
Discrctelv Presented Component Units (continued) For the Ycar Ended June 30, 1997

Primary Government

General

Governmental Fund Types

Special

Debt

Revenue

Service

Other Financing Sources (Uses): Operating Transfers In Operating Transfers from Primary Government Operating Transfers from Component Units Operating Transfers Out Operating Transfers to Component Units Proceeds of General Fixed Asset Dispositions Capital Leases General Obligation Bond Proceeds

$

171,652,886 $

582,180,317 (2,081,658,683)
(57,431,561) 2,673,289 48,410

$ (14,500,000)

703,381,512

Total Other Financing Sources (Uses)

$ (1,382,535,342) $

(14,500,000) $

703,381,512

Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses

$

115,100,769 $

1,048,065 $

74,381,014

Fund Balances, July 1 Adjustments (Net) Residual Equity Transfers In Residual Equity Transfers from Component Units Residual Equity Transfers Out Residual Equity Transfers to Component Units Increase in Inventories

2,472,800,480 8,957,903 82,000 14,123,115
(7,514,977) 425,030

3,244,349

134,272,330

Fund Balances, June 30

$ 2,603,974,320 $

4,292,414 $==2=0=8,=65=3=,3=44=

The notes to the financial statements are an integral part ofthis statement.

A-14

Capital Projects

Fiduciary Fund Type Expendable
Trust

Totals(Memorandum
Only) Primary Government

Component Units Governmental Fund Type

Totals(Memorandum
Only) Reporting
Entity

$

$

1,401,130 (214,201,995)

373,248,075

$

160,447,210 $

3,400,000 $

878,434,398 $ 0
583,581,447 (2,310,360,678)
(57,431,561) 2,673,289 48,410
373,248,075

3,400,000 $ (529,806,620) $

$ 16,326,489

878,434,398 16,326,489
583,581,447 (2,310,360,678)
(57,431,561) 2,673,289 48,410
373,248,075

16,326,489 $ (513,480,131)

$ (134,042,005) $

164,540,915 $ 221,028,758 $

1,228,059,648
(2,885,570) (49,277,258)

1,701,041,188

5,539,417,995 8,957,903 82,000 14,123,115 (2,885,570)
(56,792,235) 425,030

(1,196,489) $

219,832,269

686,331 979,429

5,540,104,326 9,937,332 82,000 14,123,115 (2,885,570)
(56,792,235) 425,030

$ 1,041,854,815 $ 1,865,582,103 $ 5,724,356,996 $

469,271 $ 5,724,826,267

A-15

-------State of Georgia-------
Statement of Fmds Available and Expenditures Compared to Budget
Budget Fmd For the FISCal Year Ended Jme 30, 1997

Funds Available
Revenues: State Appropriation Lottery Proceeds Federal Revenues Other Revenues Retained
Total Revenues
Carry-Over from Prior Year: Transfer from Fund Balance
Total Funds Available

Original Appropriation

Final Budget

Actual

Variance Favorable (Unfavorable)

$ 10,794,986,380 $ 11,145,256,617 $ 11,122,716,878 $

546,198,773

680,069,448

679,819,448

4,567,668,639

5,614,829,287

4,942,663,953

2,959,288,902

4,338,270,266

3,804,573,030

(22,539,739) (250,000)
(672,165,334) (533,697,236)

$ 18,868,142,694 $ 21,778,425,618 $ 20,549,773,309 $ (1,228,652,309)

1,672,666,173

1,446,324,703

(226,341,470)

$ 18,868,142,694 $ 23,451,091,791 $ 21,996,098,012 $ (1,454,993,779)

Expenditures
Administrative Services, Department of Agricultural Exposition Authority Agriculture, Department of Agrirama Development Authority Audits and Accounts, Department of Banking and Finance, Department of Building Authority Children and Youth Services, Department of
Community Affairs, Department of
Corrections, Department of Defense, Department of Education, Department of Employees' Retirement System -
Administrative Expense Fund Forestry Commission General Assembly General Obligation Debt Sinking Fund Governor, Office ofthe Guaranteed Revenue Debt Common Reserve Fund Human Resources, Department of Industry, Trade and Tourism, Department of Insurance, Department of Investigation, Georgia Bureau of Judicial Branch Labor, Department of Law, Department of Medical Assistance, Department of Natural Resources, Department of

$

185,912,104 $

290,312,166 $

266,433,598 $

4,921,827

5,705,964

5,692,679

49,751,824

52,446,553

51,606,982

1,375,300

1,118,677

1,072,672

19,706,494

20,967,654

20,484,013

9,318,265

9,318,265

9,189,889

37,538,499

45,025,906

44,450,931

142,719,890

163,305,260

159,014,407

76,410,979

184,488,458

172,834,213

695,760,881

724,281,283

701,007,059

15,780,248

27,229,349

26,619,111

4,818,221,159

5,124,275,856

5,084,841,287

4,389,972 40,350,065 26,278,571 414,482,451 50,704,653
0 2,382,300,078
21,097,481 16,512,068 46,619,323 87,045,066 155,808,877 13,427,658 3, 739,739,927 139,063,103

4,677,051 42,939,243 28,742,632 621,465,791 267,356,246
0 2,602,566,978
39,171,995 17,460,449 56,509,738 89,330,946 170,935,947 15,447,956 4,242,144,852 213,374,361

4,318,083 42,254,221 22,175,657 621,465,791 212,872,574
0 2,496,971,621
20,828,880 16,828,620 55,329,318 90,113,856 147,902,627 14,700,696 3,766,742,466 206,687,460

23,878,568 13,285
839,571 46,005 483,641 128,376 574,975 4,290,853 11,654,245 23,274,224 610,238 39,434,569
358,968 685,022 6,566,975
0 54,483,672
0 105,595,357
18,343,115 631,829
1,180,420 (782,910) 23,033,320 747,260 475,402,386 6,686,901

The notes to the financial statements are an integral part of this statement

A-16

---------State of Georgia---------
Statement of Funds Available and Expenditures Compared to Budget
Budget fund For the FISCal Ycar Ended June 30. 1997

Original Appropriation

Final Budget

Actual

Variance Favorable (Unfavorable)

Pardons and Paroles, State Board of

$

Personnel Board, State - Merit System of

Personnel Administration

Public Safety, Department of

Public School Employees' Retirement System-Expense Fund

Public Service Commission

Public Telecommunications Commission

Regents ofthe University System ofGeorgia, Board of

Revenue, Department of

Secretary of State

Soil and Water Conservation Commission

Student Finance Commission

Teachers' Retirement System- Expense Fund

Technical and Adult Education, Department of

Transportation, Department of

Veterans Service, Department of

Workers' Compensation, State Board of

43,239,164 $
1,099,766,134 121,187,740 14,212,500 10,536,019 23,713,135
2,525,081,073 97,058,269 31,791,948 2,657,810
202,538,239 10,805,196
285,807,286 1,164,343,369
29,275,348 10,892,701

44,395,511 $
1,119,892,356 134,118,633 14,212,500 11,117,558 31,811,927
3,377,794,580 113,514,059 33,996,415 2,371,698 193,887,469 11,802,389 395,063,083
2,866,807,448 28,544,888 11,161,701

44,059,461 $
1,033,717,757 130,176,826 14,212,500 10,809,510 32,919,818
3,087,392,181 99,728,495 32,323,452 2,240,538
200,847,282 10,655,007
375,080,760 1,146,946,888
28,247,731 10,943,437

336,050
86,174,599 3,941,807
0 308,048 (1,107,891) 290,402,399 13,785,564 1,672,963 131,160 (6,959,813) 1,147,382 19,982,323 1,719,860,560 297,157 218,264

Total Expenditures

$ 18,868,142,694 $ 23,451,091,791 $ 20,522,740,354 $ 2,928,351,437

Excess ofFunds Available over Expenditures

$ 1,473,357,658 $ 1,473,357,658

The notes to the fmancial statements are an integral part of this statement.

A-17

State of GeorfJia

Combined Statemrnt of Revrnues, Exprn.ses and
Changes in Fund EquitY/Fund Balances All Propridmv Fund Tvpes,Noncxpendablc Trust Funds and
Discrctdv Presented Component Units For the FISCal Ycar Ended June 30, 1997

Primary Government

Proprietary Fund Types

Enterprise

Internal Service

Fiduciary Fund Type
Nonexpendable Trust

Operating Revenues: Contributions Insurance Recoveries Interest and Other Investment Income Intergovernmental Rents and Royalties Sales and Services Taxes Other

$ 974,191,768 $ 128,187,894 $

7,861,703

14,983,383

128,643,328

31,587

32,992,291 265,021,475

1,549,918

11,679

Total Operating Revenues

$ 989,206,738 $ 564,256,609 $

11,679

Operating Expenses: General and Administrative Goods and Services Interest Benefits Claims and Judgments Prizes Scholarships Depreciation Other

$ 190,381,605 $ 148,687,122 $ 164,204,806

820,471,531

15,871,000 105,228,182

1,387,958

3,847
1,300 903

Total Operating Expenses

$ 1,010,853,136 $ 435,379,068 $

6,050

Operating Income (Loss)

$ (21,646,398) $ 128,877,541 $

5,629

Nonoperating Revenues (Expenses): Contributions and Intergovernmental Revenue Interest and Other Investment Income Gain on Sale ofLoans Hotel/Motel Tax (Net) Interest Expense Other Debt Service Charges Other

$

$

$

794,867

(30,873)

(69,439) (11,648,671)

Total Nonoperating Revenues (Expenses) Net Income (Loss) Before Operating Transfers

$

(30,873) $ (10,923,243) $

$ (21,677,271) $ 117,954,298 $

0 5,629

The notes to the fmancial statements are an integral part ofthis statement. A-18

Totals(Memorandum
Only) Primary Government

Component Units Proprietary Fund Types

Totals(Memorandum
Only) Reporting
Entity

$ 1'1 02,379,662 $ 7,861,703
143,638,390 0
32,992,291 265,053,062
0 1,549,918
$ 1,553,475,026 $

38,928 $
80,031,640 28,253,099 65,288,058 1,836,327,617
1,439,287 16,573,581

1,102,418,590 7,861,703
223,670,030 28,253,099 98,280,349
2,101,380,679 1,439,287
18,123,499

2,027,952,210 $ 3,581,427,236

$ 339,072,574 $ 164,204,806 0 836,342,531 105,228,182 0 1,300 1,387,958 903
$ 1,446,238,254 $
$ 107,236,772 $

140,399,898 $ 323,522,300
58,720,450
857,283,000
33,092,551 55,510,140

479,472,472 487,727,106
58,720,450 836,342,531 105,228,182 857,283,000
1,300 34,480,509 55,511,043

1,468,528,339 $ 2,914,766,593

559,423,871 $

666,660,643

$

0 $

794,867

0

0

(69,439)

0

(11,679,544)

$ (10,954,116) $

$

96,282,656 $

518,498 $ 25,258,853
527,514 17,247,578 (35,232,947) (3,003,122)
933,242
6,249,616 $
565,673,487 $

518,498 26,053,720
527,514 17,247,578 (35,302,386) (3,003,122) (10,746,302)
(4,704,500)
661,956,143
(continued)
A-19

- - - - - - - - S t a t e of GeortJia - - - - - - - -

Combined Statement of Revenues. Expm.ses and
Changes in Fund EquitY/Fund Balances All Proprictmv Fund Tvpes.Noncxpendable Trust Funds and
Discrctclv Presented Component Units (continued)
For the FISCal Year Ended June 30. 1997

Primary Government

Proprietary Fund Types

Enterprise

Internal Service

Fiduciary Fund Type
Nonexpendable Trust

Operating Transfers: Transfers In Transfers from Primary Government Transfers Out Transfers to Primary Government
Net Operating Transfers
Net Income (Loss)

$

$

39,697,821 $

(21,189,792)

$

0 $

18,508,029 $

$ (21,677,271) $ 136,462,327 $

0 5,629

Deficiency ofRevenues under Expenditures from Governmental Operations and Expendable Trust Funds

Fund Equity/Fund Balances, July 1 Adjustments (Net) Contributed Capital Contributed Capital from Primary Government Contributed Capital from Federal Government Contributed Capital from Other Sources Transfer of Contributed Capital Ttansfer of Contributed Capital to Primary Government Increase (Decrease) in Inventories

125,939,453

1,027,788,074 (158,951,179)
2,885,570

(82,000) (372,967)

210,197

Fund Equity/Fund Balances, June 30

$ 104,262,182 $ 1,007,729,825 $

215,826

The notes to the financial statements are an integral part ofthis statement. A-20

Totals(Memorandum
Only) Primary Government

Component Units Proprietary Fund Types

Totals(Memorandum
Only) Reporting
Entity

$

39,697,821 $

0

(21,189,792)

0

$

18,508,029 $

$ 114,790,685 $

$ 53,331,561 (583,039,856) (529,708,295) $ 35,965,192 $

39,697,821 53,331,561 (21,189,792) (583,039,856)
(511,200,266)
150,755,877

0
1,153,937,724 (158,951,179)
2,885,570 0 0 0
(82,000) 0
(372,967)

(4,263,322)
1,364,973,768 (35,955,508)
56,792,235 28,615,928 21,126,652
(14,123,115) 22,476

(4,263,322)
2,518,911,492 (194,906,687)
2,885,570 56,792,235 28,615,928 21,126,652
(82,000) (14,123,115)
(350,491)

$ 1,112,207,833 $ 1,453,154,306 $ 2,565,362,139

A-21

State of Georftia
Combi\cd statement of Cash Flows
All Proprictarv Fmd Tvpcs. Noncxpmd<VIc Trust Fmds md Discrctdv Prcsmtcd Componmt U1its For the FISCal Ycar Ended Jmc 30. 1997

Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Required Contributions Cash Reoeived from Insurance Proceeds Principal Payments Received on Program Loans Interest Received on Program Loans Cash Paid to Vendon Cash Paid to Employees Cash Paid for Benefits Cash Paid for Claims and Judgments Cash Paid for Lottery Prizes Cash Paid for Scholarships Origination ofProgram Loans Governmental and Fiduciary Fund Type Activity (Net) Other Operating Items (Net)
Net Cash Provided by (Used in) Operating Activities
Cash Flows from Noncapital Financing Activities: Operating Transfers In Operating Transfers from Primacy Government Proceeds from Assigrunent ofProgram Loans Under Repurchase Agreements Issuance ofBonds/Loans!Notes Contributed Capital Hotel/Motel Tax (Net) Operating Transfers Out Operating Transfers to Primmy Government Repayment ofAdvances Principal Paid on Bonds/Loans!Notes Interest Paid on BondsJLoans/Notes Return ofContributed Capital Other Debt Semce Payments Other Noncapital Items (Net)
Net Cash Provided by (Used in) Noncapital Financing Activities
Cash Flows from Capital and Related Financing Activities: Issuance ofBonds/Loans!Notes Hotel/Motel Tax Received Contributed Capital Sale of Capital Assets Acquisition and Construction of Capital Assets Principal Paid on Bonds/Loans!Notes Interest Paid on Bonds/Loans!Notes Other Debt Service Payments Other Capital and Related Items (Net)
Net Cash Used in Capital and Related Financing Activities
.Cash Flows from Investing Activities: Purchase oflnvesttnents (Net) Interest on !nvesttnents Net Increase in Fair Value of Investments Other Investing Items (Net)
Net Cash Provided by Investing Activities
Net Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1
Cash and Cash Equivalents, June 30

Primary Government

ProE:!etmy Fund T~

Fiducimy FundT~

Intcmal

Nonexpendable

Enterprise

Service

Trust

Totals-
(Memonmdum On!~) Primacy
Government

Component Units
Proprietmy FundT~

Totals(Memorandum
Only)
Reporting Entity

$

s 31,587 $ 286,158,359

976,344,710

126,647,464

7,861,703

(186,422,391) (2,182,191)
(831 ,648,569)

(237,879,223) (80,518,070) (15,871,000) (86,676,768)

-s
(903) (3,847)
(1,300)

286,189,946 $ 1,102,992,174
7,861,703 0 0
(424,302,517) (82,704,108)
(847 ,519,569) (86,676,768) 0 (1,300) 0 0 0

s 1,937,506,263
105,494,635 70,248,615
(444,518,764) (I 04,098,685)
(839,989,000)
(170,01 0,786) 9,278,983 234,000

2,223,696,209 1,102,992,174
7,861,703 I 05,494,635
70,248,615 (868,821,281 ) (186,802,793) (847,519.569)
(86,676,768) (839,989,000)
(1,300) (170,010,786)
9,278,983 234,000

s $ (43,876,854)

(277,535) s

s s (6,050)

(44,160,439) $ 564,145,261

519,984,822

s

- $ 39,697,821 $

- $ 39,697,821 $

- $ 39,697,821

0

53,331,561

53,331,561

(21,189,792)
(82,000) 96,789,117

0 0 0 0 (21,189,792) 0 0 0 0 (82,000) 0 96,789,117

11,602,888 156,349,835
47,397,522 3,334,037
(582,933,770) (53,750)
(136,185,819) (48,383,179) (14,123,115) (1,824,658) (1,902,899)

11,602,888 156,349,835
47,397,522 3,334,037 (21,189,792) (582,933,770)
(53,750) (136,185,819)
(48,383,179) (14,205,115)
(1,824,658) 94,886,218

s

0 $ 115,215,146 $

0 $ 115,215,146 $ (513,391,347) $ (398,176,201)

$

-$

-$

2,885,570

(98,377)

(21,297 ,953) (242,857) (69,439)

$

(98,377) $ (18,724,679) $

$ 57,040,591 $ 10,707,135 $

15,596,017

40,336,595

89,101,600

s

s 72,636,608

140,145,330 $

s $ 28,661,377 $ 236,358,262

48,322,572

35,941,284

s s 76,983,949 $ 272,299,546

-$ 0 $

0 $ 0 2,885,570 0 (21,396,330) (242,857) (69,439) 0 0
(18,823,056) $

15,000,000 $ 13,565,899 24,626,605
465,962 (67,818,097) (1 0,131 ,015) (40,748,092)
(1,424,804) (21,113)
(66,484,655) $

15,000,000 13,565,899 27,512,175
465,962 (89,214,427) (1 0,373,872) (40,817,531)
(1 ,424,804) (21,113)
(85,307,711)

(4,723) s
15,679
10,956 s 4,906 s

67,743,003 $ 55,948,291 89,101,600
0
212,792,894 $
265,024,545 s

79,707,721 s
40,893,005
(26,648)
120,574,078 s 104,843,337 s

147,450,724 96,841,296 89,101,600 (26,648)
333,366,972
369,867,882

14,196

84,278,052

264,376,315

348,654,367

s 19,102 $ 349,302,597 $ 369,219,652

718,522,249

The notes to 1he fmancial statements are an integral part of1his statement. A-22

State of GeortJia
Combined Statement of Cash Flows All Proprictarv Fmd Tvpcs, Nonexpendable Trust Fmds and
Discrctdv Presented Component Units For the FISCal Year Ended Jme 30, 1997

Operating Income (Loss)
Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities: Depreciation!Amortization Interest
Other Changes in Assets and Liabilities: Decrease in Intergovermnental Receivables Increase in Interest and Dividends Receivable Increase in Notes and Loans Receivable
Decrease (Increase) in Other Receivables Increase in Due from Other Funds Increase in Due from Component Units Decrease (Increase) in Inventories Decrease (Increase) in Prepaid Items Decrease in Deferred Charges Decrease in Other Assets Increase (Decrease) in Accounts Payable and Other Accruals Increase in Compensated Absences Payable Increase in Claims and Judgments Payable Increase (Decrease) in Contracts Payable Increase in Salaries/Withho!dings Payable Decrease in Benefits Payable Decrease in Due to Other Funds Decrease in Due to Primary Government Increase (Decrease) in Deferred Revenue Decrease in FWlds Held for Others Increase in Other Liabilities Decrease in Deposits and Oveipayrnents Increase in Grand Prizes Payable
Total Adjustments

Primary Government

Proprietmy Fund Types

Fiduciary Fund Type

Internal

Nonexpendable

Enterprise

Service

Trust

Totals(Meniorandmn
Only)
Primary Government

Component Units
Proprietmy Fund Types

Totals(Memorandum
Only) Reporting
Entity

$ (2!,646,398) $ 128,877,541 $

5,629 $ 107,236,772 $ 559,423,871 $ 666,660,643

$

-$

1,387,958 $

(14,983,383)

(39,541,728)

(87 ,652,979)

2,022,928

(4,218,312) (6,073,269)
(318,230) 344,920
29,900

1,617,617 11,773
147,633 (11,177,038)
130,014

(6,321,721) 70,304
18,551,414 (748,691) 26,710
(188,747)
(3,762,703)

(739,902)

$ (22,230,456) $ (129,155,076) $

-$ (11,679)

1,387,958 $ (54,536,790) (87 ,652,979)

0 0 0 (2,195,384) (6,073,269) (318,230) 344,920 29,900 0 0 (4,704,104) 82,077 18,551,414 (601,058) 26,710 (11,177,038) (188,747) 0 (3,632,689) 0 0 (739,902) 0

(11,679) $ (151,397,211) $

34,783,856 $ 40,889,127
716,913

36,171,814 (13,647 ,663) (86,936,066)

909,985 (2,104,682) (64,507,748) (30,056,551)
(81,212) (167,365)
10,054 123,014 (34,546,824) 140,241
633,183 185,307
(143,063) 1,518,890 (420,345) 1,272,755 (279,145) 55,845,000

909,985 (2,104,682) (64,507,748) (32,251,935) (6,073,269)
(318,230) 263,708 (137,465) 10,054 123,014 (39,250,928) 222,318 18,551,414
32,125 212,017 (11,177,038) (188,747) (143,063) (2,113,799) (420,345) 1,272,755 (1,019,047) 55,845,000

4,721,390 $ (146,675,821)

Net Cash Provided by (Used in) Operating Activities

$ (43,876,854) $

(277,535) $

(6,050) $ (44,160,439) $ 564,145,261 $ 519,984,822

Noncash Investing, Capital, and Financing Activities: Disposal ofFixedAssets Donation ofFixed Assets Interest Earned on Grand Pri2e Investments and
Grand Pri2es Payable Write off ofFixed Assets

$

(30,873) $ (12,417,687) $

17,899

(16,544,667)

$

(30,873) $ (28,944,455) $

-$

(12,448,560) $ 17,899

0 (16,544,667)

(425,323) $ 21,705,422
16,343,000

(12,873,883) 21,723,321
16,343,000 (16,544,667)

0 $ (28,975,328) $ 37,623,099 $

8,647,771

The notes to the financial statements are an integral part ofthis statement. A-23

State of GeorfJl'l-------
Statements of Plan Net Assets
Pension Trust Fmds and Discrctclv Presented Component Units
Jmc 30. 1997

Assets
Cash and Cash Equivalents Investments Receivables (Net ofAllowances
for Uncollectibles) Interest and Dividends other Prepaid Items FJXed Assets (Ne~ Where Applicable, of Accumulated Depreciation)
Tots! Assets
Liabilities
Accounts Payable and Other Acc:ruals Salaries!Withholdings Payable Due to Other Fonds Due to Primaxy Government
Tots! Liabilities

Defined Contribution
Plan

District Attorneys Retirement
Fund

$

77,000 $

20,186,000

3,000

306,000 1,006,000

District Attomeys Retirement
System

Primaxy Govenunent

Employees' Retirement
System

Legislative Retirement
System

Superior Com! Judges Retirement
Fund

Superior Com! Judges Retirement
System

Trial Judges and Solicitors Retirement
Fund

25,000 $ 25,257,000

2,939,866 $ 9,179,587,000

20,000 $ 22,729,000

44,000 $ 1,259,000

52,000 93,455,000

104,000 44,203,000

46,000

87,393,000 26,511,000
14,014

32,000

2,000

241,000

215,000

21,575,000

$

1,000

1,000

3 000 $

25~~000 $ 9,296,444,880 $

2!.,781,000

l~05 1ooo $

93 748 000 $

4422!.,000

3,000 3 000

65,000 $ 65 000 $

5,344,886 $ 20,110 682,670
6 047 666 s

10,000 $ 25,000
35 000

37,000 $

41,000

37000 $

41000 $

6,000 6000

Fund Balances Reserved for Pension Benefits

$

2lii:74,000 $

(Schedules offunding progress are presented on pages 77 and 80)

0 s

25,263!000 $ 9,290,397!214

22,746!000 s

s 1~68!000

93!707!000 $

44,516 000

The notes to the financial statements are an integral part ofthis statement.

A-24

Total Prirnazy Govenunent
3,264,866 9,386,676,000
87,699,000 28,053,000
14,014
9,505,706,880

F'aemen's Pension
Fund

Judges ofthe Probate Courts
Retirement Fund

Component Units - Fiduciazy Fund TYPes

Public Scltool

Peace Officers'

Employees

Sheriffs'

Annuity and

Retirement

Retirement

Benefit Fund

System

Fund

48,167 s
261,644,190

20,702 s
30,793,275

1,771,747 s
214,754,374

131,000 578,396,000

55,739 32,157,003

Superior Court Clerks' Retirement
Fund

Teachers Retirement
System

12,531 32,294,575

10,585 27,721,266,000

Total Component
Units

Totals(Memoxandum
Only)
Reporting Entity

2,050,471 28,871,305,417

5,315,337 38,257,981,417

2,455,668

297,232

2,280,888

249,253
264,397,278 s

9189
31,120,398 s

403 162 219,210,171

578,527,000

238,802
16 662 32,468,206

223,757,000 176,832,155
39,650
15 459
32,322,565 s 28,121,905,390 s

229,029,590 176,832,155
39,650
693 725
29,279,951,008

316,728,590 204,885,155
53,664
693,725
38,785,657,888

5,507,886 s
20,110 707,670
0
6,235,666

s

s

228,000 s

s

s

228 000

s

1,622,697 s
58,985
26,058
1 707 740

1,850,697 s
58,985 0
26058
1935 740 s

7,358,583 79,095 707,670 26 058
8171406

s 9,499,471,214 s

s 264~97,278

31,120,398 s 219,210,171 s 578,299,000 s

32 468,206 $

32,322,565 s 28,120,197,650 s 29,278,015,268 $

38,777,486,482

A-25

- - - - - - - - S t a t e of Georfjia - - - - - - - -
Statements of Changes in Plan Net Assets Pension Trust Funds and
DiscretelY Presented Component Units For the FISCal Year Ended June 30. 1997

Additions: Contributions Employer and Employee Fmes and Forfeits Fines and Bond Forfeitures Interest and Other Investment lnc:ome Dividends and Interest Net Appreciationin FairValue of!nvestments Less: Investment Expense Net Gain on Disposal of!nvestment Securities Sales and Services Civil Cases Marriage License Fees Real Estate Recording Fees Taxes Insurance Companies Other Miscellaneous
Total Additions
Deductions: General and Adnrinistrative Expenses Benefits Refunds
Total Deductions
Net Increase Before Operating Transfers
Operating Transfm: Transfers from Primazy Govenunent Transfen; to Primazy Govermnent
Net Operating Transfers
Net Increase

D<Dned Contribu1ion
Plan

District Attorneys Retirement
Fund

District Attorneys Retirement
System

Primazy Govenunent

Employees' Retirement
System

Legislative Retirement
System

Superior Court Judges Retirement
Fund

Superior Court Judges Retirement
System

Trial Judges and Soliciton; Retirement
Fund

$

9,511,000 $

183,000 $

566,000 $ 339,751,000 $

351,000 $

1,844,000 $

2,338,000

1,426,000

1,025,000 178,000 (3,000)

876,330 3,635,646
(17,976)

341,292,760 1,414,915,112
(7,298,872)

951,210 3,946,302
(19,512)

65,715 . 272,633
(1,348)

3,440,775 14,274,805
(70,580)

1,519,830 6,305,346
(31,176)

10,711,000 $

245,000 $

7~17,000

$

7,56~000

s 3149 000 s

-S

$

-S

3,149,000 $

183 000 $

5106o,ooo

2,088,660,000

5:2:_29,000 $

-$ 183,000
183 000

-$ 284,000
59000

3,188,699 $ 320,165,000
9641 000

343 000 $ 332,994,699
4 717 000 s 1,755,665,301 s

-$ 915,000 47000
962 000 $
4,267,000 s

-S

-s

-$

-$

s

s

-S

$

s 4,717,000 $ 1,755,665,301 4,267,000 s

2,181,000 $

19,283,000

9:2:_20,000

1,970,000
1970 000 s 211000 s

$ 2,193,000
51,000
2:2:_44,000
17,739,000

534,000 175 000
709 000
8,511,000

-$

-$

s
211,000

-S
17,739,000 s

8,511,000

Fund Balances Reserved for Pension Benefits, July I Adjustments Change in Accounting Principle

18,647,000 (222,000)

s Fund Balances Reserved for Pension Benefits, June 30

2115741000 $

17,453,000 3,093,000

6,122,246,913 1,412,485,000

13,858,000 4,621,000

s s s 0

25,2631000 $ 9,290~97~14

~7461000

687,000 370 000

65,159,000 10,809,000

112681000 $

9317071000

28,882,000 7,123,000
44,5161000

The notes to the financial statements are an integral part ofthis statement.
A-26

Tollll Primai)' Government

Firemen's Pension
Fimd

Judges ofthe Probate Courts
Retirement Fimd

Comf2nen! Units - Fiduciary Fimd Types

Public School

Peace Officers'

Employees

Sheriffs'

Annuity and

Retirement

Retirement

Benefi!Fimd

System

Fimd

Superior Court Clerks' Retirement
Fimd

Teachers Retirement
System

Totlll Component
Units

Totals (Memorandmn
Only)
Reporting Entity

s

s 355,970,000

s 1,407,265

349,171,620 1,443,527,844
(7,442,464) 0

12,613,173 16,912,573

s

2,141,227,000

11,075,091 89952
s 42,098 054

190,845 395,219 1,728,386 1,797,001 139,643
6192 4,257,286

955,132 11,503,511 11,259,353
9,563,707

15,358,000
21,602,295 89,621,829
(443,124)

188 628
s 33,470,331

126,139,000

s 101,931
1,912,745 1,478,981
493,440
1461 3,988,558

110,755 572,489 1,878,753
278,403 1,125,031
3 965 431

930,841,591 $

948,965,519

14,383,964

1,008,618,000 4,245,539,000
(20,635,000)

1,059,178,941 4,335,160,829
(21,078,124) 28,766,721

278,403 139,643 1,125,031

11,075,091

s 6,164,363,591

286 233 6,378,282,251

1,304,935,519
14,383,964
1,408,350,561
5,778,688,673
(28,520,588) 28,766,721
278,403 139,643 1,125,031
11,075,091
286 233
8,519,509,251

s

3,433,699

326,244,000

17 290 000

s

346,967,699

$

1,794,259,301

1,282,733 $ 9,995,563
184 764
11,463,060 $
30 634 994 $

161,789 940,805
1,102,594 3,154,692

1,035,024 9,203,209
123,246
10,361,479
23,108,852

575,000 22,879,000
418 000
23,872,000
102,267,000

333,787 2,004,367
17628
2,355,782
1,632,776

85,355 $ 1,974,144
2 059 499 1,905,932

s 6,150,431
706,032,000 36,415,000
748,597,431 $
5,415,766,160 $

9,624,119 753,029,088
37,158,638
799,811,845
5,S78,47Q,406

13,057,818 1,079,273,088
54,448,638
1,146,779,544
7,372,729,707

s

$

s

s

s 1,794,259,301

30,634,994

$

s

$ 3,154,692 $

23,108,852 $

s
102,267,000

1,632,776

1,905,932

s 4,100,000
(541,591)
s 3 558 409
5,419,324,569 $

4,100,000 $ (541,591)

4,100,000 (541,591)

3 558409 $

3,558,409

5,582,028,815 $ 7,376,288,116

6,266,932,913 1,438,279,000

$

9,4991471,214

233,762,284

27,965,706

s 264~971278

311120~98

196,101,319

371,014,000 105z018,000

30,835,430

s s 219!210,171

578rl.99i000

32,4~06 $

30,416,633

18,117,673,081 4,583,200,000

s 3~2~565

28i120i197i650

19,007,768,453 4,688,218,000

25,274,701,366 6,126,497,000

29i278i015~68

38?77i486i482

A-27

State of GeorfJia - - - - - - - -
Combined Statement of Changes in Fund Balances
College and Universilv Funds For the FISCal Year Ended June 30. 1997

Revenues and Other Additions: Unrestricted Revenues Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants and Contracts Investment Income Endowment Other Sales and Services Net Gain/(Loss) on Investments Interest on Loans Receivable Expended for Plant Facilities Current Funds Plant Funds Unexpended Renewals and Replacements Georgia State Financing and Investment Commission Other Additions (Net) Insurance Recoveries Other Recovery of Prior Year's Cancelled Loans and Collection Costs
Total Revenues and Other Additions
Expenditures and Other Deductions: Education and General Expenditures Auxiliary Enterprises Expenditures Hospital Expenditures Indirect Cost Recoveries Loans Assigned to Federal Government Loan Cancellations and Write-offs Administrative and Collection Costs Expended for Plant Facilities Capitalized Non-Capitalized Other Deductions (Net) Disposals/Deletions/Adjustments
Total Expenditures and Other Deductions

Current Funds

Unrestricted

Restricted

Loan Funds

$ 1,045,579,557 $

$ 590,261,367 157,642,364
5,262,242 139,923,391
8,017,938 76,483
4,831,684

(48,652) 2,627
165,870
646,283 19,498
1,187,755

2,897,494 $ 1,048,477,051 $ 906,015,469 $

186,913 2,160,294

$ 2,007,649,578 $ 166,711,996 187,349,712

835,303,413 $
7,597,627 54,077,811

89,497

118,806 549,412 140,910

44,321

375,478

$ 2,361,711,286 $ 897,112,669 $

1,184,606

The notes to the financial statements are an integral part ofthis statement.

A-28

Endowment and Similar
Funds

Unexpended

Plant Funds Renewals and Replacements

Investment in Plant

Total (Memorandum
Only)

$

$

$

69,096,513

2,151,147

891,232

7,041,749

2,932,299

12,798,132

7,829,640 317,192

$

3,823,531 $

99,234,373 $

$

$ 1,045,579,557

659,309,228

159,793,511

5,264,869

48,592,388

196,614,630

505,098 1,173

8,017,938 14,025,996 4,831,684 2,952,970
1,187,755

191,837,076

191,837,076

130,799,797 9,465,183 89,411,446

130,799,797 9,465,183
89,411,446

14,189

7,829,640 3,228,875

186,913

520,460 $ 470,105,890 $ 2,530,337,068

$

-$

$

-$

40,614

$ 2,842,952,991 166,711,996 194,947,339 54,077,811 118,806 549,412 271,021

130,799,797 21,458,474

9,465,183 1,937,776

55,999,492

140,264,980 23,396,250
419,799 55,999,492

$

0 $ 152,298,885 $

11,402,959 $

55,999,492 $ 3,479,709,897

(continued)

A-29

- - - - - - - S t a t e of GeortJ1a-------
Combined Statement of Changes in Fund Balances
College and Univcrsitv Funds (continued) For the FISCal Ycar Ended June 30. 1997

Transfers Between Funds, Net In (Out) Mandatory Nonmandatory
Total Transfers Between Funds
Operating Transfers: Transfers In Transfers Out Transfers to Component Units
Total Operating Transfers
Net Increase (Decrease) in Fund Balances
Fund Balances, July 1
Fund Balances, June 30

Current Funds

Unrestricted

Restricted

Loan Funds

$

752,514 $

(25,570,982)

$ (24,818,468) $

(398,752) $ (2,690,177)
(3,088,929) $

(176,233) (4,924)
(181,157)

$ 1,363,372,659 $ (6,191,914)
(16,326,489)

$ 1,340,854,256 $

$

2,801,553 $

121,112,456

$
0 $ 5,813,871 $ 49,448,130

0 794,531 58,657,611

$ 123,914,009 $

55,262,001 $

59,452,142

The notes to the fmancial statements are an integral part ofthis statement.

A-30

Endowment and Similar
Funds

Unexpended

Plant Funds Renewals and Replacements

Investment in Plant

Total (Memorandum
Only)

$

(177,529) $

$

$

(716,413)

15,946,555

13,035,941

$

0

0

$

(893,942) $

15,946,555 $

13,035,941 $

0 $

0

$

$

56,743,969 $

561,443 $

$ 1,420,678,071

(1,067,906)

(7,259,820)

(16,326,489)

$

0 $

55,676,063 $

561,443 $

0 $ 1,397,091,762

$

2,929,589 $

18,558,106 $

2,714,885 $ 414,106,398 $ 447,718,933.

78,809,686

20,115,802

30,274,874

3,809,483,805

4,167,902,364

$

81,739,275 $

38,673,908 $

32,989,759 $ 4,223,590,203 $ 4,615,621,297

A-31

---------State of Georgia---------
Combined Statement of Current Funds Revenues.
Expenditures and Other Changes College and U1iversifv Funds
For the FISCal Year Ended June 30. 1997

Revenues: Tuition and Fees Federal Grants and Contracts State Grants and Contracts Local Grants and Contracts Private Gifts, Grants and Contracts Investment Income Sales and Services ofEducational Departments Sales and Services ofAuxiliary Enterprises Sales and Services ofHospital Other Sources
Total Revenues
Expenditures and Mandatory Transfers: Education and General Instruction Research Public Service Academic Support Student Services Institutional Support Plant Operations and Maintenance Scholarships and Fellowships Auxiliary Enterprises Student Housing Faculty and StaffHousing Food Services Stores and Shops Intercollegiate Athletics Other Service Units Hospital Expenditures Medical College of Georgia Hospital Georgia War Veterans Nursing Home Mandatory Transfers, Net (In) Out
Total Expenditures and Mandatory Transfers
Other Transfers and Additions (Deductions): Excess ofRestricted Receipts over Transfers to Revenues Nonmandatory Transfers, Net In (Out) Other Additions (Deductions), Net Operating Transfers Transfers In Transfers Out Transfers to Component Units
Total Other Transfers and Additions (Deductions)

Current Funds

Unrestricted

Restricted

Total (Memorandum
Only)

$ 481,300,286 $ 54,470,445 4,511,487 267,533 7,577,426 108,049 44,552,352 161,383,527
203,041,315 88,367,137
$ 1,045,579,557 $

$ 543,796,656 154,346,772
4,754,301 131,554,665
3,027,711 4,606,070

481,300,286 598,267,101 158,858,259
5,021,834 139,132,091
3,135,760 49,158,422 161,383,527 203,041,315 88,367,137

842,086,175 $ 1,887,665,732

$ 803,538,977 $

84,272,564 $ 887,811,541

218,635,385

226,341,644

444,977,029

132,873,946

57,548,622

190,422,568

196,419,002

7,330,571

203,749,573

105,447,948

4,074,366

109,522,314

286,510,035

22,186,665

308,696,700

197,316,064

251,642

197,567,706

66,908,221

433,297,339

500,205,560

52,093,574 1,731,980
32,219,491 19,233,204 25,780,992 35,652,755

52,093,574 1,731,980
32,219,491 19,233,204 25,780,992 35,652,755

187,349,712 (752,514)

7,597,627 398,752

187,349,712 7,597,627 (353,762)

$ 2,360,958,772 $ 843,299,792 $ 3,204,258,564

$

-$

(25,570,982)

2,897,494

1,363,372,659 (6,191,914)
(16,326,489)

$ 1,318,180,768 $

9,851,483 $ (2,690,177)
(133,818)

9,851,483 (28,261,159)
2,763,676

1,363,372,659 (6,191,914)
(16,326,489)

7,027,488 $ 1,325,208,256

Net Increase in Fund Balances The notes to the :financial statements are an integral part ofthis statement.
A-32

$

2,801,553 $

5,813,871 $

8,615,424

--------State of Georgia--------
Notes to the Fnandal Statements
~dcx
Page
Note 1 Summary of Significant Accounting Policies ......................................................... ,........................ A-34 Note 2 Other Accounting Disclosures ......................................................................................................... A-45 Note 3 Budgetary Accounting...................................................................................................................... A-47 Note 4 Deposits and Investments................................................................................................................. A-50 Note 5 Receivables....................................................................................................................................... A-55 Note 6 Fixed Assets ..................................................................................................................................... A-51 Note 7 Risk Management............................................................................................................................. A-59 Note 8 Construction and Other Significant Commitments .......................................................................... A-60 Note 9 Operating Leases .............................................................................................................................. A-60 Note 10 Capital Leases and Installment Purchases ....................................................................................... A-62 Note 11 Long-Term Debt............................................................................................................................... A-63 Note 12 Interfund Balances ........................................................................................................................... A-69 Note 13 Contributed Capital .......................................................................................................................... A-70 Note 14 Contingencies ................................................................................................................................... A-71 Note 15 Subsequent Events............................................................................................................................ A-72 Note 16 Deferred Compensation Plan ........................................................................................................... A-73 Note 17 Retirement Systems.......................................................................................................................... A-74 Note 18 Nonmonetary Transactions .............................................................................................................. A-84 Note 19 Postemployment Benefits................................................................................................................. A-85 Note 20 Fund Deficits .................................................................................................................................... A-85 Note 21 Major Discretely Presented Component Unit Condensed Financial Statements ............................. A-86
A-33

State of GeorfJkt - - - - - - - -
Notes to the Fnandal Statements
JLBIC 30, 1997

Note 1. Summary of Significant Accounting Policies
With the exception of the departures from generally accepted accounting principles (GAAP) disclosed in the following paragraphs, the fmancial statements of the State of Georgia have been prepared in conformity with GAAP as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and fmancial reporting principles. The financial statements of the College and University Funds have been prepared in conformity with GAAP as promulgated by the provisions of the American Institute of Certified Public Accountants' "Industry Audit Guide- Audits of Colleges and Universities."
The more significant of the State's accounting policies are described below:
A. Reporting Entity
In evaluating how to define the government for fmancial reporting purposes, management has considered both the organizations which compose the primary government and potential component units. The primary government consists of all the organizations that compose the legal entity of the State of Georgia. All agencies, departments, authorities, commissions, courts, councils, boards, universities, colleges, retirement funds, associations and other funds that are not legally separate are, for fmancial reporting purposes, considered part of the primary government. In addition, included within the primary government are organizations which are legally separate but so intertwined with the primary government that they are, in substance, part of the primary government.
The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in Section 21 00 of the GASB Codification of Governmental Accounting and Financial Reporting Standards. This Section defmes a component unit as a legally separate organization for which the primary government is fmancially accountable and other organizations for which the primary government is not accountable, but for which the nature and the significance of the relationship with the primary government are such that exclusion would cause the financial statements to be misleading or incomplete.

Financial accountability is the ability to appoint a voting majority of an organization's governing board and to impose will upon the organization or to have exist the potential for the organization to provide specific fmancial benefits or impose specific fmancial burdens on the primary government. In addition, organizations which are fiscally dependent upon the primary government were considered as potential component units.
As required by GAAP, these fmancial statements present the government and its component units, entities for which the government is considered to be fmancially accountable. Blended component units, although legally separate entities, are, in substance, part of the government's operations and therefore data from these units are combined with that ofthe primary government. The blended component units are as follows:
GeorgiaNet Authority (Special Revenue Fund) is an instrumentality of the State of Georgia and a public corporation. The authority is responsible for the centralized marketing of certain information maintained in electronic format to the public. Three of the five members of the Board are appointed by the Governor. Any funds in excess of those needed for the corporate purposes of the authority are required to be transferred to the General Fund.
Georgia Building Authority (Hospital) (Capital Projects Fund) is a body corporate and politic. The authority is responsible for the construction and management of hospitals, health care facilities, dormitories and housing accommodations for the use of patients, officers and employees under the control of any State agency. The Board consists of four State officials designated by statute and one member appointed by the Governor.
Georgia Building Authority (Markets) (Capital Projects Fund) is a body corporate and politic. The authority is responsible for the construction and management of farmers' markets. The Board consists of four State officials designated by statute and one member appointed by the Governor.
Georgia Building Authority (Penal) (Capital Projects Fund) is a body corporate and politic. The authority was created for the purpose of constructing and managing penal institutions, penitentiaries, prisons and prison institutes, detention and corrections institutions, rehabilitation facilities and county correctional institutions. The Board consists of four State officials designated by statute and one member appointed by the Governor.

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Notes to the Fnandal Statements Jme 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
Georgia Education Authority (University) (Capital Projects Fund) is a body corporate and politic. The authority is charged with the overall responsibility of the construction and management of housing accommodations; classrooms, laboratories, libraries, dormitories and instructional, administrative and recreational facilities for students, faculty, officers and employees of any institution under control of the Board of Regents. The Board consists of five State officials designated by statute and one member appointed by the Governor.
Georgia Building Authority (Internal Service Fund) is a body corporate and politic. The purpose of this authority is to construct and manage buildings and facilities intended for use as office space, public parks and public parking facilities, the executive mansion and laboratories. The Board consists of four State officials designated by statute and one member appointed by the Governor.
Georgia Correctional Industries Administration (Internal Service Fund) is a public corporation which utilizes inmates in the manufacturing of products for sale to State agencies and others. The Governor appoints one Board member from each congressional district in the State, as well as appointing five additional members from the State at large.
Employees' Retirement System ofGeorgia (Pension Trust Fund) is a single-employer, public employee retirement system established to provide benefits for employees of the State. The system is governed by a seven member Board of Trustees, three of which are State officials designated by statute, and one of which is appointed by the Governor. The system administers seven blended defmed benefit pension plans: the Employees' Retirement System Fund, the District Attorneys ' Retirement Fund, the District Attorneys' Retirement System, the Legislative Retirement System, the Superior Court Judges Retirement Fund, the Superior Court Judges Retirement System, and the Trial Judges and Solicitors Retirement Fund. The State provides a substantial amount of funding for these retirement systems in the form of employer contributions and administrative expenses.
Georgia Military College (College and University Funds) is a body corporate and politic. This institution is dedicated to providing a high-quality military education to the youth of the State. The Board consists of the mayor of the City of Milledgeville, and one trustee elected from each of the six municipal voting districts of the City of Milledgeville, as required by statute.

Discrete presentation entails reporting component unit financial data in columns separate from the fmancial data of the primary government. The discretely presented component units are as follows:
Georgia Education Authority (Schools) (Governmental Fund Type) is a body corporate and politic. The authority is responsible for the construction of buildings _and facilities intended for use as school buildings, classrooms, laboratories, libraries and instructional, administrative and recreational facilities for students, faculty, officers and employees of any institution under control of a county or city board of education or governing body of any independent district or system. The Board consists of six State officials designated by statute and one member appointed by the Governor.
Georgia Public Telecommunications Commission (Governmental Fund Type) is a body corporate and politic. This commission is a public charitable organization created for the purpose of providing educational, instructional and public broadcasting services to citizens of Georgia. The budget of the commission must be approved by the State. The Board consists of three State officials designated by statute and six members appointed by the Governor.
Georgia Agricultural Exposition Authority (Proprietary Fund Type) is a body corporate and politic. This authority is responsible for provision of a facility for the agricultural community, for public events, exhibits and other activities and for promotion and staging of a statewide fair. The nine Board members are appointed by the Governor.
Georgia Agrirama Development Authority (Proprietary Fund Type) is a body corporate and politic. The purpose of this authority is to utilize all funds for the purpose of beautifying, improving, developing, maintammg, administering, managing and promoting an agricultural museum in or around Tifton, Georgia; this museum is designated as the State Museum of Agriculture. Of the fourteen members of the Board, four are State officials designated by statute and seven members are appointed by the Governor.
Georgia Development Authority (Proprietary Fund Type) is a body corporate and politic. The authority was created to assist agricultural and industrial interests by providing credit and servicing functions to better enable farmers and businessmen to obtain needed capital funds. The Board consists of three State officials designated by statute and four members appointed by the Governor.
Georgia Environmental Facilities Authority (Proprietary Fund Type) is a body corporate and politic. The authority

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Notes to the Fnandal Statements Jme 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
provides assistance to local governments in constructing, extending, rehabilitating, repairing, replacing and renewingenvironmental facilities by providing financial and technical assistance. The Board consists of three State officials designated by statute and eight members appointed by the Governor.
Georgia Higher Education Assistance Corporation (Proprietary Fund Type) is a public authority, body corporate and politic. The corporation was created to improve the higher educational opportunities of eligible students by guaranteeing educational loan credit to students and to parents of students. The corporation is governed by the Board of Commissioners ofthe Georgia Student Finance Commission. The Board consists of five State officials designated by statute and eleven members appointed by the Governor.
Georgia Highway Authority (Proprietary Fund Type) is a body corporate and politic. This authority was created to build, rebuild, relocate, construct, reconstruct, surface, resurface, layout, grade, repair, improve, widen, straighten, operate, own, maintain, lease and manage roads, bridges and approaches. The Board consists of three State officials designated by statute.
Georgia Housing and Finance Authority (Proprietary Fund Type) is a body corporate and politic. The authority is responsible for facilitating housing and housing fmance, and fmancing for health facilities and health care services throughout the State. The Board consists of two State officials designated by statute and ten members appointed by the Governor.
Georgia International and Maritime Trade Center Authority (Proprietary Fund Type) is a body corporate and politic. The authority was created to develop and promote the growth of the State's import and export markets through its ports and other transportation modes. The Board consists of eleven members, eight of whom are appointed by State officials.
Georgia Lottery Corporation (Proprietary Fund Type) is a public body, corporate and politic. The corporation operates lottery games to provide continuing entertainment to the public and maximize revenues, the net proceeds of which are utilized to support improvements and enhancements for educational purposes. The corporation is governed by a board of directors composed of seven members, all of which are appointed by the Governor. The

State is legally entitled to residual resources of the corporation.
Georgia Music Hall ofFame Authority (Proprietary Fund Type) is a body corporate and politic whose purpose is to construct, operate and maintain the Music Hall of}<ame, as well as promoting music events at the facility and throughouHhe State. All nine members -of the Board are appointed by the Governor.
Georgia Ports Authority (Proprietary Fund Type) is a body corporate and politic. The purpose of the authority is to develop and improve the harbors or seaports ofthe State for the handling of waterborne commerce and to acquire, construct, equip, maintain, develop and improve said harbors, seaports and their facilities. The Board consists of nine members, all of which are appointed by the Governor.
Georgia RaU Passenger Authority (Proprietary Fund Type) is a body corporate and politic. This authority is responsible for construction, fmancing, operation and development of rail passenger service and other public transportation projects. The Board includes one member appointed by the Governor from each congressional district, as well as two appointed members from the State at large.
Georgia Seed Development Commission (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State whose purpose is to purchase, process, and resell breeders' and foundation seeds. The commission consists of ten members who are accountable as trustees. Of the ten members serving on the Board, six members are State officials or are appointed by State officials.
Georgia Student Finance Authority (Governmental Fund Type) is a body corporate and politic. This authority was created for the purpose of improving higher educational opportunities by providing educational scholarship, grant and loan assistance. A substantial amount of funding is provided to the authority by the State. The Board consists of fifteen members, four of whom are State officials and the remaining eleven are appointed by the Governor.
Geo. L. Smith II Georgia World Congress Center Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority is responsible for acquiring, constructing, equipping, maintaining and operating the World Congress Center to promote trade shows, conventions and political, musical, educational, entertainment, recreational, athletic or other events. The eleven members of the Board are appointed by the Governor.

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Note.s to the Fnandal Statements Jmc 30. ICJJ7

Note 1. Summary of Significant Accounting Policies (continued)
Georgia Sports HaU ofFame Authority (Proprietary Fund Type) is a body corporate and politic. This authority was created to construct and maintain a facility to house the Georgia Sports Hall of Fame to honor those who have made outstanding and lasting contributions to sports and athletics, and to operate, advertise and promote the Sports Hall of Fame. The thirteen members ofthe Board are appointed by State officials. The issuance of bonds must be approved by the Georgia State Financing and Investment Commission.
Jekyll Island State Park Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority was created to operate and manage resort recreational facilities on Jekyll Island. The Board consists of one State official designated by statute and eight members appointed by the Governor.
Lake Lanier Islands Development Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the authority is to develop, manage, preserve and protect projects on Lake Lanier Islands. The Board consists of one State official designated by statute and eight members appointed by the Governor.
North Georgia Mountains Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State responsible for the construction and management ofrecreation, accommodation and tourist facilities and services. The nine members of the Board are appointed by the Governor.
Sapelo Island Heritage Authority (Proprietary Fund Type) is a body corporate and politic. The purpose of the authority is the preservation of the cultural and historic values of Hog Hammock Community located on Greater Sapelo Island. The three members serving on the Board are State officials. The State has assumed the obligation to provide fmancial support for real property acquisition.
State Tollway Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State. The authority was created to construct, operate and manage a system of roads, bridges and tunnels and facilities related thereto. The three Board members are State officials; therefore, the State can impose its will on the authority.
Stone Mountain Memorial Association (Proprietary Fund Type) is a body corporate and politic and an instrumentality

and public corporation of the State. The authority is responsible for the proper development, management, preservation and protection of Stone Mountain as a Confederate memorial and public recreational area. The Board consists of one State official designated by statute and eight members appointed by the Governor.
Superior Court Clerks' Cooperative Authority (Proprietary Fund Type) is a body corporate and politic and an instrumentality and public corporation of the State created to provide a cooperative for the development, acquisition and distribution of record management systems, information, services, supplies and materials for superior court clerks of the State. Of the seven members of the Board, three are appointed by the Governor. The nature of this organization is such that it would be misleading to exclude it from the reporting entity.
Georgia Firemen's Pension Fund (Fiduciary Fund Type) is a multiple-employer, defmed benefit pension plan established for the purpose of paying retirement, death and disability benefits to the firemen of the State of Georgia. The Board of Trustees consists of two State officials designated by statute and three members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute.
Judges ofthe Probate Courts Retirement Fund ofGeorgia (Fiduciary Fund Type) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the judges of the Probate Courts of the State of Georgia. The Board consists of one State official designated by statute and six members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute.
Peace Officers' Annuity and Benefit Fund of Georgia (Fiduciary Fund Type) is-'ll multiple-employer, defmed benefit pension plan established for the purpose of paying retirement, death and disability benefits to the peace officers ofthe State of Georgia. The Board of Commissioners ofthe Annuity and Benefit Fund consists of two State officials designated by statute and four members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute.
Public School Employees Retirement System (Fiduciary Fund Type) is a single-employer, defmed benefit pension plan established for the purpose of providing retirement allowances for public school employees who are not eligible for membership in the Teachers Retirement System of Georgia. This retirement fund is administered by the Employees' Retirement System Board of Trustees and two other Governor's appointees not on the Employees' Retirement System Board.

A-37

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Notes to the Fnandal Statements
June 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
Sheriffs' Retirement Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defmed benefit pension plan established for the purpose of paying retirement, death and disability benefits to the sheriffs of the State of Georgia. The Board consists of one State official designated by statute and five members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute.
Superior Court Clerks' Retirement Fund of Georgia (Fiduciary Fund Type) is a multiple-employer, defmed benefit pension plan established for the purpose of paying retirement, death and disability benefits to the Superior Court Clerks of the State of Georgia. The Board consists of one State official designated by statute and six members appointed by the Governor. Benefit provisions and vesting requirements are established by State statute.
Teachers Retirement System of Georgia (Fiduciary Fund Type) is a cost-sharing multiple-employer plan created by an act of the Georgia General Assembly to provide retirement, service, disability and survivors' benefits for qualifying teachers. The Board of Trustees is comprised of ten members, eight of which are State officials or are appointed by State officials. The State provides a substantial amount of funding to this retirement system in the form of employer contributions.
B. Fund Accounting
The State of Georgia uses funds and account groups to report on its fmancial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid fmancial management by segregating transactions related to certain government functions or activities.
A fund is a separate accounting entity with a self-balancing set of accounts. An account group, on the other hand, is a fmancial reporting device designed to provide accountability for certain assets and liabilities that are not recorded in the funds because they do not directly affect net expendable available fmancial resources.

Primary Government - The fmancial statements of the primary government are divided into four fund categories (further divided by fund type) and two account groups, all of which are described below. The four fund categories include governmental, proprietary, fiduciary and college and university funds. The two account groups presented are the general fixed assets account group -and the general long-term debt account group.
Governmental Fund Types are used to account for all or most of a state's general activities. Governmental fund types include:
General Fund- The General Fund is used to account for all fmancial transactions not required to be accounted for in another fund. These transactions relate to resources obtained and used for services traditionally provided by a State government.
Special Revenue Funds - Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditures for specified purposes.
The primary government special revenue fund is the GeorgiaNet Authority. The GeorgiaNet Authority is responsible for centralized marketing, sales, leasing and licensing of certain public information.
Debt Service Funds - Debt Service Funds are used to account for the payment of principal and interest on general long-term debt.
The primary government debt service fund is the General Obligation Debt Sinking Fund, which is administered by the Office of Treasury and Fiscal Services. The Debt Sinking Fund is responsible for the accumulation of resources for the payment of principal and interest on general obligation bonds.
Capital Projects Funds - Capital Projects Funds are used to account for the acquisition or construction of capital facilities.
Proprietary Fund Types are used to account for activities similar to those found in the private sector, where cost recovery and the determination of net income is necessary or useful for sound fmancial administration.
Enterprise Funds - Enterprise Funds are used to account for operations (a) that are fmanced and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs of providing goods or services to the general public on a continuing basis

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Notes to the F~nandal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes.
The primary government enterprise fund is the State Employees' Health Benefit Plan, which is administered by the State Personnel Board, Merit System of Personnel Administration. The State Employees' Health Benefit Plan is a self-insured program of health benefits for the employees of units of government of the State of Georgia, units of county government and local education agencies located within the State of Georgia.
Internal Service Funds - Internal Service Funds are used to account for the fmancing of goods or services provided by one department or agency to other State departments or agencies, or to other governmental entities, on a cost-reimbursement basis.
Fiduciary Fund Types are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the State. These fund types include:
Expendable Trust Funds - Expendable Trust Funds are used to account for the activities of trusts in which both principal and income may be used for the purposes of the trust.
Nonexpendable Trust Funds- Nonexpendable Trust Funds are used to account for the activities of trusts when the government is under an obligation to maintain the trust principal.
Pension Trust Funds - Pension Trust Funds are used to account for State-administered retirement systems.
Agency Funds - Agency Funds are used to account for assets that the State holds on behalf of others as their agent.
College and University Funds are used to account for the operations of State colleges and universities in accordance with existing authoritative accounting and reporting principles applicable to government-operated colleges and universities. Accordingly, college and university funds are an aggregation of the following funds.

Current Funds - Current Funds are used to account for current operating expenditures and related resources and include (1) unrestricted funds over which the college or university retains full control in achieving the institutions' purposes, and (2) restricted funds which may be utilized only in accordance with externally-restricted purposes.
Loan Funds - Loan Funds are used to account for transactions ofrelated resources obtained and used for loans to students.
Endowment and Similar Funds - Endowment and Similar Funds are used to account for resources held by the institutions that must be administered in accordance with trust agreements.
Plant Funds - Plant Funds are used to account for institutional property acquisition, renewal and replacement, debt retirement and investment.
Agency Funds - Agency Funds are used to account for amounts held in custody for students, university-related organizations and others.
The General Fixed Assets Account Group is used to account for all fixed assets acquired or constructed for use by the State, other than those accounted for in the proprietary, fiduciary, and college and university funds.
The General Long-Term Debt Account Group is used to account for general obligation bonds outstanding, accrued armual and compensatory leave, capital lease obligations and other long-term liabilities not otherwise recorded in proprietary, fiduciary, and college and university funds.
Discretely Presented Component Units - The fmancial statements of the component units, other than the component units which fmancial statements were blended with the financial statements of the primary government due to their relationship with the primary government, are presented in separate columns. The three columns presented reflect fmancial activity for the following fund types:
Governmental Fund Types are used to account for component unit general activities.
Proprietary Fund Types are used to account for activities similar to those found in the private sector, where the determination ofnet income is necessary or useful for sound fmancial management.

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Notes to the Fnandal Statements Jmc 30, 1997

Note 1. Summary of Significant Accounting Policies (continued)
Fiduciary Fund Types are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the State.
The fmancial data presented in these columns are discretely presented with the balances and transactions for each component unit being aggregated within the component unit's predominant fund type.
C. Basis of Accounting
The accounting and fmancial reporting treatment applied to a fund is determined by its measurement focus. All governmental funds and expendable trust funds are accounted for using a current fmancial resources measurement focus. With this measurement focus, only current assets and current liabilities generally are included on the balance sheet. Operating statements of these funds present increases (i.e., revenues and other fmancing sources) and decreases (i.e., expenditures and other fmancing uses) in net current assets.
All proprietary funds, nonexpendable trust funds and pension trust funds are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and liabilities associated with the operation of these funds are included on the balance sheet. Fund equity (i.e., net total assets) is segregated into contributed capital and retained earnings components. Proprietary fund type operating statements present increases (e.g., revenues) and decreases (e.g., expenses) in net total assets.
The modified accrual basis of accounting is used by all governmental fund types, expendable trust funds and agency funds. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual (i.e., when they become both measurable and available). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Principal revenue sources which are susceptible to accrual include income taxes, sales and use taxes, federal grants and shared revenues. Revenues applicable to expendituredriven programs, however, may be accrued based on the unexecuted portion of contracts for goods and services. Expenditures are recorded when the related fund liability is incurred, as required by GAAP, with the exception of year-end encumbrances which are recorded as expenditures

rather than as a reservation of fund balance. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated in the debt service fund for payments to be made early in the subsequent fiscal year.
The accrual basis -of accounting, as retlUirod by -GAAP, is utilized by proprietary fund types, nonexpendable trust funds and pension trust funds with the exception of the following individual pension trust funds which are reported essentially on the cash basis:
Discretely Presented Component Units Fiduciary Fund Types Firemen's Pension Fund Judges of the Probate Courts Retirement Fund Peace Officers' Annuity and Benefit Fund of Georgia Sheriffs' Retirement Fund of Georgia Superior Court Clerks' Retirement Fund of Georgia
Under the accrual basis of accounting, revenues are recorded when earned and expenses are recorded at the time liabilities are incurred. Depreciation of fixed assets has not been reported for all funds included within the proprietary fund types as required by GAAP.
The College and University Funds are reported using the modified accrual basis of accounting (which is materially the same as the accrual basis of accounting applicable to colleges and universities), with the exception that contractual obligations for services which have not been performed and for goods which have not been delivered at the end ofthe fiscal year are recognized as expenditures and liabilities in the accompanying fmancial statements.
As permitted by generally accepted accounting principles for colleges and universities, no depreciation is provided for the physical properties.
D. Budgets
The annual budget ofthe State of Georgia is prepared on the modified accrual basis utilizing encumbrance accounting with the following exceptions: federal and certain other revenues are accrued based on the unexecuted portion of long-term contracts; and intrafund transactions are disclosed as revenue and expenditures. The budget represents departmental appropriations recommended by the Governor and adopted by the General Assembly prior to the begirming of the fiscal year. Annual appropriated budgets are adopted at the departmental level. The appropriated budget covers most governmental funds included in the State reporting entity but excludes the special revenue fund, capital projects

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Notes to the Fnandal Statements Jmc 30, 1997

Note 1. Summary of Significant Accounting Policies (continued)
funds and certain debt service funds which are not subject to appropriation. The budget includes certain proprietary funds, the college and university funds, and the administrative costs of operating certain public employee retirement systems. All unencumbered annual appropriations lapse at fiscal year end unless otherwise specified by constitutional or statutory provisions. Supplementary and amended appropriations may be enacted during the next legislative session by the same process used for original appropriations. Encumbrances are used to indicate the intent to purchase goods or services. Liabilities and expenditures are recorded upon issuance of completed purchase orders. Goods or services need not have been received for liabilities and expenditures to be recorded.
Because the budgetary basis differs from GAAP, budget and actual amounts in the accompanying Statement of Funds Available and Expenditures Compared to Budget - Budget Fund are presented on the budgetary basis. A reconciliation of the excess of funds available over expenditures on the budgetary basis at June 30, 1997, to the excess of revenues over expenditures and other fmancing sources (uses)/net income (loss)/net increase in plan net assets/net increase (decrease) in fund balances - current funds presented in conformity with GAAP is set forth in Note 3.
E. Deposits and Investments
Cash and Cash Equivalents Cash and cash equivalents include currency on hand and demand deposits with banks and other fmancial institutions. Cash and cash equivalents also include short-term, highly liquid investments with maturity dates within three months of the date acquired, with the exception of the college and university funds, which report all time deposits as cash.
Investments Investments are defmed as those fmancial instruments with terms in excess of three months from the date of purchase and certain other securities held for the production of revenue.
The investment policy of the State of Georgia is to maximize the protection of State funds on deposit while accruing an advantageous yield on those funds in excess of those required for current operating expenses (Official Code of Georgia Annotated [OCGA] 50-17-51). The State Depository Board may permit any department, board, bureau or other agency to invest funds collected directly by

such organization in short term time deposit agreements, provided that the interest income of those funds is remitted to the Director of the Office of Treasury and Fiscal Services as revenues of the State of Georgia. As a matter of general practice, however, demand funds of any department, board, bureau or other agency in excess of current operating expenses are .required to be. deposited with the Director of the Office of Treasury and Fiscal Services for the purpose of pooled investment (OCGA 50-17-63). Such cash is managed in a pooled investment fund to maximize interest earnings. Investments are stated at cost. Authorized pool investments are limited to the following (OCGA 36-83-4 and 36-83-8):
1) Obligations of the State of Georgia or of other states; 2) Obligations issued by the United States government; 3) Obligations fully insured or guaranteed by the United
States government or a United States government agency; 4) Obligations of any corporation of the United States government; 5) Prime banker's acceptances; 6) Repurchase agreements; and 7) Obligations of other political subdivisions ofthe State.
Other organizations of the State of Georgia reporting entity invest in a variety offmancial activities. These investments may include brokered certificates of deposit, commercial paper, convertible bonds, corporate bonds, notes and obligations, foreign bonds, investment agreements, mortgages, municipal bonds, mutual funds, real estate, real estate mortgages and notes, real estate investment trust limited partnerships, repurchase agreements, short-term investments, stocks, and U. S. Treasury bonds, notes, and bills. Investments are stated at cost or amortized cost at June 30, 1997, with the exception of deferred compensation plan assets which are stated at market value (See Note 16), as well as investments of Teachers Retirement System and all funds administered by Employees' Retirement System of Georgia, which are stated at fair value.
In accordance with State statutes and investment policy and guidelines adopted by the State Depository Board, the State of Georgia invests a portion of the assets of the various portfolios in certain structured notes and certain mortgagebacked securities, such as collateralized mortgage obligations and adjustable rate mortgages. These securities are reported as U. S. Government Securities in the disclosure of custodial credit risk (See Note 4).
As of June 30, 1997, the State had $34,976,371 in two portfolios invested in U. S. agency mortgage and assetbacked securities. Investments in these portfolios are transacted by external investment management firms under

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Notes to the Fnandal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
direction of investment advisory agreements executed between the State and the investment management firms.
The Commissioner of the Department of Agriculture is directed by statute to require dealers in certain agricultural products and livestock to make and deliver to the Department a surety or cash bond to secure the faithful accounting for and payment to producers ofthe proceeds of agricultural products or livestock handled or sold by the dealer. Cash bonds are required to designate the Department as trustee of the funds and may take the form of certificates of deposit, letters of credit, money orders or cashiers' checks. At June 30, 1997, the Department held surety bonds in the amount of $24,621,366 and cash bonds in the amount of $11,232,037. These bonds are not recorded on the Combined Balance Sheet.
Securities are held pursuant to statutes which require licensed insurance companies to deposit securities with the Department of Insurance prior to issuance of a certificate of authority to transact insurance by the Commissioner of Insurance. These securities remain in the name of the licensed insurance company as long as the company has a pending claim in the State of Georgia or until a proper order of a court of competent jurisdiction has been issued to the receiver, conservator, rehabilitator, or liquidator of the insurer or to any other properly designated official or officials who succeed to the management and control of the insurer's assets. The purchase and redemption of such securities is allowed as long as the required levels of deposits are maintained. At June 30, 1997, securities in the amount of $195,342,785 were held by the Department of Insurance. These securities are not recorded on the Combined Balance Sheet.
Construction contracts awarded by the Department of Transportation (Primary Government) and the State Tollway Authority (Discretely Presented Component Units) usually include provisions to withhold a percentage of the payments until the project reaches a specified state of completion. Georgia law requires that these funds be deposited in a state or national bank chartered within this State. The State controls only the release of these funds; the assets in the accounts are considered to be the property of the contractor. Therefore, no assets and liabilities for these escrow accounts have been included in these fmancial statements. At June 30, 1997, $43,363,105 in escrow deposits were administered by the Department of Transportation and $74,732 by the State Tollway Authority.

F. Receivables
Receivables in the State's governmental funds pertain primarily to Federal revenues and revenues applicable to charges for services. Receivables in all other funds have arisen in the ordinary course of business. Receivables are recorded when either the asset or revenue recognition criteria (See Note 1-C) have been met. Estimates of allowances for uncollectible receivables have not been made for the majority of receivables included within the fmancial statements.
G. Due To/From Other Funds
Equally offsetting asset and liability accounts are used to account for amounts owed to a particular fund by another fund for short term obligations on goods sold or services rendered.
H. Advances to Other Funds
Noncurrent portions oflong-term interfund loans receivable are reported as advances and are offset equally by a fund balance reserve account which indicates that they do not constitute expendable available fmancial resources and therefore are not available for appropriation.
I. Inventories
Inventories of supplies and materials are determined by physical count and/or perpetual inventory records and are valued at cost, current purchase price, fair market value, lower of cost or market using the frrst-in/frrst-out (FIFO) method, moving average cost, standard cost, or weighted average cost, depending on the individual organization's preference. The costs of governmental fund-type inventories are recorded as expenditures when consumed rather than when purchased for larger agencies and agencies with material inventories. Other agencies may use either the purchase or consumption method.
Under the purchase method, a portion ofthe fund balance is reserved for inventories to indicate that it is not available for appropriation. Organizations under the consumption method normally reserve a portion of fund balance equal to the average monthly inventories on hand for the fiscal year.
USDA Donated Food Inventories are shown at a value established by the U. S. Department of Agriculture.

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Notes to the Fnandal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
Donated food inventories are equally offset by an amount to indicate that they do not constitute "available expendable resources" even though they are a component ofnet current assets. The fund balance reserve is based on values established by the U. S. Department of Agriculture.
J. Prepaid Items
Payments made to vendors and local government organizations for services that will benefit periods beyond June 30, 1997, are recorded as prepaid items.
K. Restricted Assets
Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants.
L. Fixed Assets
General fixed assets of governmental fund types are reflected as expenditures in the funds used to acquire or construct them and the related assets are reported in the general fixed assets account group. Proprietary and trust fund fixed assets are capitalized in their respective funds, except for trust fund fixed assets, which are reported in the general fixed assets account group. College and university funds report expenditures for fixed assets in the funds used to acquire or construct them and the related assets are reported within the plant funds.
Due to the lack of complete and accurate inventory records applicable to State-owned land and buildings and the lack of historical cost values for certain parcels of land and buildings, the general fixed assets account group does not represent a comprehensive valuation ofthe assets owned by the State of Georgia.
All purchased fixed assets are valued at cost or at estimated historical cost if historical cost is not practically determinable. Certain fixed assets acquired through capital leases in prior years have not been recorded on the financial statements at the net present value of the minimum lease payments as is required by GAAP. Donated fixed assets are

valued at their estimated fair market value on the date received.
Costs ofnormal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Material improvements adding to the value of assets are capitalized. Interest costs during construction are not capitalized for construction or acquisition of assets funded by governmental fund types .and college and university funds. Interest costs during construction for proprietary fund types are not capitalized with the exception of construction projects funded through the Stone Mountain Memorial Association (discretely presented component unit).
With the exception of the college and university funds, public domain ("infrastructure") fixed assets consisting of such assets as roads, bridges, curbs, streets and sidewalks, drainage systems and lighting systems are not generally reported, as these assets are immovable and of value only to the State of Georgia.
Assets in the general fixed assets account group and the college and university funds are not depreciated. The majority of proprietary funds do not record depreciation on fixed assets as required by GAAP.
M. Compensated Absences
The State's liability for accumulated unpaid annual leave is reported in the accompanying general long-term debt account group for governmental fund types. These amounts are not shown as a liability in the funds but are recorded as expenditures when paid. In the proprietary fund types and the college and university funds this obligation is reported as a liability in the respective- funds.
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employee's length of continuous State service with a maximum accumulation of forty-five days. Employees are paid for unused accumulated annual leave upon retirement or termination of employment. Funds are provided in the appropriation of funds each fiscal year to cover the cost of annual leave of terminated employees.
Employees earn ten hours of sick leave each month with a maximum accumulation ofninety days. Sick leave does not vest with the employee. Unused accumulated sick leave is forfeited upon retirement or termination of employment. However, certain employees who retire with one hundred and twenty days or more of forfeited annual and sick leave

A-43

- - - - - - - S t a t e of Georgia-------
Notes to the F11andal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
are entitled to additional seniice credit in the Employees' Retirement System of Georgia. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits.
N. Deferred Revenue
The State reports deferred revenue on the combined balance sheet. Deferred revenues arise when a potential revenue does not meet the "available" criterion for recognition in the current period. Deferred revenues also arise when resources are received by the State before it has a legal claim to them, as when grant monies are received prior to qualifying expenditures being incurred. In subsequent periods, when the revenue recognition criterion is met, or when the State has a legal claim to the resources, the liability for deferred revenue is removed from the combined balance sheet and revenue is recognized.
0. Mortgage Loans Under Repurchase Agreements
At June 30, 1997, mortgage loans totaling $30,446,467 have been transferred and assigned to lenders under repurchase agreements by the Georgia Development Authority (Discretely Presented Component Units). The agreements give the lenders the option to have the Authority repurchase the mortgage loans for an amount equal to the then outstanding balance of principal and interest due during a specified period of time.
In addition, the Authority guarantees the principal and interest payment by the borrower to the lender within thirty (30) days ofthe due date. Any payment not received within thirty (30) days is considered advanced to the borrower and paid to the lender by the Authority. The Authority then charges the borrower interest on these advances for the period outstanding at a penalty rate agreed upon at the loan origination date. Fund balance in the amount of fifteen percent (15%) of the principal balances outstanding of mortgage loans under repurchase agreements is reserved.
P. Long-Term Obligations
Long-term debt and other long-term obligations are recognized as a liability of a governmental fund when due,

or when resources have been accumulated in the debt service fund for payment early in the subsequent fiscal year. Other long-term obligations, with the exception of the long-term portion of some capital leases, are reported in the generallong~term debt account group.
Long-term debt expected to be fmanced from proprietary fund operations are accounted for in those funds.
Q. Fund Equity
Contributed capital is recorded in proprietary funds that have received capital or contributions from developers, customers or other funds. Reserves represent those portions of fund equity not appropriable for expenditure or legally segregated for a specific future use. Designated fund balances represent tentative plans for future use of fmancial resources.
R. Bond Discounts/Premiums/Issuance Costs
In governmental fund types, bond discounts, premiums and issuance costs are recognized in the current period. Bond discounts, premiums and issuance costs for proprietary fund types are deferred and amortized over the term of the bonds using a method which approximates the effective interest method or the straight-line method. Bond premiums (discounts) are presented as increases (reductions) in the face amount of bonds payable whereas issuance costs are recorded as deferred charges.
S. Interfund Transactions
The State has the following types ofinterfund transactions:
Quasi-external transactions for services rendered by one fund to another are accounted for as revenues by the recipient fund and expenditures or expenses by the disbursing fund.
Reimbursements of expenditures/expenses initially made from a fund that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed.
Residual equity transfers are recorded for nonrecurring or nonroutine permanent transfers of equity.

A-44

--------State of Georgia--------
Notes to the F11andal Statements Jmc 30. 1997

Note 1. Summary of Significant Accounting Policies (continued)
Operating transfers are recorded for all other interfund transactions.
T. Intrafund Transactions
State accounting policies and procedures allow for the recording of revenues, receivables, expenses and liabilities for transactions between State organizations whose fmancial activity is included within a single fund. State accounting systems do not facilitate the identification of all such transactions. Adjustments have been made for material transactions and balances which have been identified during the preparation of the State's general purpose fmancial statements; however, all such intrafund transactions and balances were not identifiable and, accordingly, revenues, receivables, expenses and liabilities are overstated, primarily in the general and college and university funds.
U. Memorandum Only- Total Columns
Total columns on the general purpose fmancial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate fmancial analysis. Data in these columns do not present fmancial position, results of operations or cash flows in conformity with GAAP. Neither are such data comparable to a consolidation. lnterfund eliminations have not been made in the aggregation of this data.
V. Fiscal Reporting Periods
The fmancial statements include fmancial activity for the Stone Mountain Memorial Association whose fiscal reporting period differs from that of the State of Georgia (July 1, 1996 through June 30, 1997). The applicable fiscal reporting period for the Stone Mountain Memorial Association is based on a fifty-two/fifty-three week period ending on the last Sunday of each calendar year. Financial activity is reported for the period January 1, 1995 through December 29, 1996.

Note 2. Other Accounting Disclosures
Change in Accounting Policy and Restatements
The State's Regional Educational Service Agencies and DeKalb Technical Institute have been added to the reporting entity as a part ofthe General Fund for the year ended June 30, 1997. The beginning fund balance for the general fund has been increased by $8,957,903 due to the inclusion of these organizations. These organizations also had beginning fixed assets balances of $4,384,840, and this amount is shown as "Retroactive Restatement of Prior Year Balance" in Note 6.
In fiscal year 1997, certain internal service (risk management) funds adopted the accrual basis of accounting in accordance with GAAP. The beginning fund equity of the internal service funds has been decreased by $239,893,133 for this change in accounting principle.
In fiscal year 1997, the State Employees' Assurance Department early implemented GASB Statement 31, "Accounting and Financial Reporting for Certain Investments and for External Investment Pools." The statement requires investments to be reported at fair value rather than at cost. The beginning fund equity of the internal service funds has been increased by $96,038,000 for this change in accounting principle.
A reconciliation of the EDP equipment inventory records of the Department of Administrative Services revealed an unidentified difference between the computed balance based on current year purchases/deletions and the actual balance on the fmancial statements. The beginning fund equity of the internal service funds has been decreased by $16,544,667 for this correction.
In fiscal year 1997, the State implemented GASB Statement 25, "Financial Reporting for Defmed Benefit Pension Plans and Note Disclosures for Defmed Contribution Plans" for all primary government pension trust funds and for the Public School Employees' Retirement System and the Teachers' Retirement System (discretely presented component units - fiduciary fund types). The statement requires, among other things, that the investments of the pension trust funds be reported at fair value rather than at cost. This change is reflected as an adjustment in the applicable funds.

A-45

--------State of Georgia--------
Notes to the Fnandal Statements Jmc 30. 1997

Note 2. Other Accounting Disclosures
The Foundation for Public Broadcasting in Georgia, Inc., a blended component unit of the Georgia Public Telecommunications Commission has been added to the reporting entity for the year ended June 30, 1997. The beginning fund balance of the discretely presented component units - governmental fund types has been increased by $979,429 due to the inclusion of the Foundation.
Effective May 16, 1996, the Lake Lanier Islands Development Authority entered into a management agreement with KSL Lake Lanier, Incorporated, to manage the properties previously operated by the Authority. Terms of the management agreement called for KSL to utilize certain accounts for maintaining the fmancial records of the project and stated that these accounts were to remain the property of the Authority during the term of the management agreement. As a result of this agreement, certain financial activity maintained by KSL was included in the financial statements of the Authority for the year ended June 30, 1996. The privatization agreement was entered into on August 1, 1997, and was retroactive to May 16, 1996. As a result, the beginning fund equity of the discretely presented component units - proprietary fund types has been decreased by $35,366,099 to reflect the retroactive clause of the privatization agreement.
In prior years, the Student Finance Authority did not record a reserve for the estimated portion of voided serviced loans that the Authority is required to purchase under the terms of the existing servicing agreements. The Authority also had overstated certain amounts due to the U.S. Department of Education. The correction of these errors resulted in a net decrease of $1,731,608 in the beginning fund equity of the discretely presented component units - proprietary fund types.
Fund balances/fund equity at July 1, 1996, have been adjusted as follows:

Primary Government

General Fund

Restatement of Beginning Fund Balance

for the Inclusion ofRESA's and

DeKalb Technical Institute

$

8.957.903

Internal Service Funds Conversion to Accrual Basis Investments Reported at Fair Value Fixed Assets Correction Other (Georgia Building Authority)

$ (239,893,133) 96,038,000 (16,544,667) I 448 621
$ (!58 951.179)

Pension Trust Funds Investments Reported at Fair Value

$1.438.279.000

Discretely Presented Component Units

Governmental Fund Types

Restatement of Beginning Fund Balance

for the Inclusion of Foundation for

Public Broadcasting

$

979.429

Proprietary Fund Types Retroactive Privatization Agreement Correction of Errors Other

$ (35,366,099) (I,731 ,608) 1142199
$ (35 955.508)

Fiduciary Fund Types Investments Reported at Fair Value

$4.688.218.000

A-46

--------State of Georgia--------
Notes to the Fnandal Statements Jmc 30, ICJ7

Note 3. Budgetary Accounting
The Official Code of Georgia Annotated (OCGA), Title 45, Chapter 12, Article 4 sets forth the process for the development and monitoring of an appropriated budget for the State of Georgia. Not later than September I of each year, the head of each executive branch budget unit must submit estimates of the fmancial requirements for the subsequent fiscal year to the Office of Planning and Budget, which operates under the direction ofthe Governor. Budget estimates relative to the legislative and judicial branches of State government are provided to the Office of Planning and Budget for the purpose of estimating the total fmancial needs of the State, but are not subject to revision or review by the Office of Planning and Budget.
The Governor, through the Office of Planning and Budget, examines the estimates and may investigate and revise executive branch submissions as necessary. Upon the completion and revisions of the estimates, the Governor must prepare and submit a budget report to the General Assembly within five days of the date on which the General Assembly convenes. The Governor possesses the responsibility and authority to establish the revenue estimate for the corresponding fiscal year.
The General Assembly, after adopting such modifications to the Governor's budget report as it deems necessary, enacts the General Appropriations Act for the subsequent fiscal year. Each General Appropriations Act enacted, along with amendments as are adopted, continues in force and effect for the next fiscal year after adoption. In accordance with the Constitution of the State of Georgia, Article III, Section IX, Paragraph 4, the General Assembly is prohibited from appropriating funds for any given fiscal year which, in the aggregate, exceeds the amount of unappropriated surplus funds expected to have accrued at the beginning ofthe subsequent fiscal year together with the total estimated amount of receipts from existing revenue sources, less refunds, anticipated to be collected in the subsequent fiscal year. The Constitution further authorizes the passage of additional Supplementary Appropriation Acts for specific purposes, provided sufficient unappropriated funds are available or additional revenue measures have been enacted. Federal funds received by the State are continually appropriated in the exact amounts and for the purposes authorized and directed by the awarding federal

agency. Internal transfers within a budget unit and between objects of functional or activity budget units are subject to the condition that no State funds shall be transferred for the purpose of initiating a, new program area not currently having a State funds appropriation.
The Governor, through the Office of Planning and Budget, requires each budget un1t; other than those ofthe legis1ative and judicial branches, to submit an annual operating budget based on the activities and functions set forth in the Appropriations Act. Budget units submit quarterly allotment requests which must be approved in conjunction with quarterly work programs prior to release of appropriated funds. Further monitoring of budget unit activities is accomplished by review of expenditure reports which are submitted quarterly to the Office of Planning and Budget.
Budget units (i.e., agencies, commissions) of the State are responsible for budgetary control oftheir respective portion of the total State appropriated budget. The legal level of budgetary control is at the departmental level. Due to the complex nature of the State appropriated budget, a separate budgetary report entitled, "Report of the State Auditor of Georgia," is published each year. This report includes a listing of State organizations (appropriation units) which incurred expenditures in excess of amounts budgeted by object class.
The appropriated budget covers the maJonty of the governmental funds included within the State of Georgia reporting entity, but excludes the special revenue fund, debt service fund and capital projects funds, which are not subject to appropriation. The budget does include certain proprietary funds, the college and university funds, and the administrative costs of operating various public employee retirement systems. The accompanying Statement of Funds Available and Expenditures Compared to Budget - Budget Fund presents comparisons of the legally adopted budget with actual data prepared on the budgetary basis of accounting utilized by the State. Because the budgetary and GAAP presentations for actual data differ, a reconciliation of "Excess of Funds Available Over Expenditures - Budget Fund (Budgetary Method)" and "Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/Net Increase in Plan Net Assets/Net Increase (Decrease) in Fund Balances -Current Funds- GAAP Fund Types" appears below.

A-47

State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997
Note 3. Budgetary Accounting (continued)

Excess of Funds Available Over Expenditures ~Budget Fund Budgetary Method
Entity and Perspective Differences:
Reclassification of Budgetary Funds to GAAP Financial Statement Fund Types
Non-Budgeted Funds
Budgeted Non-Current Funds
Basis Differences:
Net Accrued Revenues, Related Receivables and Deferred Revenues
Net Accrued Expenditures/Expenses and Related Liabilities
Timing Differences:
Revenues
Expenditures/Expenses
Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/Net Increase in Plan Net A.ssets/Net Increase (Decrease) in Fund Balances - Current Funds GAAP Fund Types

Budgetary Fund

Bude;et 1,473,357,658

General

Special Revenue

Financial Statement Fund Tyoes

Primary Government

Debt Service

Capital frgiects

EnterJ!rise

Internal Service

(1,473,357,658)

1,345,015,054 801,706,680

1,048,065

74,381,014

(134,042,005)

93,640,275

1,584,537 I 32,858,553

(1,990,948,465) (53,679, 194) 13,006,694

(125,899,773) 10,582,227

(4,827,664) I 1,888,193

(5 041 292)

115100769

I 048 065

74 381 014 m34042005J

$(21 677 271)

136 462 327

A-48

State of G e o r g i a - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

Excess of Funds Available Over Expenditures - Budget Fund Budgetary Method
Entity and Perspective Differences:
Reclassification of Budgetary Funds to GAAP Financial Statement Fund Types
Non-Budgeted Funds
Budgeted Non-Current Funds
Basis Differences:
Net Accrued Revenues, Related Receivables and Deferred Revenues
Net Accrued Expenditures/Expenses and Related Liabilities
Timing Differences:
Revenues
Expenditures/Expenses
Excess of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses/Net Income (Loss)/Net Increase in Plan Net Assets/Net Increase (Decrease) in Fund Balances ~Current Funds GAAP Fund Types

Expendable Trust

Financial Statement Fund Tynes

Primary Government

Nonexpendable Trust

Pension Trust

College and Univenitt

Discretely Presented Component Units

Governmental

Prol!rietao:

Fiducia!J:

164,540,915

5,629

200 1,794,259,301

33,318,450 8,119,586
(27,965,023)

(1,454,524) 367,631

710,075 31,691,316

543,591 5,582,022,246

(200)

5,374,894

(5,675,850)

(15,114) !4 541 519l

(137,244) 27,648

(766,748) 67,227

(2,000) 6,569
!541 591l

164 540 915

5 629 $ I 794 259301

a6J5424

!I 196 489l

31701 870 $ 5 582 028 815

A-49

--------State of GeorfJia - - - - - - - -
Notes to the Frmndal Statements June 30, 1997

Note 4. Deposits and Investments
Deposits - Funds belonging to the State of Georgia cannot. be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as collateral any one or more of the following securities as enumerated in OCGA 50-17-59:
1) Bonds, bills, notes, certificates of indebtedness or other direct obligations of the United States or ofthe State of Georgia.
2) Bonds, bills, notes, certificates of indebtedness or other obligations ofthe counties or municipalities ofthe State of Georgia.
3) Bonds of any public authority created by the laws of the State of Georgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
4) Industrial revenue bonds and bonds of development authorities created by the laws of the State of Georgia.
5) Bonds, bills, certificates of indebtedness, notes or other obligations of a subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest and debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association and the Federal National Mortgage Association.

6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.
As authorized in OCGA 50-17-53, -the State .Depository Board has adopted policies which allow agencies of the State of Georgia the option of exempting demand deposits from the collateral requirements.
Primary Government
At year end, the carrying amounts of the State's deposits were $479,403,589, and the bank balances were $960,522,782. The amounts of these bank balances are classified into three categories of credit risk: (1) cash that is insured (e.g., Federal depository insurance) or collateralized with securities held by the State or by its agent in the State's name, (2) cash collateralized with securities held by the pledging fmancial institution's trust department or agent in the State's name and (3) uncollateralized bank accounts. The State's deposits were classified as follows at June 30, 1997:

Risk Category
2 3

Bank Balance

$

297,399,206

231,690,300

431 433 276

$ 960,522,782

A-50

State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jme30, 1997
Note 4. Deposits and Investments (continued)
Significant Discretely Presented Component Units
At year end, the significant discretely presented component units' deposits were classified as follows:

Governmental Fund Types Georgia Education Authority (Schools)
Georgia Public Telecommunications Commission
Proprietary Fund Types Environmental Facilities Authority
Georgia Housing and Financing Authority
Geo. L. Smith II Georgia World Congress Center Authority
All Other Component Units Fiduciary Fund Types Peace Officers' Annuity and Benefit Fund
Teachers Retirement System of Georgia
All Other Component Units

Risk Categories 3

Bank Balance

Funds Held by (for) Primao: Government

Carn::ina:; Amount

61 101,136

569,250

61 670,386

568,781 76,055

61 1,783,633

3,548,503 29,824,958
186,623 9,131,365

1,767,952 14,287,208

I 00,336,593 42,327,100

3,548,503 130,161,551
1,954,575 65,745,673

193,819,476 475,164 15,951
55,240,778

10,107,645 131,919,709
1,292,642 19,718,403

100,000 2,198,134 1,577,886

225,856

2,010,325

2,110,325

12,376,101

2,198,134 $ 1,803,743

(541,591) 589,031,179

1,771,547 552,176 468,113

Investments - Investments are stated at cost or amortized cost, with the exception of deferred compensation plan assets which are stated at market value, and are summarized and classified as to risk in the following three categories: (1) insured or registered, or securities held by the State or

its agent in the State's name, (2) uninsured or unregistered, with securities held by the counterparty's trust department or agent in the State's name or (3) uninsured or unregistered, with securities held by the counterparty, or by its trust department or agent but not in the State's name.

A-51

State of Georgia-------
Notes to the Fnandal Statements Jmc 30. 1997
Note 4. Deposits and Investments (continued)
Primary Government
The carrying amounts, risk categories and market value applicable to the State's investments are listed below:

Tl:!!!: of Investment Commercial Paper Corporate Bonds Municipal Bonds Repurchase Agreements Stocks U.S. Government
Securities and Corporate Obligations
Unclassified Loans (Interfund) Mortgages Mutual Funds Unemployment
Compensation Funds Pooled with the U.S. Treasury Other Total Investments

Risk Categories

1,998,769 2,853,379 10,180,605 1,933,951,491 6,445,350,914
9 368 051408 17 762 386 566

10,253,898
357,689,837 23,955,291
121 501 751 513 400 777

3

Ca!:!Jjn& Amount

Market Value

1,998,769

1,967,740

13,107,277

12,987,348

10,180,605

10,180,169

2,291,641,328

2,291,641,329

6,469,306,205

6,512,705,875

227 029 227 029

9 489 780 188 18,276,014,372

9 516 214 222 18,345,696,683

41,128 3,486,343 8,565,971

41,128 3,564,645 9,029,402

1,745,915,543 6297
20 034 029 654

1,745,915,543 6 297
20 I 04 253 698

A-52

State of G e o r g i a - - - - - - -
Notes to the F11andal Statements Jmc 30. 1997
Note 4. Deposits and Investments (continued)
Significant Discretely Presented Component Units
The carrying amounts, risk categories and market value of the investments of the State's significant discretely presented component units are listed below: Proprietary Fund Types
A-53

State of GeorfJia - - - - - - -
Notes to the Fnandal Statements Jmc30. 1997
Note 4. Deposits and Investments (continued)
Fiduciary Fund Types

Risk Categories

Tl:J!!:: of Investment

3

Fidllciary Fund Types

Teachers Retirement System of Georgia

Repurchase Agreements

16,850,878,000

Stocks

363,342,000

U.S. Government Securities and Corporate Obligations

I0 504 465 000

27 718 685 000

Unclassifred

Real Estate

All Other Component Units

Corporate Bonds
Investment Accounts
Notes Repurchase Agreements
Stocks
U.S. Government Securities and Corporate Obligations

Unclassified Mutual Funds Real Estate

16,620,590 197,696
48,319,810 250,000
201,660,760
243 375 936 510 424 792

Ca!::!Jjn& Amount

Market Value

16,850,878,000 363,342,000
10 504 465 000 27,718,685,000
2 581 000 27 721 266 000
16,620,590 197,696
48,319,810 250,000
201,660,760
243 375 936 510,424,792
36,406,804 I 600 542
548 432 138

16,850,878,000 363,342,000
10 504 465 000 27,718,685,000
2581000 27 721 266 000
16,447,298 197,696
48,291,398 250,000
326,087,472
246 903 758 638,177,622
I 057 559 639 235 181

Investments Lending Program - The State is presently involved in a securities lending program with major brokerage firms. The State lends equity and fixed income securities for varying terms and receives a fee based on the loaned securities' value. During a loan, the State continues to receive dividends and interest as the owner of the loaned securities. The brokerage firms pledge collateral securities consisting of U. S. Government and agency securities, mortgage-backed securities issued by aU. S. Government agency, and U. S. Corporate bonds. The collateral value must be equal to at least 102% to 110% of the loaned securities value, depending on the type of collateral security.

Securities loaned totaled $11,407,654,000 at June 30, 1997, and the collateral value was equal to 102.8%. The loaned securities are classified as category 1 investments in the component units - fiduciary fund types based on the custodial arrangements for the collateral securities. Loaned securities are included in the accompanying Combined Balance Sheet since the State maintains ownership. The related collateral securities are not recorded as assets on the Combined Balance Sheet, and a corresponding liability is not recorded, since the State does not pledge or trade the collateral securities.

A-54

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc30. 1997
Note 5. Receivables
Primary Government
Receivables by fund type as of June 30, 1997, consist of the following:

Governmental Fund Types General Special Revenue Capital Projects
Proprietary Fund Types Enterprise Internal Service
Fiduciary Fund Types Expendable Trust Pension Trust Agency
College and University Funds

Gross Receivables

Allowance For
Uncollectibles

Net Total Receivables

$2,574,431,832

$

1,865,404

12,446,440

$ 2,574,431,832 1,865,404 12,446,440

18,294,998 10,892,781

(1,969,493)

16,325,505 10,892,781

111,999,766 115,752,000 27,865,023 304.423.817

(15,825,923) (61 543. 170)

96,173,843 115,752,000 27,865,023 242.880.647

$3.177.972 061

$ (79,338,586)

~ 3,098,633,47~

A-55

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jme 30. 1997
Note 5. Receivables (continued)
Significant Discretely Presented Component Units
Receivables of the significant discretely presented component units as of June 30, 1997, consist of the following:

Governmental Fund Types
Georgia Public Telecommunications Commission
Proprietary Fund Types
Georgia Environmental Facilities Authority
Georgia Housing and Finance Authority
Georgia Student Finance Authority
All Other Component Units
Fiduciary Fund Types
Teachers Retirement System Of Georgia
All Other Component Units

Gross Receivables

Allowance For
Uncollectibles

Allowance For Service Rel!a:rments

Deferred Loan Fees

Net Total Receivables

$ 3,033,920 $

(72,275) $

$

$ 2,961,645

511,964,667
638,361,366 365,606,219 170,499,851

(265,063) (1,492,748) (3,665,616)

(25,520,877)

(I 72,685)

511,964,667
638,096,303 338,592,594 166,661,550

400,589,155 5.272.590

400,589,155 5 272 590

$ 2,095,327,768 $ (5,495 702} $ (25,520,877} $ (172,685} $2,064,138,504

A-56

--------State of GeorfJia - - - - - - - -
Notes to the F11andal Statements Jmc30. 1997
Note 6. Fixed Assets
Primary Government
The following is a summary of changes in the general fixed assets account group during the fiscal year:

Land and Buildings Improvements Other Than Buildings Machinery and Equipment

Balance Jul~ 1,1996
$ 1,770,738,936

Retroactive Restatement
of Prior Year Balance

$

18,758

779 778 914

4.366.082

Additions $ 142,166,150
389,573 131.022.789

R~:lirements
$ (56,820,232)
(64.420.523)

Balance June 30, 1997 $ 1,856,103,612
389,573 850.747.262

Total General Fixed Assets

~ 2 550,517,850 $ 4,384,840 ~ 273,578,512 ~ (121,240,755) ~ 2,707,240 447

The following is a summary ofthe proprietary fund types and college and university funds fixed assets at June 30, 1997.

Land and Buildings Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation Construction in Progress Net Fixed Assets

Proprietary Fund T~pes

Enterprise Funds

Internal Service Funds

$

$ 239,585,046

230,662

174,048,563 (11,045,355)

$

230 662

$ 402,588,254

College and Universi!l: Funds $ 2,481,623,048
160,263,555 1,445,741,492
146 943 998 $ 4,234,572,093

A-57

--------State of GeorfJ1a--------
Notes to the Fnandal Statements
Jli\C 30, 1997
Note 6. Fixed Assets (continued)
Significant Discretely Presented Component Units
The following is a summary of the significant discretely presented component units' fixed assets at June 30, 1997:

Land and Buildings Improvements Other Than Buildings Machinery and Equipment Less: Accumulated Depreciation Construction in Progress Net Fixed Assets

Governmental Fund TyDH
Georgia Public Telecommunications
Commission 26,924,094
46,982,503
73 906 597

Georgia Ports
Authority
171,257,987 194,224,835 114,599,140 (177,964,489) 41 573 848 343 691 321

Proorietarv Fund Types

Stone Mountain Memorial Association

Geo. L. Smith n
Georgia World Congress Center
Authority

87,045,525 22,020,461 25,481,377 (34,996,035)
425 286 99 976 614

209,402,736
11,194,149 (36,138,594)
61 098 965 245 557 256

All Other CompOnent
Units
85,074,906 2,710,490
27,584,741 (17,194,897)
23 715 325 121890565

Land and Buildings Machinery and Equipment
Net Fixed Assets

Fiduciary Fund Types

Firemen's Pension Fund

$

132,909

116 344

Peace Officers' Annuity and Benefit Fund

$

310,296

92 866

All Other Component
Units
$
41 310

$

249,253 $

403,162 $ 41,310

As noted in the Summary of Significant Accounting Policies (Note 1), the State does not maintain complete and accurate inventory records applicable to State-owned land and buildings, nor are there historical cost values for certain

parcels ofland and buildings; therefore, the tables above do not represent a comprehensive valuation ofthe assets owned by the State of Georgia.

A-58

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

Note 7. Risk Management
A. Public Entity Risk Pool
The State Personnel Board, Merit System of Personnel Administration internally administers for the State of Georgia a program of health benefits for the employees of units of government of the State of Georgia, units of county government and local education agencies located within the State of Georgia. This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations by the General Assembly of Georgia. The State Personnel Board, Merit System of Personnel Administration has contracted with Blue Cross Blue Shield of Georgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board.
A reconciliation of total claims liabilities for fiscal years ended June 30, 1997, and 1996, is shown below:

Unpaid Claims and Claim Adjustments July I

Fiscal Year Ended June 30. 1997

Fiscal Year Ended June 30. 1996

$159,373,817 $157,898,978

Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year

820,4 71,532

784,718,552

Payments -Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years

(831 ,648,570}

(783,243, 713}

Unpaid Claims and Claim Adjustments June 30

$148 196 779 $I 59 373,8I7

B. Board of Regents Employee Health Benefits Plan
The Board ofRegents ofthe University System of Georgia maintains a program ofhealth and dental benefits for its employees and retirees. This plan is funded jointly through premiums paid by participants covered under the plan and employer contributions -paid by the Board ef Regents and its organizational units. All units of the University System of Georgia share the risk of loss for claims ofthe plan.
The Board of Regents has contracted with Blue Cross Blue Shield to process all claims in accordance with medical coverage guidelines as established by the Board of Regents.
A reconciliation of total claims liabilities for fiscal years ended June 30, 1997, and 1996, is shown below:

Fiscal Year Ended June 30 1997

Fiscal Year Ended June 30, 1996

Unpaid Claims and Claim Adjustments July I

$ 19,600,000 $ 25,480,000

Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year

138,407,492

115,501,490

Payments - Claims and Claim

Adjustment Expenses

Attributable to Insured Events of

the Current Year and of Prior

Years

037,107,492}

(121,381,490}

Unpaid Claims and Claim Adjustments June 30

~ 20,900,000 ~ 19,600,000

C. Other Risk Management
The Department ofAdministrative Services (DOAS) has the responsibility for the State of Georgia of making and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets.

A-59

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

Note 7. Risk Management (continued)
The State believes it is more economical to manage its risks internally and set aside assets for claim settlement.Accordingly, DOAS services claims for risk of loss to which the State is exposed, including general liability, property and casualty, workers' compensation; unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. Premiums for the risk management program are charged to the State agencies by DOAS to provide claims servicing and claims payment.
A reconciliation of total claims liabilities for fiscal year ended June 30, 1997, is shown below:

Unpaid Claims and Claim Adjustments July I
Incurred Claims and Claims Adjustment Expenses - Provisions for Insured Events of the Current Year
Payments - Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years
Unpaid Claims and Claim Adjustments June 30

Fiscal Year Ended June 30. 1997 $ 239,893,133
123,841,662
(105.237.748)
$ 258 497.047

Significant Discretely Presented Component Units
Proprietary Fund Types
At June 30, 1997, the Georgia Ports Authority had commitments for construction projects of approximately $26,000,000.
Note 9. Operating Leases
A. Lessee
The State leases land, office facilities, office and computer equipment, and other assets. These leases are considered for accounting purposes to be operating leases. Although lease terms vary, many leases are subject to appropriation from the General Assembly to continue the obligation. Other leases generally contain provisions that, at the expiration date of the original term of the lease, the State has the option of renewing the lease on a year-to-year basis. Certain organizations within the State's reporting entity do not maintain adequate systems for recording lease commitments in accordance with GAAP.
Future minimum commitments for operating leases as of June 30, 1997, are listed below. Amounts are included for renewable leases for which the option to renew for the subsequent fiscal year has been exercised.
Primary Government

Note 8. Construction and Other Significant Commitments
Primary Government
The Georgia State Financing and Investment Commission has entered into agreements with various State departments and agencies for the expenditure of bond sale proceeds and cash supplements (provided by the department or agency involved) to acquire and construct capital projects. At June 30, 1997, the undisbursed balance remaining on these agreements approximates $918,000,000.

Fiscal Year Ended June 30, 1998 1999 2000 2001 2002 2003 and Subsequent
Total Minimum Commitments

$ 53,084,121 12,446,601 12,797,557 10,889,087 10,642,189 87.383 225
$187.242 780

Expenditures for rental of real property and equipment for the year ended June 30, 1997, totaled $50,765,099.

A-60

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. IW7

Note 9. Operating Leases (continued)
Significant Discretely Presented Component Units
Proprietary Fund Types

Georgia Lottery Corporation

Fiscal Year Ended June 30.

1998

$ 1,989,000

1999

1,656,000

2000

1,656,000

2001

1,656,000

2002

1,656,000

2003 and Subsequent

1,656,000

$ 10,269,000

Less: Sublease Revenues

(2, J31,000)

Total

$ 8,138,000

B. Lessor
The State leases certain of its facilities for use by others for terms varying from I to 65 years, with the majority of leases controlled by the State Properties Commission. These leases are accounted for as operating leases; revenues for services provided and foruse of facilities are recorded when earned. Minimum future revenues and rentals to be received under operating leases as ofJune 30, 1997, are as follows:
Primary Government

Fiscal Year Ended June 30. 1998 1999 2000 2001 2002 2003 and Subsequent
Total

$ 7,052,905 6,969,364 7,085,285 7,198,118 7,322,064
159,809,440 $ 195,437,176

Expenditures for rental of real property and equipment for the year ended June 30, 1997, totaled $1,640,000.

Jekyll Island State Park Authori!Y

Fiscal Year Ended June 30,

1998

$ 237,683

1999

237,683

2000

237,683

2001

237,683

2002

235,842

2003 and Subsequent

Total Minimum Commitments

$ 1,186,574

Expenditures for rental of real property and equipment for the year ended June 30, 1997, totaled $194,072.

Revenues from rental of facilities for the year ended June 30, 1997, totaled $17,620,959.
Significant Discretely Presented Component Units
Proprietary Fund Types

Lake Lanier Islands Development Authori!Y

Fiscal Year Ended June 30,

1998

$ 3,100,000

1999

3,100,000

2000

3,100,000

2001

3,100,000

2002

3,200,000

2003 and Subsequent

144,266,667

Total

$ !59 866,667

A-61

- - - - - - - - Stak of Georfjia - - - - - - - -
Notes to the Fnandal Statements Jmc30. 1997

Note 9. Operating Leases (continued)
Revenues from rental of facilities for the year ended June 30, 1997, totaled $3,046,300.
Note 10. Capital Leases and Installment Purchases
The State acquires certain property and equipment through multi-year installment purchases or capital leases with varying terms and options. The majority of these agreements contain fiscal funding clauses in accordance with OCGA 50-5-64 which prohibits the creation of a debt to the State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, capital leases requiring appropriation by the General Assembly are considered noncancellable for fmancial reporting purposes.
Capital leases for the proprietary funds and the college and university funds are reported as a long-term obligation in those funds along with the related assets. Capital leases for the governmental funds are reported in the general long-term debt account group and the related assets are reported in the general fixed assets account group.
As noted in the Summary of Significant Accounting Policies (Note 1), capital lease transactions have not been consistently recorded in conformity with GAAP. Fixed assets in prior years have not been recorded in the general fixed assets account group at the net present value of the minimum payments nor has the long-term liability applicable to capital leases been consistently recorded in the general long-term debt account group. Also, the State does not record expenditures and other fmancing sources in the governmental fund types when capitalized leases are entered into as required by GAAP. At June 30, 1997, future commitments under installment purchases and capital leases were as follows:

Primary Government

Fiscal Year Ended June 30. 1998 1999 2000 2001 2002 2003 and Subsequent
Total Capital Lease and Installment Purchase Payments Less: Interest Present Value of Capital Lease and Installment Purchase
Payments

$ 7,203,585 6,285,346 4,695,235 - 1,516,551 278,031
s 19,978,748
(1 655 891)
$ 18 322 857

Installment Purchases Capital Leases

$ 4,935,637 13 387 220
$ 18 322 857

Significant Discretely Presented Component Units
Governmental Fund Types

Georgia Public Telecommunications Commission

Fiscal Year Ended June 30.

1998

$ 1,254,751

1999

1,243,931

2000

799,897

2001

799,897

2002

799,897

2003 and Subsequent

799 898

Total Installment Purchase Payments

5,698,271

Less: Interest

{597 959)

Present Value of Installment Purchase Payments

5100312

A-62

Otate oJ \j"eorf}ia
Notes to the Fnandal Statements
Jli1C 30, 1997

Note 10. Capital Leases and Installment Purchases (continued)
Proprietary Fund Types

Amrama Develooment Authority Fiscal Year Ended June 30.
1998 1999 2000 2001 2002 2003 and Subsequent Total Capital Leases Less: Interest Present Value of Capital Leases

$ 35,000 $ 35,000

Geo. L. Smitb II Georgia World Congress Center Authority Fiscal Year Ended June 30. 1998 1999 2000 2001 2002
2003 and Subsequent Total Capital Lease and Installment
Purchase Payments Less: Interest Present Value of Capital Leases and
Installment Purchases

$ 60,542 5,339
$ 65,881

Installment Purchases Capital Leases

$ 35,570

Note 11. Long-Term Debt
Primary Government
General Obligation Bonds. The State issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both general State and proprietary activities, to provide loans to local governments for water and sewer systems, to construct educational facilities for local school systems, and to refund general obligation bonds.
General obligation bonds are direct obligations and pledge the full faith and credit of the State. General obligation bonds currently outstanding are as follows:

General Government
General Government Refunding

2.00%10.25%
2.40%6.75%

$ 3,876,780,000 759.150.000
$ 4.635.930.000

A-63

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc: 30. 1997
Note 11. Long-Term Debt (continued)
Annual debt service requirements to maturity for general obligation bonds are as follows:

Fiscal Year Ended June 30 1998 1999 2000 2001 2002
Thereafter

PrinciJ2al $ 294,445,000
296,935,000 296, II 0,000 238,140,000 246,560,000 3,263, 740,000 $ 4,635,930,000

Interest $ 271,838,752
253,540,624 235,256,159 218,606,699 203,616,344 1,131,256,879 $ 2,314,115,457

Total $ 566,283,752
550,475,624 531,366,159 456,746,699 450,176,344 4,394,996 879 $ 6,950,045,457

General State Bonds. All General State Bonds of the State of Georgia are past due, but have not been presented for redemption. This obligation will be liquidated if and when the past due outstanding bonds and coupons are presented. Unredeemed General State Bonds at June 30, 1997, were $15,505 with accumulated interest of$11,475.

Revenue Bonds. Revenue bonds have been issued by the organizational units listed below. Income derived from acquired or constructed assets is pledged to fund the debt service requirements of these issues. The College and University fund is responsible for repayment of Georgia Military College bonds. Revenue bonds outstanding at June 30, 1997, are as follows:

Pumose
Georgia Military College - Library Building

Interest Rates 3.00%

Amount

$

14,000

A-64

State of Georffia - - - - - - - -
Notes to the F11andal Statements Jme 30. 1997
Note 11. Long-Term Debt (continued)
Revenue bond debt service requirements to maturity are as follows:

Fiscal Year Ended June 30 1998 1999 2000 2001 2002 Thereafter

Georgia Military College

Princil!al

Interest

$

7,000

$

420

7,000

210

$ 14,000

~

630

Total

$

7,420

7,210

0

0

0

0

~

14,630

At June 30, 1997, $399,575,000 of outstanding general obligation bonds (including prior years' refundings), $120,000 of outstanding Georgia Building Authority (Markets) revenue bonds and $3,688,000 of outstanding Georgia Education Authority (University) revenue bonds (including prior years' defeasances) are considered defeased.

Changes in Long-Term Liabilities. During the year ended June 30, 1997, the following changes occurred in liabilities reported in the general long-term debt account group:

Compensated Absences Claims and Judgements Capital Leases and Installment Purchases General Obligation Debt General State Bond Debt Long-Tenn Notes

Balance Jull: 1 198,202,493 86,572,979 2,649,492
4,655,560,000 15,505
2937841 4 945 938 310

Additions
4,483,256 372,535,000
377 018 256

Reductions
(85,875,000) (1,813,416)
(392,165,000)
(44 340} (479 897 756}

Earned and Utilized U!:et}
5,514,870
5 514 870

Balance June 30 203,717,363 697,979 5,319,332
4,635,930,000 15,505
2 893 501 4 848 573 680

A-65

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc30.1997

Note 11. Long-Term Debt (continued)
Significant Discretely Presented Component Units
Governmental Fund Types
Defeased Debt. At June 30, 1997, $2,520,000 of outstanding Georgia Education Authority (Schools) revenue bonds (including prior year's defeasances) are considered defeased.
Proprietary Fund Types
Long-term Operating Debt. Long-term operating debt has been issued by the Georgia Student Finance Authority. This debt consists of fmancing agreements with the Student Loan Marketing Association and a multiple disbursement revolving note with Trust Company Bank with outstanding balances at June 30, 1997, of$16,980,423 and $18,594,839, respectively.

Puruose
Georgia Student Finance Authority

Interest Rates
Varies Based on
U.S. Treasury Bill Rates

Amount ~ 35,575,262

Long-term operating debt requirements to maturity are as follows:

Georgia Student Finance Authority

Fiscal Year Ended June30

Princiual

Interest

Total

1998

$ 35 575.262 $ -

$ 35.575,262

Interest varies based on U.S. Treasury Bill rates and therefore is not available for this schedule.

Revenue Bonds. Revenue bonds have been issued by the significant discretely presented component units listed below. Income derived from acquired or constructed assets is pledged to fund the debt service requirements of these issues. Significant discretely presented component unit revenue bonds outstanding, net ofunamortized discounts, of $760,359,542 and $197,257,940 at the Georgia Housing and Finance Authority and the Geo. L. Smith II Georgia World Congress Center Authority, respectively, at June 30, 1997, are as follows:

A-66

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997
Note 11. Long-Term Debt (continued)

Pur ose Georgia Housing and Finance Authority
-Financing the Purchase of Single Family Mortgage Loans for Eligible Persons and Families of Low and Moderate Income within the State of Georgia -Financing the Purchase of Hospital Equipment and Facilities by Eligible Hospitals
Geo. L. Smith II Georgia World Congress Center Authority -Construction of the Georgia Dome Stadium
Revenue bond debt service requirements to maturity are as follows:

Interest Rates 2.95%- 9.50% 6.750%- 7.875%

Amount

$ 754,801,542

$

5,558,000

$ 197,257,940

Georgia Housing and Finance Authority

Fiscal Year Ended June 30

Princil!al

Interest

Total

1998

$

23,883,000

$ 46,438,000

$

70,321,000

1999

10,345,000

45,314,000

55,659,000

2000

11,055,000

44,650,000

55,705,000

2001

14,020,000

43,977,000

57,997,000

2002

17,015,000

43,123,000

60,138,000

Thereafter

766,416,000

565,547,000

1,331,963,000

Unamortized Discount

(1,063,443)

1,063,443

Future Accretion of Capital Appreciation Bonds

(86,869,0 15}

86,869,015

$ 754,801,542

$ 876,981,458

$ 1,631,783,000

Various series of bonds issued under Resolution I and 3 include capital appreciation bonds which require no payments of principal or interest until maturity. Capital appreciation bonds accrete to their maturity values at effective yields ranging from 7.I 0% to 11.25%.

A-67

--------State of Georgia--------
Notes to the Fnandal Statements Jmc 30. 1997

Note 11. Long-Term Debt (continued)
In addition to the above listed revenue bonds, the Georgia Housing and Finance Authority maintains revenue bonds originally issued by the Hospital Financing Authority. The balance at June 30, 1997, was $5,558,000. The bonds bear interest at an adjustable daily rate with interest payable on

a monthly basis. The interest rate basis is subject to change, at the election of the Authority, to a weekly, monthly, semiannual, or fixed rate. The bond indenture limits the interest rate on the bonds to 20% per annum. The bonds are limited obligations of the Authority, repayable solely from revenues provided from loans and other specific property pledged under the bond debenture, and are notan obligation - ofthe State ofGeorgia or any political subdivision thereof.

Geo. L. Smith II Georgia World Congress Center Authority

Fiscal Year Ended June 30 1998 1999 2000 2001 2002 Thereafter Unamortized Discount

Princil!al

Interest

Total

$

2,500,000

$

15,234,702

$

17,734,702

3,150,000

15,042,440

18,192,440

3,485,000

14,813,449

18,298,449

3,745,000

14,559,398

18,304,398

4,025,000

14,281,550

18,306,550

180,845,000

167,365,326

348,2 I0,326

(492,060}

492 060

$

197,257,940

~

241,788,925

$ 439 046,865

Defeased Debt. At June 30, 1997, $6,515,000 of outstanding Georgia Highway Authority revenue bonds (including prior years' defeasances) are considered defeased.

A-68

State of Georf}ia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997
Note 12. Interfund Balances
Interfund assets and liabilities at June 30, 1997, consist of the following:
Due Fromffo Other Funds:

Receivable Fund General Fund
Internal Service Funds Internal Service Funds Internal Service Funds Internal Service Funds
Internal Service Funds
Internal Service Funds
Proprietary Fund Types -Discretely Presented Component Units
Total

Pa1:able Fund Proprietary Fund Types - Discretely
Presented Component Units General Fund College and University Funds Pension Trust Funds Governmental Fund Types - Discretely
Presented Component Units Proprietary Fund Types - Discretely
Presented Component Units Fiduciary Fund Types -Discretely
Presented Component Units
General Fund

Due From
$ 67,540 28,020,157 3,615,897 707,670
328,877
115,484
26,058
1,393,024 ~ 34,274,707

Due To
$ 67,540 28,020,157 3,615,897 707,670
328,877
115,484
26,058
1,393,024 ~ 34,274,707

Advances Fromffo Other Funds:

Receivable Fund General Fund General Fund
Total

Pa1:able Fund
Agency Funds
Proprietary Fund Types - Discretely Presented Component Units

Advance To

$

6,925

Advance From

$

6,925

161,250 $ 168,175

161,250 $ 168,175

A-69

State of Georgia-------
Notes to the Fnandal Statements Jme 30. 1997
Note 13. Contributed Capital
During the year, contributed capital increased by the following amounts:
Primary Government

Source
General Obligation Bond Proceeds/ Fixed Assets Contributed by Primary Government
General Obligation Bond Proceeds/ Capital Outlay Returned to
Primary Government
Net Additions
Contributed Capital July I, 1996
Contributed Capital June 30, 1997

Internal Service Funds

Department of Administrative
Services

Georgia Building Authority
(Re~ular}

Georgia Correctional Industries Administration

Total

$

$ 2,885,570 $

$ 2,885,570

$

$ 2,885,570 $

53 384,666

217,008 118

$ 53 384 666 $ 219,893,688 $

(82.000)

(82.000)

(82,000) I 309 948 1,227,948

$ 2,803,570 271,702,732
$ 274,506,302

Significant Discretely Presented Component Units
Proprietary Fund Types

Source
General Obligation Bond Proceeds/Capital Outlay Contributed by Primary Government Contributions from Federal Government Contributions from Other Sources General Obligation Bond Proceeds/Capital Outlay Returned to Primary Government Net Additions Contributed Capital July 1, 1996 Contributed Capital June 30, 1997

Georgia Environmental
Facilities Authority
24,808,057 28,615,928
53,423,985 437 055 623 490 479 608

Georgia Ports
Authority
15,926,446

Stone Mountain Memorial Association
2,225,401

All Other Component
Units
13,832,331

(10 527 059l 5,399,387
227 717 407 233 116 794

15,!26,652 (! 539 057l 15,812,996 44 485 091 60 298 087

6,000,000 (2 056 999l 17,775,332 143 258 973 161034305

A-70

--------State of Georgia--------
Notes to the Fnandal Statements Jmc30. 1997
Note 13. Contributed Capital (continued)
Contributed Capital I Residual Equity Transfers for the fiscal year ended June 30, 1997, are as follows:

General Fund General Fund

Receiving Fund

Internal Service Funds
Proprietary Fund Types - Discretely Presented Component Units
Proprietary Fund Types - Discretely Presented Component Units

Proprietary Fund Types - Discretely Presented Component Units

Contributing Fund Internal Service Fund Proprietary Fund Types - Discretely
Presented Component Units Capital Projects Funds
General Fund Capital Projects Funds
Other Sources

Received

$

82,000

Contributed

$

82,000

14,123,115 2,885,570

14,123,115 2,885,570

7,514,977

7,514,977

49,277,258 $ 73,882,920 $

49 277 258 73,882,920

49 742 580 $ 123 625,500 $

73,882,920

Note 14. Contingencies
Amounts received or receivable from grantor agencies are subject to audit and review by grantor agencies, principally the Federal government. This could result in a request for reimbursement by the grantor agency for any expenditures which are disallowed under grant terms. The State believes that such disallowances, if any, will be immaterial to its overall financial position.
The State is a defendant in various legal proceedings pertaining to matters incidental to the performance of routine governmental operations. The ultimate disposition of these proceedings is not presently determinable. However, the ultimate disposition of these proceedings would not have a material adverse effect on the fmancial condition of the State, with the following exceptions:
Primary Government
Two suits for refund have been filed against the State of Georgia by out-of-state producers of alcoholic beverages. The first suit seeks $96,000,000 in refunds of alcohol import taxes, plus interest, imposed under OCGA Section 34-60. These claims constitute 99% of all such taxes paid during the three years preceding these claims. In addition,

the claimants have filed a second suit for refund of an additional $23,000,000, plus interest. The trial court has granted both State motions for summary judgment, but the time for appeal remains open.
A case arises in the context of a declaratory judgment action brought by the State and counterclaims filed by the defendants. A young professional woman was killed in an automobile accident when her car collided with a Stateowned vehicle driven by an employee of a for-profit corporation which had contracted with Fulton County to provide a transportation service. Fulton County had a contract with the Atlanta Regional Commission concerning the transportation service program, and the Atlanta Regional Commission, in tum, had a contract with the Georgia Department of Human Resources (DHR). In June, 1996, DHR and the Georgia Department of Administrative Services brought declaratory judgment actions against the decedent's estate and others to assert the absence of any duty to insure the second driver. In August, 1996, the estate and other parties filed counter-claims for wrongful death. The State's self-insurance program and the State's vehicle insurer have settled with the decedent's estate in a total amount of$675,000; the State's share was $175,000. The State is currently engaged in settlement negotiations as to all but one ofthe remaining claims, which are not expected to exceed the $175,000 amount already paid out. As to the

A-71

--------State of GeortJ1a--------
Notes to the F11andal Statements
Jmc30, 1997

Note 14. Contingencies (continued)
other remaining claim of the for-profit corporation , involved, the State believes that it has good and adequate defenses and intends to defend vigorously.
In two related cases, Cobb and DeKalb counties have sued the State of Georgia, the Department of Revenue, Zell Miller (in his official capacity as Governor), and T. Jerry Jackson (in his official capacity as Revenue Commissioner) (collectively, "the State") in connection with the State's collection and distribution of special local option sales taxes to the counties. In Cobb, the county seeks an accounting, a writ of mandamus, injunctive relief and additional relief based upon theories of unjust enrichment and bailment. Cobb's claims relate to the State's administration of State and local option sales taxes from April 1, 1995, to the present. Cobb seeds as must as $12 million in relief. In DeKalb, the county asserts the same grounds for relief with the addition of a claim for declaratory relief. DeKalb's claims relate to the State's administration of State and local option sales taxes from July 1, 1997, to the present. DeKalb seeks unspecified monetary relief but estimates a shortfall in distributions from the State of $28 million. The State filed motions to dismiss in both cases and filed a counterclaim against Cobb County for $10.4 million. The trial court has granted both State motions to dismiss. The time for appeal remains open.
In a civil action filed in October, 1997, on behalf of all contributors to the Georgia Underground Storage Tank Trust Fund, the plaintiffs seek refund of all monies collected under the Georgia Underground Storage Tank Act (OCGA 12-13-1), interest and attorney's fees. From the time of its inception in 1988 to the present, the Fund has collected approximately $82 million. The State believes that it has substantial defenses to assert and intends to defend the case vigorously. The State was granted a motion to dismiss the action, on the grounds that no justiciable controversy exists, and the plaintiffs have filed notice of intent to appeal.
Significant Discretely Presented Component Units
Proprietary Fund Types
The Federal Government, through the Guaranteed Student Loan Programs of the U.S. Department of Education, fully reinsured loans guaranteed through September 30, 1993, until the Corporation's rate of annual losses (defaults) exceeded five percent (5%). In the event of future adverse loss experience, the Corporation could be liable for up to (I)

twenty percent (20%) of the outstanding balance of loans in repayment status at the beginning of each year which were disbursed prior to October 1, 1993, and (2) twenty-two percent (22%) of the outstanding balance of loans in repayment status at the beginning of each year which were disbursed on or after October 1, 1993.
In a civil action case filed August 26,-1996, the plaintiffs seek a court order declaring that two games sponsored by the Georgia Lottery Corporation, "Quick Cash" and "Cash Three," are unconstitutional and enjoining the lottery from further offering of these games. Plaintiffs seek the return of all monies played on these games during a specified period, approximately $1,703,462,781. On an interlocutory appeal, the Georgia Court of Appeals ruled that the Lottery Corporation does not have sovereign immunity but ruled for the Corporation on the merits. The plaintiffs petitioned for a writ of certiorari to the Supreme Court of Georgia, and the Supreme Court denied the petition. The remittitur of the Court of Appeals has been returned to the trial court.
Note 15. Subsequent Events
Primary Government
General Obligation Bonds Issued
The State issued General Obligation Bonds in the amount of $256,875,000 on August 1, 1997 (Series 1997 B and 1997 C). Proceeds from these bonds will be used for the purpose of fmancing various capital outlay projects.
Year 2000 Project
Based on a preliminary study, the State of Georgia expects to spend approximately $250 million to $300 million from 1997 through 1999 to modify its computer information systems enabling proper processing of transactions relating to the Year 2000 and beyond. The State of Georgia continues to evaluate appropriate courses of corrective action, including replacement of systems. Accordingly, the State of Georgia does not expect the amounts required to be expended over the next three years to have a material effect on its fmancial position or results of operations.
Significant Discretely Presented Component Units
Proprietary Fund Types
On January 3, 1998, the Stone Mountain Memorial Association executed an agreement with Silver Dollar City

A-72

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

Note 15. Subsequent Events (continued)
Stone Mountain Park, Inc., (SDC) which leases to SDC almost all of the Association's assets and requires SDC to operate Stone Mountain Park.
This 30 year renewable lease includes an annual base tent payable monthly to the Association of $9.5 million and increases annually based on economic indices. SDC has also provided an $8.5 million letter of credit available to the Association as a security deposit. The leased property includes the park and recreation development known as Stone Mountain Park and allows SDC to conduct and operate the park facilities within fee structures and operating hours as stipulated in the lease agreement between the Association and SDC.
Note 16. Deferred Compensation Plan
The State of Georgia offers its employees a deferred compensation plan in accordance with Internal Revenue Code Section 457. The plan, available to employees of the State of Georgia and county health departments, permits such employees to defer a portion of their salary until future years. This plan is administered by a third party. Participants choose the option or options in which they wish to participate. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.
All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property or rights of the State of Georgia subject only to the claims of the State's general creditors. Participants' rights under the plan are equal to those of a general creditor of the State of Georgia in an

amount equal to the fair market value of the deferred account of each participant. In the equity funds, the market value may be either greater or less than the participants' contributions. It is the opinion of the Attorney General that .the State has no liability for losses under the plan but does have the duty of due care that would be required of an ordinary prudent investor. It is unlikely that the State will use the assets of the plan to satisfy the claims of general creditors in the future.
Market values, which approximate cost, of investments at June 30, 1997, by plan type are as follows:

Guaranteed Investment Contracts Index Trust 500 Portfolio The Vanguard Group of Investment Companies Magellan Fund
Fidelity Institutional Retirement Services Company Over-The-Counter Portfolio Fidelity Institutional Retirement Services Company Prime Portfolio The Vanguard Group of Investment Companies United International Growth Fund
Waddell and Reed Asset Management Company Wellesley Income Fund
The Vanguard Group of Investment Companies Windsor II
The Vanguard Group of Investment Companies
Participants Accounts Reserve for Administration of Plan

$ 128,745,892 42,068,974 55,502,156 21,876,362 3,139,739 6,364,531 23,998,853 32 510 300
$314 206 807 $ 308,827,113
5 379 694 $314 206 807

A-73

--------State of GeorfJia - - - - - - - -
Notes to the Fr~andal Statements Jmc30.1997

Note 17. Retirement Systems
Primary Government
Georgia Defined Contribution Plan
Plan Description
Organization and Purpose The Georgia Defmed Contribution Plan ("GDCP") is a single-employer defined contribution plan established by the Georgia General Assembly in July I993 for the purpose ofproviding retirement allowances for State employees who are not members of a public retirement or pension system. The GDCP is administered by the Employees' Retirement System (ERS) Board of Trustees.
Membership As of June 30, I997, participation in GDCP is as follows:

Active Plan Members
Terminated Employees Entitled to Benefits but not yet Receiving Benefits

52,900

Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board. If a member has less than $3,500 credit to his/her account, the Board has the option of requiring a lump sum distribution to the member. Upon the death of a member, a lump sum distribution equaling the amount credited to his/her account will be paid to the member's designated beneficiary.
Contributions Members are required to contribute seven and one-half percent (7.5%) oftheir gross salary. There are no employer contributions. Earnings will be credited to each member's account as adopted by the Board. Upon termination of employment, the amount of the member's account is refundable upon request by the member.

District Attorneys' Retirement Fund
Plan Description
Organization and Purpose The District Attorneys' Retirement Fund ("DARF") is a single-employer, defmed benefit pension plan established by the Georgia General Assembly in I949 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARF is directed by its own Board of Trustees. The Boards of Trustees for ERS and DARF entered into a contract for ERS to administer the plan effective July I, I995.
Membership As of June 30, I997, DARF had twelve (12) retirees and beneficiaries currently receiving benefits.
Benefits Persons appointed as district attorney emeritus shall receive an annual benefit of$I5,000 or one-half of the State salary received by such person as a district attorney for the calendar year immediately prior to the person's retirement, whichever is greater.
Contributions and Vesting Member contributions were five percent (5.0%) of their salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit if elected. The State paid member contributions of five percent (5.0%) of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an asneeded basis to fund current benefits.
District Attorneys' Retirement System
Plan Description
Organization and Purpose The District Attorneys' Retirement System (DARS) is a single-employer defmed benefit pension plan established by the Georgia General Assembly in I978 for the purpose of providing retirement benefits to the district attorneys of the State of Georgia. DARS is directed by its own Board of Trustees. The Boards of Trustees for ERS and DARS entered into a contract for ERS to administer the plan effective July I, I995.

A-74

--------State of GeorfJia - - - - - - - -
Notes to the F11andal Statements Jme 30. 1997

Note 17. Retirement Systems (continued)
Membership As of June 30, 1997, participation in DARS is as follows:

Retirees and Beneficiaries Currently

Receiving Benefits

9

Active Plan Members

54

Terminated Employees Entitled to Benefits but not yet Receiving Benefits

Employees' Retirement System of Georgia
Plan Description
Organization and Purpose Employees' Retirement System of Georgia ("ERS") is a single-employer-,c defined benefit pension plan established by the Georgia General Assembly during the 1949 Legislative Session for the purpose of providing retirement allowances for employees of the State of Georgia and its political subdivisions. ERS is directed by a Board of Trustees and has the powers and privileges of a corporation.
Membership As of June 30, 1997, participation in ERS is as follows:

Benefits The normal retirement for DARS is age sixty (60) with ten (1 0) years of creditable service with a benefit of four percent (4.0%) of the member's average annual compensation for each year of creditable service. If service exceeds sixteen (16) years, the benefit is four percent (4.0%) for each year of creditable service plus one percent (1.0%) for each year served after sixteen (16), not to exceed twenty four (24) years (72%). "Average annual compensation" is the highest average of two consecutive years of creditable service, except no increase during such period in excess of five percent (5.0%) may be used. Death, disability, and spousal benefits are also available. Early retirement benefits are not available.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of their salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit if elected. The State pays member contributions of four and threefourths percent (4.75%) of the member's annual salary. Employer contributions are actuarially determined and approved and certified by the Board.
Members become vested after ten years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if a member later holds office as a district attorney, the member shall be reinstated as if never before a member and may reestablish prior service by repaying the amount withdrawn, plus interest.

Retirees and Beneficiaries Currently Receiving Benefits
Active Plan Members
Terminated Employees Entitled to Benefits but not yet Receiving Benefits

20,988 71,059

Benefits The benefit structure ofERS was significantly modified on July 1, 1982. Unless the employee elects otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provision in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions ..
Under both the old and new plans, a member may retire and receive normal retirement benefits after completion of ten (1 0) years creditable service and attainment of age sixtyfive (65). If ten years of service is completed and age sixty (60) is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after thirty (30) years of service regardless of age.
Retirement benefits paid to members are based upon the monthly average of the member's highest eight consecutive calendar quarters multiplied by the number of years of creditable service. Post - retirement cost - of- living

A-75

--------State of Georfjia - - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

Note 17. Retirement Systems (continued)
adjustments are also made to members' benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution of the member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
Contributions and Vesting Member contributions under the old plan are four percent (4%) of annual compensation up to $4,200 plus six percent (6%) of annual compensation in excess of $4,200. Under the old plan, the State pays member contributions in excess of one and one-quarter percent (1.25%) of annual compensation. Under the old plan, these State contributions are included in the members' accounts for refund purposes. Member contributions under the new plan are one and onequarter percent (1.25%) of annual compensation. The State is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation.
Members become vested after ten (1 0) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
The employer contributions are projected to liquidate the unfunded actuarial accrued liability within eleven (II) years based upon the actuarial valuation at June 30, 1996.
Legislative Retirement System
Plan Description
Organization and Purpose Legislative Retirement System ("LRS") is a singleemployer defmed benefit plan established by the Georgia General Assembly in 1979 for the purpose of providing retirement allowances for all members of the Georgia General Assembly. LRS is administered by the ERS Board of Trustees.
Membership As of June 30, 1997, participation in LRS is as follows:

Retirees and Beneficiaries

Currently Receiving Benefits

174

Active Plan Members

204

Terminated employees Entitled to Benefits but not yet Receiving Benefits

Benefits A member's normal retirement is after eight (8) years of creditable service and attainment of age sixty-five (65) or eight (8) years of membership service (4legislative terms) and attainment of age sixty-two (62). A member may retire early and elect to receive a monthly retirement benefit after completion of eight (8) years of membership service and attainment of age sixty (60); however, the retirement benefit is reduced by five percent (5%) for each year the member is under age sixty-two (62).
Upon retirement, the member will receive a monthly service retirement allowance of $28 multiplied by the number of years of creditable service reduced by age reduction factors, if applicable. Death, disability, and spousal benefits are also available through the plan.
Contributions and Vesting Member contributions are eight and one-half percent (8.5%) of annual salary. The State pays member contributions in excess of four percent (4%) of annual compensation. Employer contributions are actuarially determined and approved and certified by the Board.
Members become vested after eight (8) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
Based on the June 30, 1995, actuarial valuation ofLRS (the latest actuarial valuation; present Board policy requires a biennial valuation), the employer contributions are projected to liquidate the unfunded actuarial accrued liability within twelve (12) years.

A-76

--------State of GeorfJl'l--------
Notes to the Fnandal Statements Jmc 30. 1997

Note 17. Retirement Systems (continued)
Superior Court Judges Retirement Fund
Plan Description
Organization and Purpose The Superior Court Judges Retirement Fund ("SCJRF") is a single-employer, defmed benefit pension plan established by the Georgia General Assembly in 1945 for the purpose of providing retirement benefits to the superior court judges of the State of Georgia. SCJRF is directed by its own Board of Trustees. The Boards of Trustees for ERS and SCJRF entered into a contract for ERS to administer the Plan effective July 1, 1995.
Membership As of June 30, 1997, participation in SCJRF is as follows:

Retirees and Beneficiaries Currently

Receiving Benefits

36

Active Plan Members

3

Terminated Employees Entitled to Benefits but not yet Receiving Benefits

Benefits The normal retirement for SCJRF is age sixty-eight (68) with nineteen (19) years of creditable service with a benefit of two-thirds the salary paid to superior court judges. A member may also retire at age sixty-five (65) with a minimum of ten (10) years of creditable service with a benefit of one-half the salary paid to superior court judges. Death, disability, and spousal benefits are also available.
Contributions and Vesting Member contributions are five percent (5.0%) oftheir salary plus an additional two and one half percent (2.5%) for the spousal coverage benefit if elected. The State pays member contributions of five percent (5.0%) ofthe member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits.

Superior Court Judges Retirement System
Plan Description
Organization and Purpose The Superior Court Judges Retirement System ("SCJRS") is a single-employer, defmed benefit pension plan established by the Georgia General Assembly in 1976 for the purpose of providing retirement benefits to the superior courtjudges ofthe State of Georgia. SCJRS is directed by its own Board of Trustees. The Boards of Trustees for ERS and SCJRS entered into a contract for ERS to administer the plan effective July 1, 1995.
Membership As of June 30, 1997, participation in SCJRS is as follows:

Retirees and Beneficiaries Currently

Receiving Benefits

55

Active Plan Members

156

Terminated Employees Entitled to Benefits but not yet Receiving Benefits

Benefits The normal retirement for SCJRS is age sixty (60) with sixteen (16) years of creditable service with a benefit of two-thirds of the State salary paid to superior court judges at the time of the member's retirement, plus one percent (1.0%) for each year of creditable service over sixteen (16) up to a maximum of twenty-four (24) years. Additionally, a member may retire with reduced benefits at age sixty (60) with a minimum of ten (1 0) years of creditable service. A member must retire at age seventy-five (75), or at the end of the term in which the member becomes seventy-five (75), or forfeit all retirement and disability benefits. Death, disability, and spousal benefits are also available.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) oftheir salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit or two and three-fourths percent (2.75%) for the spouse plus benefit if elected. The State pays member contributions of four and

A-77

--------State of GeorfJia - - - - - - - -
Notes to the Fnancial Statements Jmc 30. 1997

Note 17. Retirement Systems (continued)
three-fourths percent (4.75%) of the member's annual salary. Employer contributions are actuarially determined and approved and certified by the Board.
Members become vested after ten (1 0) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if a member later holds office as a superior court judge, the member shall be reinstated as if never before a member and may re-establish prior service by repaying the amount withdrawn, plus interest, within sixty (60) days of certification of such amount.
Trial Judges and Solicitors Retirement Fund
Plan Description
Organization and Purpose Trial Judges and Solicitors Retirement Fund ("TJSRF") is a multiple-employer cost-sharing defmed benefit plan established by the Georgia General Assembly in 1968 for the purpose of providing retirement allowances for trial judges and solicitors of certain courts of Georgia, and their survivors and other beneficiaries. TJSRF is administered by the ERS Board of Trustees and three other trustees not on the ERS Board.
Membership As of June 30, 1997, participation in TJSRF is as follows:

Retirees and Beneficiaries

Currently Receiving Benefits

36

Active Plan Members

163

Terminated Employees Entitled to Benefits but not yet Receiving Benefits

Benefits The normal retirement for TJSRF is age sixty (60) with sixteen (16) years of creditable service; however, a member may retire at age sixty (60) with a minimum of ten (10) years of creditable service. Additionally, a member must

retire at age seventy (70) or forfeit all retirement and disability benefits. Members holding office on July 1, 1980, are exempt from this provision.
Retirement benefits paid to members are computed as four percent (4%) ofthe average.annual compensation multiplied by the total years of creditable service not to exceed sixteen (16) years. The average annual compensation is the average salary of a member during the two consecutive years of creditable service producing the highest such average but excluding any salary increases exceeding five percent (5%) over the previous year during the two-year period. Death, disability and spousal benefits are also available.
Contributions and Vesting Members are required to contribute seven and one-half percent (7.5%) of their salary plus an additional two and one-half percent (2.5%) if spousal benefit is elected. Employer contributions are actuarially determined and approved and certified by the Board.
Members become vested after ten (1 0) years of creditable service. Upon termination of employment, member contributions with accumulated interest are refundable upon request by the member. However, if an otherwise vested member terminates and withdraws his/her member contributions, the member forfeits all rights to retirement benefits.
Based on the June 30, 1995, actuarial valuation (the latest actuarial valuation; present Board policy requires a biennial valuation), TJSRF does not have an unfunded accrued liability.
Regents Retirement Plan
Plan Description
Organization and Purpose The Regents Retirement Plan, a single-employer defmed contribution plan, is an-optional retirement plan established and administered by the Board of Regents of the University System of Georgia (College and University Funds), under which it may purchase annuity contracts for the purpose of providing retirement and death benefits for eligible faculty and principal administrators.
Benefits Benefits depend solely on amounts contributed to the plan plus investment earnings. Benefits are payable to participating employees or their beneficiaries in accordance with the terms of the annuity contracts.

A-78

--------State of GeorfJia - - - - - - - -
Notes to the F11andal Statements Jmc30. 1997
Note 17. Retirement Systems (continued)
Contributions and Vesting Member contribution requirements are established by the Board of Trustees of the Teachers Retirement System. Employer contributions are established by statute and may be amended only by the General Assembly of the State of Georgia.
A) Members' Contributions: Members' contributions are calculated as five percent (5%) of the earnable compensation.
B) State ofGeorgia Contributions: Prior to January 1, 1997, the employer's contribution is calculated as four percent (4%) of the earnable compensation. On and after January 1, 1997, the employer's contribution is an amount equal to the normal cost contribution determined by the Teachers' Retirement System Board of Trustees. Since January 1, 1997, that rate is seven and forty-two onehundredths percent (7.42%).
Amounts attributable to all plan contributions are fully vested and non-forfeitable.

Required Supplementary Information
Schedule of Funding Progress (Thousands of Dollars)

Actuarial Valuation
Date

Actuarial Value of Plan Assets
(a)

Actuarial Accrued Liability ("AAL")Entry Age
(b)

Unfunded AAU(Funding
Excess) (b- a)

Funded Ratio
(a/b)

Annual Covered Payroll
(c)

Unfunded AAL/(Funding
Excess) as a Percentage of
Covered Payroll [(b- a)/c)

DARS ERS LRS SCJRS TJSRF

6/30/96 6/30/96 6130/95 6/30/96 6/30/95

$

19,277 $

12,669 $

(6,608)

$ 6,140,080 $ 7,243,105 $ 1,103,025

$

13,137 $

13,860 $

723

$

72,642 $

50,753 $ (21,889)

$

25,925 $

21,953 $

(3,972)

152.2% $ 84.8% $ 94.8% $ 143.1% $ 118.1% $

3,737 1,968,714
2,186 13,294 5,991

(176.8)% 56.0% 33.1%
(164.7)% (66.3)%

Information is shown only for the plans and years available in accordance with the parameters ofGASB 25. Additional information will be added as data become available.
A-79

State of Georgia-------
Notes to the Fnandal Statements
June 30. 1997

Note 17. Retirement Systems (continued)
Schedule ofEmployer Contributions (Thousands of Dollars)

DARS ERS LRS SCJRS TJSRF

Year Ended June 30 1996 1996 1996 1996 1996

State Annual Reguired Contribution

$

271,342

$

164

$

472

Percentage Contributed
100.0% 100.0% 100.0% 100.0% 100.0%

Information is shown only for the plans and years available in accordance with the parameters ofGASB 25. Additional information will be added as data become available.

Notes to Required Supplementary Schedules

DARS

ERS

LRS

Actuarial Valuation Date

June 30, I 996

Actuarial Cost Method

Entry Age Normal

Amortization Method

Level payment, closed

Remaining Amortization Period

27 years

Asset Valuation Method

5-year smoothed market

Actuarial Assumptions: Investment Rate of Return 7.5% (3)

Projected Salary Increases 5.5% (3)

Post-Retirement Cost-ofLiving Adjustment

None

June 30, 1996 Entry Age
Level percentage of pay, open
I I years 5-year smoothed market
7.5% (!) 5.7-9.5% (I)
None

June 30, I 995 Unit Credit
Level dollar, open
12 years 5-year smoothed market
7.5% (2) n/a
3%annually

SCJRS

TJSRF

June30, 1996 Entry Age Normal

June30, 1995 Entry Age

Level payment, closed

Level percentage of pay, open

27 years
5-year smoothed market

15 years
5-year smoothed market

7.5% (3) 5.5% (3)

7.5% (2) 6.0%(2)

None

None

(I) Includes inflation rate of 4.00% (2) Includes inflation rate of3.75% (3) Includes inflation rate of3.00%

A-80

- - - - - - - - S t a t e of Georgia--------
Notes to the Fnandal Statements Jmc30. 1997

Note 17. Retirement Systems (continued)
Significant Discretely Presented Component Units
Georgia Ports Authority Retirement Plan

As of June 30, 1997, participation in TRS is as follows:

Retirees and Beneficiaries Currently Receiving Benefits
Active Plan Members
Terminated Employees Entitled to Benefits but not yet Receiving Benefits

39,278 173,599

Plan Description
Organization and Purpose The Georgia Ports Authority Retirement Plan ("Plan") is a single-employer defmed benefit plan covering all full-time employees of the Georgia Ports Authority.
Benefits The Plan provides pension benefits that are based on years of service and compensation earned during years of employment.
Contributions and Vesting Members contribute one percent (1 %) oftheir earnings each month for the first $9,000 earned during the plan year and one and one-half percent (1.5%) after earnings reach $9,000. The employer's contributions are two and one-quarter percent (2.25%) of the employee's first $9,000 of armual earnings for the plan year plus three and one-quarter percent (3.25%) of the employee's armual earnings for the plan year in excess of$9,000.
Members become vested after reaching age 55 or after completing five (5) or more years of service.
Teachers Retirement System of Georgia
Plan Description
Organization and Purpose The Teachers Retirement System of Georgia ("TRS") is a cost-sharing multiple-employer plan created in 1943 by an act of the Georgia General Assembly to provide retirement benefits for qualifying employees in educational service. A Board ofTrustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration of TRS.
Membership All teachers in the State public schools, the University System of Georgia (except those professors and principal administrators electing to participate in an optional retirement plan), and certain other designated employees in educational-related work are eligible for membership.

Benefits A member is eligible for normal service retirement after thirty (30) years of creditable service, regardless of age, or after ten (10) years of service and attainment of age sixty (60). A member is eligible for early retirement after twentyfive (25) years of creditable service.
Normal retirement (pension) benefits paid to members are equal to two percent (2%) of the average ofthe member's two (2) consecutive highest paid years of service multiplied by the number of years of creditable service up to forty (40) years. Early retirement benefits are reduced by the lesser of one-twelfth (1112) of seven percent (7%) for each month the member is below age sixty (60), or by seven percent (7%) for each year or fraction thereof by which the member has less than thirty (30) years of service. It is also assumed that certain cost-of-living adjustments, based on the CPI, will be made in future years. Retirement benefits are payable monthly for life. Death, disability and spousal benefits are also available.
Contributions and Vesting TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees.
Contributions required by the armual actuarial valuation are as follows:

Member
Employer: Normal Unfunded Accrued Liability Expenses

7.42% 4.24%

A-81

--------State of Georgia--------
Notes to the Fnandal Statements Jme 30. 1997
Note 17. Retirement Systems (continued)
Members become fully vested after ten (10) years of service. If a member terminates with less than ten (10) years of service, no vesting of employer contributions occurs, but the member's contributions may be refunded with interest.
The employer contributions to the unfunded accrued liability will liquidate the unfunded accrued liability over approximately twenty-seven (27) years on the assumption that the aggregate amount of unfunded accrued liability contribution will increase by three and three-quarters percent (3.75%) each year.

Required Supplementary Information
Schedule of Funding Progress (Thousands of Dollars)

Actuarial Valuation
Date

Actuarial Value of Plan Assets
(a)

Actuarial Accrued Liability ("AAL")Entry Age
(b)

Unfunded AALI(Funding
Excess) (b- a)

TRS

6/30/95

$ 16,335,944 $ 19,771,740 $ 3,435,796

6/30/96

$ 18,750,568 $ 22,163,755 $ 3,413,187

Funded
Ratio (a/b)

Annual Covered Payroll
(c)

Unfunded AALI(Funding
Excess) as a Percentage of
Covered Payroll !fb- allc!

82.6% $ 84.6% $

4,712,292 5,086,924

72.9% 67.1%

Information is shown only for the plans and years available in accordance with the parameters of GASB 25. Additional information wiii be added as data become available.

A-82

--------State of Georgia--------
Notes to the Fnandal Statements Jmc 30. 1997

Note 17. Retirement Systems (continued)
Schedule ofEmployer Contributions (Thousands ofDollars)

Year Ended June 30

TRS

1991

1992

1993

1994

1995

1996

State Annual Reguired Contribution

$

452,522

$

454,138

$

485,121

$

512,429

$

556,522

$

600,766

Percentage Contributed
100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Information is shown only for the plans and years available in accordance with the parameters ofGASB 25. Additional information will be added as data become available.

Notes to Required Supplementary Schedules Teachers Retirement System Actuarial Valuation Date- June 30, 1996 Actuarial Cost Method - Entry Age Amortization Method- Level percentage of pay, open Remaining Amortization Period - 27 years Asset Valuation Method- 5-year smoothed market Actuarial Assumptions: Investment Rate of Return- 7.5% Projected Salary Increases- 3.75%- 6.50% Inflation Rate- 3.75% Post-Retirement Cost-of-Living Adjustment- 3% annually

A-83

--------State of Georgia--------
Notes to the F11andal Statements Jmc30. 1997

Note 18. Nonmonetary Transactions
Primary Government
The State of Georgia received donated goods for its use and for distribution to other qualifying organizations outside

the State reporting entity under the following programs:

Program Agriculture, U.S. Department of Food Distribution Program Temporary Emergency Food Assistance Program
Health and Human Services, U.S. Department of Childhood Immunization Grant
HIV Prevention Activities - Health Department Based
Preventive Health and Health Services Block Grant
Preventive Health Services - Sexually Transmitted Disease Control Grants
Project Grants and Cooperative Agreements for Tuberculosis Control Programs
Public Health and Social Services Emergency Fund

Value of Inventory Received

Value of Inventory Reported at June 30, 1997

$

25,809,324 $

$

3,206,024 $

40,094 1,412,500

$

19,264,470 $

$

13,500 $

$

195,540 $

$

571,070 $

$

147,679 $

$

18,750 $

The value of donated commodities received and distributed is not reported as revenues and expenses on the combined statement of revenues, expenditures and changes in fund balances. Information is not available to determine the items used within the State and the items distributed to (or held for) other qualifying organizations outside the State reporting entity.
In addition, the Georgia Department of Administrative Services operates the Donation of Federal Surplus Personal Property program for the purpose of distributing surplus properties made available by the General Services Administration to eligible institutions, organizations and agencies. The value of surplus property received and distributed is not reported as revenues and expenses on the combined statement of revenues, expenditures and changes in fund balances, and the inventory on hand at June 30, 1997, is not reported on the combined balance

sheet. The changes in Federal surplus personal property inventory during the fiscal year ended June 30, 1997, were as follows:

Balance July I, 1996 Additions
Property Received
Deductions Property Donated and Other Distributions
Balance June 30, 1997

$ 9,480,500 16,217.711
$ 25,698,211
15 775.009 $ 9.923.202

A-84

State of Georftia - - - - - - -
Notes to the Fnandal Statements Jmc 30. 1997

Note 18. Nonmonetary Transactions (continued)
The Federal government provides food stamps to low-income households. The amount of food stamps a household receives depends on the household's size and fmancial circumstances. The Georgia Department of Human Resources is responsible for determining eligibility for participation in the food stamp program within the State. During the year under review, the total value of food stamps distributed as approved by the Department was $623,236,891.
Significant Discretely Presented Component Units
Governmental Fund Types
Donated support of volunteer services and other sources totaling $636,158 was provided to the Georgia Public Telecommunications Commission during the year ended June 30, 1997. The value of these services and other sources are not reported as revenue on the Combining Statement of Revenues, Expenditures and Changes in Fund Balances.
Note 19. Postemployment Benefits
In addition to the pension benefits described in Note 17, the State of Georgia provides postretirement health care benefits through the State Health Benefit Plan to retirees pursuant to Title 45, Chapter 18 of the OCGA. An individual eligible for these benefits must have been a full time employee at the time of retirement of either the State of Georgia or a county social service agency and must be receiving monthly retirement benefits from either the Employees' Retirement System of Georgia or a county employees' retirement system. The State Health Benefit Plan is a public entity risk pool funded by employee and employer contributions. Employees and retirees subject to the Plan contribute amounts determined by the State Personnel Board for various health insurance plans. The various agencies of the State contribute to the health insurance fund based upon amounts recommended by the State Personnel Board and set forth in the Appropriations Act. The State Health Benefit Plan is funded on a "pay-as-you-go" basis. Expenses of the Plan include provisions for incurred but not reported claims. As of June 30, 1997, there were 50,407 employees who had retired and

were receiving postretirement health care benefits through the State Health Benefit Plan. For the fiscal year ended June 30, 1997, the State recognized expenditures of $167,137,452, which was net of retiree contributions of $39,155,258. .
Pursuant to the general powers conferred by OCGA Section 20-3-31, the Board of Regents of the University System of Georgia (college and university funds) has established group health and life insurance programs for regular employees ofthe University System. It is the policy of the Board of Regents to permit employees of the University System eligible for retirement or that become permanently and totally disabled to continue as members of the group health and life insurance programs. Employees who are eligible for retirement or disability under the criteria established by the Teachers Retirement System and who have at least ten years of service with the University System are eligible for these postemployment health and life insurance benefits. The University System pays the employer portion for group insurance for affected individuals. For the fiscal year ended June 30, 1997, the University System recognized expenditures of$18,196,283, which was net of participant contributions of$4,650,902.
Note 20. Fund Deficits
The following organizations had deficit balances at June30, 1997.
Internal Service Funds - Primary Government
Hazard and Insurance Reserve Fund- At June 30, 1997, the Fund had an unreserved retained earnings deficit of $10,932,274.
Unemployment Compensation Fund- At June 30, 1997, the Fund had an unreserved retained earnings deficit of $816,585.
Workers' Compensation Fund- At June 30, 1997, the Fund had an unreserved retained earnings deficit of $62,809,734.
Governmental Fund Types - Discretely Presented Component Units
Georgia Public Telecommunications Commission - At June 30, 1997, the Commission had an unreserved, undesignated fund balance deficit of$99,571.

A-85

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Notes to the F11andal Statements Jmc: 30. 1997

Note 20. Fund Deficits (continued)
Proprietary Fund Types- Discretely Presented Component Units
Lake Lanier Islands Development Authority - At June 30, 1997, the Authority had an unreserved retained earnings deficit of $14,276,175.
North Georgia Mountains Authority- At June 30, 1997, the Authority had an unreserved retained earnings deficit of $2,579,081.
Sapelo Island Heritage Authority- At June 30, 1997, the Authority had an unreserved retained earnings deficit of $379.

Note 21. Major Discretely Presented Component Unit Condensed Financial Statements
The condensed fmancial statements ofthe major discretely presented component units of the State of Georgia reporting entity are presented below. "Major" component units, for purposes of this presentation, have been determined by giving consideration to each component units' significance relative to the other component units and the nature and significance of its relationship to the primary government. Condensed fmancial statements for all nonmajor discretely presented component units are presented in the aggregate.

A-86

--------State of GeorfJia - - - - - - - -
Notes to the Fnandal Statements Jmc 30, 1997

Note 21. Major Discretely Presented Component Unit Condensed Financial Statements (continued)
ASSETS AND OTHER DEBITS Other Assets Property, Plant and Equipment (Net) Amount to be Provided for Retirement of General Long-Term Debt Total Assets and Other Debits
LIABILITIES Due to Primary Government Other Liabilities Bonds and Other Long-Term Liabilities Total Liabilities EQUITY AND OTHER CREDITS Investment in Fixed Assets Fund Balances Unreserved Total Equity and Other Credits Total Liabilities, Equity and Other Credits
REVENUES
EXPENDITURES
EXCESS (DEFICIENCY) OF REVENUES OVER (UNDER) EXPENDITURES Operating Transfers from Primary Government
EXCESS (DEFICIENCY) OF REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES
FUND BALANCES, JULY I Adjustments
Inclusion of Foundation for Public Broadcasting in Georgia, Inc. FUND BALANCES, JUNE 30

Governmental Fund Types

Georgia

Education

Georgia Public

Authority

Telecommunica-

(Schools)

tions Commission

Total

$

568,842 $

5,219,408 $

73,906,597

6,069,631

$====~5~6~8,~84~2~$=85=,=19=5~,6~3~6= $

5,788,250 73,906,597
6,069,631
85,764,478

$

$

$ _ _ _ _ __::.0_$

$

$

568,842 $ _ _ _5:..:6:..:.8;,.:;;,8..;;;42:... $

$ =====5;;6;;8;,;;,84.;;2;., $

328,877 $

328,877

4,990,102

4,990,102

6,069,631

6,069,631

11,388,610 $

11,388,610

-----'--"'----

73,906,597 $

73,906,597

(99,571)

469,271

73,807,026 $

74,375,868

-----''---'---

85,195,636 $ ====8=5'=7=64=,4==7=8=

$

29,655 $

15,481,330 $

15,510,985

-----'--"'----

$

0 $

33,033,963 $ _ _ _33;....:.,_03_3-'-,9-'-63_

$

29,655 $

(17,552,633) $

(17,522,978)

16,326,489

16,326,489

$

29,655 $

539,187

$ ====~5;;6~8,~84~2~ $

(1,226,144) $ 147,144

(l, 196,489) 686,331

979,429

979,429

(99 ,571) $ ====4=6=9=,2=7=1

A-87

State of GeorfJia
Notes to the Fnandal Statements Jmc 30, 1997

Note 21. Major Discretely Presented Component Unit Condensed Financial Statements (continued)

Proprietary Fund Types

ASSETS Due from Primary Government Other Assets Restricted Assets Property, Plant and Equipment (Net)
Total Assets

Environmental Facilities Authority

Housing and Finance Authority

Lottery Cotporation

$

1,393,024 $

716,120,785

270,903

$ 120,835,304 776,904,831
5,988,643

$ 56,725,219 234,704,000
3,284,000

$ 717,784,712 $

903,728,778 $

294,713,219 $

Ports Authority
40,297,734 4,072,536
343,691,321
388,061,591

LIABILITIES Due to Primary Government Other Liabilities Bonds and Other Long-Term Liabilities Total Liabilities

$

367 $

16,967 $

29,563 $

13,546,945

69,406,911

59,438,656

88,655,000

762,722,042

234,95 8,000

$

102,202,312 $

832,145,920 $

294,426,219 $

52,590 7,027,914 33,076,440 40,156,944

EQUITY AND OTHER CREDITS Investment in Fixed Assets Contributed Capital Retained Earnings Reserved Unreserved Fund Balances Reserved Unreserved Total Equity and Other Credits

$

270,903 $

490,479,608

2,510,812 104,224,366

10,542,581 7,554,130 $ 615,582,400 $

$
22,581,833 46,891,428
772,276 1,337,321 71,582,858 $

$ 287,000

233,116,794 114,787,853

287,000 $ 347,904,647

Total Liabilities, Equity and Other Credits

$ 717,784,712 $

903,728,778 $ 294,713,219 $ 388,061,591

OPERATING REVENUES Sales and Services Operating Grants Taxes Other Total Operating Revenues

$

$

4,939,935 $ 1,654,659,000 $

86,305,610

8,756,304

63,851,267

$

8,756,304 $

68,791,202 $ 1,654,659,000 $

86,305,610

OPERATING EXPENSES Depreciation Other Total Operating Expenses
OPERATING INCOME (LOSS)
Nonoperating Revenues/Expenses (Net) Operating Transfers to/from Primary Government NET INCOME (LOSS)

$

$

574,299 $

1,077,000 $

15,306,746

6,318,240

63,918,081

1,091,164,274

57,963,490

$

6,318,240 $

64,492,380 $ 1,092,241,274 $

73,270,236

$

2,438,064 $

4,298,822 $ 562,417,726 $

13,035,374

8,075,304

3,083,207

$

13,596,575 $

(1,439,585) 2,859,237 $

5,896,000 (581,638,726)
(13,325,000) $

(5,374,597) 7,660,777

EXCESS (DEFICIENCY) OF REVENUES OVER (UNI)ER) EXPENDITURES FROM GOVERNMENTAL OPERATIONS AND EXPENDABLETRUSTFUNDS
FUND EQUITY, JULY I Adjustments (Net) Current Capital Contributions (Net) Increase (Decrease) in Inventories
FUND EQUITY, JUNE 30

(2,855,403) 551,146,340
53,423,985

(1,493,945) 70,217,566

13,612,000

334,844,483 5,399,387

$ 615,311,497 $

71,582,858 $

287,000 $ 347,904,647

A-88

Student Finance Authority

Geo L. Smith II Georgia World Congress Center
Authority

All Other Discretely Presented
Proprietary Fund Types

Total

$

$

$

355,757,334

27,331,007

56,993,577

2,923,010

245,557,256

$ 358,680,344 $ 329,881,840 $

$ 242,823,896
19,454,465 209,400,623

1,393,024 1,559,891,279 1,092,129,409
811,115,756

471,678,984 $ 3,464,529,468

$

67,540 $

10,399 $

1,972,984

32,902,757

320,285,068

214,182,192

$ 322,325,592 $ 247,095,348 $

5,598 $ 25,547,075 147,199,251 172,751,924 $

183,024 209,843,242 1,801,077,993 2,011,104,259

$

$

$

58,750,000

25,386,512 10,968,240

111,209 23,925,283

$

36,354,752 $

82,786,492 $

$ 358,680,344 $ 329,881,840 $

$ 162,582,392

270,903 944,928,794

22,984,634 113,360,034

73,862,000 414,157,204

298,927,060 $

11,314,857 8,891,451 1,453,425,209

471,678,984 $ 3,464,529,468

$

2,470,439 $

18,700,546 $

69,252,087 $ 1,836,327,617

28,253,099

28,253,099

1,439,287

1,439,287

4,900,281

36,088,982

48,335,373

161,932,207

$

7,370,720 $

54,789,528 $

147,279,846 $ 2,027,952,210

$

252,186 $

51,032,320

$

51,284,506 $

$

(43,913,786) $

663,359

45,677,328

$

2,426,901 $

8,696,046 $ 42,891,691 51,587,737 $
3,201,791 $
2,466,406 (1,401,130) 4,267,067 $

7,186,274 $ 122,147,692 129,333,966 $

33,092,551 1,435,435, 788 1,468,528,339

17,945,880 $

559,423,871

(4,037,271) 4,571,026 18,479,635 $

6,249,616 (529,708,295)
35,965,192

86,026

(4,263,322)

35,659,459 (1,731,608)

72,533,501
6,000,000 (14,076)

286,960,419 (34,223,900) 27,588,328
36,552

1,364,973,768 (35,955,508) 92,411,700 22,476

$

36,354,752 $

82,786,492 $

298,927,060 $ 1,453,154,306

A-89

(This page htentionallv ldl blanR)

&ction'll Scl1edufe of CExpendltures of~edera[.A_wards

&ftedufe of CExpenditures of
~edera[~~ards

(This page ntentionallv left blank)

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended Jmc 30. 1997

Agriculture, U.S. Department of
Agricultural Research -Basic and Applied Research Through: University of Georgia Research Foundation
Plant and Animal Disease, Pest Control, and Animal Care Direct
Forestry Incentives Program Direct
Conservation Reserve Program Direct
Special Emphasis Outreach Programs Grants Direct
Market News Direct
Inspection Grading and Standardization Direct
Market Protection and Promotion Direct
Grants for Agricultural Research, Special Research Grants Direct Through: University of Florida Through: University of Georgia Research Foundation
Cooperative Forestry Research Direct
Payments to Agricultural Experiment Stations Under Hatch Act Direct
Payments to 1890 Land-Grant Colleges and Tuskegee University Direct
Grants for Agricultural Research Competitive Research Grants Through: University of Georgia Research Foundation
Food and Agricultural Sciences National Needs Graduate Fellowship Grants Direct
1890 Institution Capacity Building Grants Direct
Higher Education Challenge Grants Direct Through: Centro International De Ag Tropical Through Texas Tech University
Buildings and Facilities Program Direct Through: University of Georgia Research Foundation

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

10.001 10.025 10.064 10.069 10.140 10.153 10.162 10.163 10.200
10.202 10.203 10.205 10.206 10.210 10.216 10.217
10.218

RD309-013/2401524

10,959.79 (R)
590,585.42 (R)
66,000.00
37,280.40
60.00
26,435.44
2,448,566.04
3,722.41
414,220.90 (R) 83.57 (R)
4,076,342.51 (R) 10,000.00
4,500,646.98
672,220.51 (R)

4,347,733.78 (R)

3,114,601.03

1,218,379.77 (R)

22,679.11 (R)

741,558.17

42,182.66 (R) 23,263.43 (R)
1,570.00 (R)

s

67,016.09

481,856.64 1,957,634.33 (R)
2,439,490.97

B-5

State of G e o r g i a - - - - - - - -
Schedule of Expenditures of Federal Awards For the FLSCal Year Ended Jme 30. 1997

Agriculture, U. S. Department of
Human Nutrition Infonnation Service Through: University of Georgia Research Foundation
Rural Self-Help Housing Technical Assistance Direct
Cooperative Agreements with States for Intrastate Meat and Poultry Inspection Direct
Cooperative Extension Service Direct
Food Distribution Direct
Food Stamps (FSC) Direct
School Breakfast Program (NC) Direct
National School Lunch Program (NC) Direct
Special Milk Program for Children (NC) Direct Education, Department of
Special Supplemental Food Program for Women, Infants, and Children Direct
Child and Adult Care Food Program (NC) Direct
Summer Food Service Program for Children (NC) Direct
State Administrative Expenses for Child Nutrition Direct
State Administrative Matching Grants for Food Stamp Program (FSC) Direct
Nutrition Education and Training Program Direct
Commodity Supplemental Food Program Through: University of Georgia Research Foundation
Emergency Food Assistance Program (Administrative Costs) Direct
Emergency Food Assistance Program (Food Commodities) Direct
Nutrition Program for the Elderly (Commodities) Direct
Forestry Research Direct Through: University of Georgia Research Foundation

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

10.375 10.420 10.475 10.500 10.550 10.551 10.553 10.555 10.556
10.557
10.558 10.559 10.560 10.561 10.564 10.565 10.568
10.569 10.570 10.652

5,590.10 (R) 92,439.44

2,686,637.92

$

11,967,795.79 (R)

549.35

55,303,735.67 183,466,704.88
26,777.57

25,844,423.68 (4) 633,236,891.00 (4)

151,372,950.65 (6) 41,836,045.56
145,127.56 2,345,946.82
58,679,709.85 153,486.20 2,369.70 (R)
534,585.99
2,635,516.72 119,754.88 (R) 638,168.56 (R) 757,923.44

2,653,494.99

B-6

State of GeorfJia - - - - - - -
Schedule of Expenditures of Federal Awards For the FISCal Ycar Ended Jmc 30. 1997

Agriculture, U. S. Department of
Cooperative Forestry Assistance Direct Through University of Georgia Research Foundation
Water and Waste Disposal Systems for Rural Communities Through: Virginia Water Project, Incorporated
Technical Assistance and Training Grants Direct
Rural Development Grants Direct
Resource Conservation and Development Direct
Agricultural Statistics Reports Direct
International Agricultural Research Program Through: University of Georgia Research Foundation
International Training- Foreign Participant Direct
Scientific and Technical Cooperation Through: University of Georgia Research Foundation
Other Federal Assistance Direct Through: American Forest and Paper Association Through: Clemson University Through: North Carolina State University Through: Pennsylvania State University Through: University of Alaska Through: University of California Through University of Georgia Research Foundation
Through: University of Maryland
AGENCY TOTAL
Appalachian Regional Commission
Appalachian Regional Development Direct
Appalachian Supplements to Federal Grant-in-Aid (Area Development) Direct
Appalachian State Research, Technical Assistance, and Demonstration Projects
Direct
AGENCY TOTAL

CFDA NUMBER

PAS5-THROUGH
ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY
EXPENDITURES

10.664
10.760 10.761 10.769 10.901 10.950 10.961 10.962 10.963 IO.XXX
RD284-277/4522923

1,923,085.09 (R) 54,382.84 (R)
1,977,467.93
49,168.82
77,746.30
-3,866.77
15,000.00
50,030.70
18,917.53 (R)
3,603.83 (R)
7,133.07 (R)
438,942.85 (R) 6,452.32 (R) 1,944.70 (R)
78,262.79 (R) 3,500.00 (R)
100,089.68 (R) 4,994.67 (R)
2,601,758.80 (R) 28,234.11 2,809.22 (R)
3,266,989.14
537,784,019.67

661,734,809.67

23.001 23.002 23.011

208,197.90 62,272.00 286,100.47 (3) 556,570.37

1,480,414.69 (3) 1,480,414.69

B -7

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended Jmc 30, 1997

Commerce, U. S. Department of
Export Promotion -Market Development Cooperator Direct
Research and Evaluation Program Throogh: Georgia Tech Research Corporation
Trade Adjustment Assistance Through: Georgia Tech Research Corporation
Geodetic Surveys and Services (Geodesy and Applications of the National Geodetic Reference System) Through: Atlantic States Marine Fish Company Through: University of Georgia Research Foundation
Interjurisdictional Fisheries Act of 1986 Direct
Sea Grant Suppon Direct Through: University of Georgia Research Foundation
Coastal Zone Management Administration Awards Direct
Coastal Zone Management Estuarine Research Reserves Direct
Fisheries Development and Utilization Research and Development Grants and Cooperative Agreements Program Direct Through: University of Georgia Research Foundation
Marine Sanctuary Program Through: University of Georgia Research Foundation
Climate and Atmospheric Research Through Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Marine Fisheries Initiative Direct Through: University of Georgia Research Foundation
Cooperative Fishery Statistics Direct
Unallied Management Projects Direct
Marine Research ~ Regional Programs Direct Through: University of North Carolina at Wilmington
Unallied Science Program Direct

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

11.112 11.312 11.313 11.400
11.407 11.417
11.419 11.420 11.427
11.429 11.431
11.433
11.434 11.454 11.464
11.472

UNCW9611.1

83,465.79
4,282,646.87 (R) 74,361.29 (R)

0.01 (R) 7,112.43 (R)
7,112.44
56,792.00
32,856.00
1,078,121.07 (R)
1,110,977.07
103,538.00
160,348.00

43,567.08 (R) 13,899.63 (R)
57,466.71

5,197.81 (R)

8,702.82 (R) 6,526.13 (R)
15,228.95

$

159,568.00

77,046.47 (R)

236,614.47

146,652.00

2,456.00

35,486.61 1,100.56 (R)
36,587.17

82,757.00

B- 8

State of Georfjia - - - - - - -
Schedule of Expenditures of Federal Awards
For the Hscal Year Ended Jme 30. 1997

Commerce, U. S. Department of
Atlantic Coastal Fisheries Cooperative Management Act Direct
Public Telecommunications Facilities- Planning and Construction Direct
Telecommunications and Information Infrastructure Assistance Program Through: Georgia Tech Research Corporation
Measurement and Engineering Research and Standards Through: Georgia Tech Research Corporation
Advanced Technology Program Direct Through. University of Georgia Research Foundation
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through: Gulf and Southern Atlantic Fish Development Fund Through University of Georgia Research Foundation
AGENCY TOTAL
Consumer Product Safety Commission, U. S.
Other Federal Assistance Direct
AGENCY TOTAL
Corporation for National and Community Service
National Models Program Direct Community Affairs, Department of
Learn and Serve AmericaSchool and Community Based Programs Direct
Learn and Serve America - Higher Education Direct
AmeriCorps Direct
Training and Technical Assistance Direct
Senior Companion Program Direct

CFDA NUMBER

PASS-THROUGH ENTI1Y IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

11.474 11.550 11.552 11.609 11.612
!!.XXX

96,986.00
54,657.00
-6,391.98 (R)
-6,837.28 (R)
1,730.00 166,836.14 (R) 168,566.14
331,631.51 (R) 161,418.56 (R)
0.01 (R) 106,452.63 (R) 599,502.7!
7,368,684.16

!3.XXX

2,698.64 2,698.64

94.00! 94.004 94.005 94.006 94.009 94.0!6

102,599.48
6!0,489.28 105,488.30 4,420,226.25 (R) 404,393.49 146,914.19

B -9

State of Georgia-------
Schedule of Expenditures of Federal Awards For the Hscal Ycar Ended Jmc 30, 1997

Corporation for National and Community Service
Other Federal Assistance Through: The Georgia Commission for National/ Community Service
AGENCY TOTAL
Defense, U. S. Department of Procurement Technical Assistance for Business Firms Through: Defense Logistics Agency Through Georgia Tech Research Corporation
Aquatic Plant Control Direct Through: University of Georgia Research Foundation
Navigation Projects Direct
Collaborative Research and Development Through: Georgia Tech Research Corporation
Basic and Applied Scientific Research Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Military Construction, National Guard Through: National Guard Bureau
National Guard Military Operations and Maintenance (O&M) Projects Through: National Guard Bureau
National Guard Youth Opportunity Programs Through: National Guard Bureau
Military Medical Research and Development Through: University of Georgia Research Foundation
Basic Scientific Research Through: Georgia Tech Research Corporation Through: Academy of Applied Science
Community Economic Adjustment Planning Assistance Direct
Basic, Applied, and Advanced Research in Science and Engineering Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Air Force Defense Research Sciences Program Through: Georgia Tech Res~ch Corporation Through: University of Georgia Research Foundation

CFDA NUMBER

PASS.mROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

94.XXX

44,320.97 (R)
5,834,431.96

12.002 12.100

SP480095-2001 5

12.107 12.114 12.300

12.400 12.401
12.404 12.420 12.431

12.607 12.630

12.800

39,006.66 162,394.55 (R) 201,401.21
7,020.00
229.00 (R)
7,249.00
287,384.00
5,612,580.65 (R)
8,398,705.75 (R)
585,283.58 (R)
8,983,989.33
454,252.87
I 5,078,279.20
3,577,683.54
4,141.96 (R)
16,110.47 (R) 4,488.96 (R)
20,599.43
18,643.72
1,365,628.09 (R) 10,569.66 (R)
1,376,197.75
2,903,227.83 (R) 335,157.74 (R)
3,238,385.57

B- 10

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended Jmc 30, 1997

Defense, U. S. Department of
Mathematical Sciences Grants Program Direct Thro~gh: Georgia Tech Research Corporation Through: University of Georgia Research Foundation

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

12.901

Research and Technology Development Through: Georgia Tech Research Corporation
Other Federal Assistance Direct Through: Academy of Applied Science Through: Gee Marine, Incorporated Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute Through National Guard Bureau Through U S. Army Medical Research and Material Command Through: University of Georgia Research Foundation

12.910 12.XXX

AGENCY TOTAL
Education, U. S. Department of
Adult Education - State Grant Program Direct Through: Wilkes County Board of Education
Federal Supplemental Educational Opportunity Grants (SFA) Direct
Education of Children with Disabilities in State Operated or Supported Schools Direct
Title I Grants to Local Educational Agencies Direct
Migrant Education ~ Basic State Grant Program Direct Through: Southern Pine Migrant Educational Agency
Educationally Deprived Children~ State Administration Direct
Title I Program for Neglected and Delinquent Children Direct
Undergraduate International Studies and Foreign Language Programs Direct Through: Georgia Tech Research Corporation
International: Overseas ~ Group Projects Abroad Direct
Special Education Innovation and Development Through: University o.f Georgia Research Foundation

84.002
84.007 84.009 84.010 84.011
84.012 84.013 84.016
84.021 84.023

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

-593.78 (R) 18,472.42 (R) 60,698.45 (R)
78,577.09
472,989.04 (R)
1,971,677.52 (R) 19,854.05 (R) 21,106.30 (R)
71,283,354.23 (R) 477,787.66 (R)
2,264,743.17 64,649.90
272,110.84 (R)
76,375,283.67
115,787,638.03

7,530,015.74 3,000.00
7,533,015.74
5,799,218.41
14,668.73 169,952,729.53
4, 782,742.64 21,674.31
4,804,416.95 233,548.09
1,113,149.83
33,679.56 30,820.23 (R) 64,499.79 27,513.22 113,920.15 (R)

B- II

State of Georffia - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

Education, U. S. Department of
Early Education for Children with Disabilities Direct Through: University of Kansas
Services for Children with Deaf~Blindness Direct
Special Education - Grants to States Direct
Special Education - Personnel Development and Parent Training
Direct
Higher Education - Institutional Aid Direct
Federal Family Education Loans (SFA) Direct
Federal Work-Study Program (SFA) Direct
Public Library Services Direct
Interlibrary Cooperation and Resource Sharing Direct
Federal Perkins Loan Program Federal Capital Contributions (SFA) Direct
TRIO- Student Support Services Direct
TRJO- Talent Search Direct
TRJO - Upward Bound Direct
Vocational Education - Basic Grants to States Direct
Vocational Education - Consumer and Homemaking Education Direct
Vocational Education - State Councils Direct
Higher Education - Cooperative Education Direct
Federal Pell Grant Program (SFA) Direct
TRIO - Educational Opportunity Centers Direct
State Student Incentives Grants Direct
National Diffusion Network Direct

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

84.024
84.025 84.027 84.029
84.031 84.032 84.033 84.034 84.035 84.038
84.042 84.044 84.047 84.048 84.049
84.053 84.055 84.063 84.066 84.069 84.073

H024D30033

107,213.05 (R) 13,065.24 (R) 120,278.29
-5,052.40
54,363,095.92

1,257,921.02 (R) 5,385,423.49 39,343,327.00 (3) 5,497,958.60 1,897,501.41
-43,656.01

1,404,000,000.00 (3)

263,569.60 (1), (3) $

37,705,151.13 (1), (3)

1,311,346.21 (R)

789,749.68

2,446,647.88 (R)

28,414,224.48 (5)

130,201.90 65,324.59 25,746.61 (R) 93,749,361.43 816,685.42 (R) 200,845.00 (R) 14,026.65 (R)

B- 12

State of Georgia-------
Schedule of Expenditures of Federal Awards
For the Hscal Year Ended Jme 30. 1997

Education, U. S. Department of
Special Education -Postsecondary Education Programs for Persons with Disabilities Through: University of Tennessee
Special Education Program for Severely Disabled Children Direct
Harris Fellowships Direct
Law School Clinical Experience Program Direct
Fund for the Improvement of Postsecondary Education Direct Through Georgia Tech Research Corporation
Educational Research and Development Through University of Georgia Research Foundation
Minority Science Improvement Direct
Rehabilitation Services- Vocational Rehabilitation Grants to States Direct
Rehabilitation Long-Term Training Direct
National Institute on Disability and Rehabilitation Research Direct
Business and International Education Direct
Training Interpreters for Individuals who are Deaf and Individuals who are Deaf-Blind Through. University of Tennessee
Rehabilitation Services - Client Assistance Program Direct
Immigrant Education Direct
Eisenhower Mathematics an~ Science Education State Grants Direct Through: Mississippi State University
Eisenhower Professional Development- National Activities Through: University of Iowa
Independent Living - State Grants Direct
Special Education - Preschool Grants Direct Through: Various Boards of Education

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

84.078
84.086 84.094 84.097 84.116

84.117 84.120 84.126 84.129 84.133 84.153 84.160 84.161 84.162 84.164
84.168 84.169 84.173

R999B5000 10-95

14,178.30 348,051.42 (R)
74,372.97 (R) 15,945.21 65,530.25
811.56 (R) 66,341.81 1,552,064.54 (R) 65,792.47
58,647,786.18 376,263.24 (R) 248,034.59 (R) 147,068.97 (R)
7,650.04 102,938.96 547,744.76
695,044.92 (R) 5,654.44
700,699.36 8,448.91 (R)
606,283.84 8,505,560.18
85,323.71 8,590,883.89

B- 13

State of GeorfJia- - - - - - -
Schedule of Expenditures of Federal Awards
For the Frscal Year Ended June 30, 1997

Education, U. S. Department of
Vocational Education- Community Based Organizations Direct
Rehabilitation Services - Independent Living Services for Order Individuals Who are Blind Direct
Technology Applications for Individuals with Disabilities Direct
Special Education - Grants for Infants and Families with Disabilities
Direct
Drug & Violence Prevention/Higher Education/ Institution-Wide Direct
Safe and Drug-Free Schools and Communities National Programs
Direct
Byrd Honors Scholarships Direct
Safe and Drug-Free Schools and Communities- State Grants Direct Through: University of Georgia Research Foundation
Supported Employment Services for Individuals with Severe Disabilities Direct
Bilingual Education Support Services Direct
Bilingual Education -Professional Development Direct
Education for Homeless Children and Youth Direct
Graduate Assistance in Areas of National Need Direct
Even Start - State Educational Agencies Direct
Fund for the Improvement of Education Direct
Capital Expenses Direct
McNair Post-Baccalaureate Achievement Direct
State Program Improvement Grants Direct
Centers for International Business Education Through: Georgia Tech Research Corporation
State Grants for Assistive Technology Direct

CFDA NUMBER

PASS-THROUGH ENTI1Y IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

84.174 84.177 84.180 84.181 84.183 84.184 84.185 84.186
84.187 84.194 84.195 84.196 84.200 84.213 84.215 84.216 84.217 84.218 84.220 84.224

15,634.82

138,949.70 94,402.95 (R)

7,257,472.71

28,050.35 (R)

26,749.58
771,248.00
10,027,948.38 (S),(R) 149,300.07 (R)
10,177,248.45

$

834,382.46

8,736.43

14,761.63 (R)

1,035,362.78

115,230.10 (R)

2,320,600.41

29,498.00

41,709.00

195,004.36 (R)

62,524.16

249,154.05 (R)

716,613.03

B- 14

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards For the FISCal Ycar Ended Jmc 30, 1997

Education, U. S. Department of
Income Contingent Loan Program Direct
Tech-Prep Education Direct Through: Franklin County Board of Education Through Lumpkin County Board of Education Through: Muscogee County Board of Education Through: Randolph County Board of Education
Foreign Languages Assistance Direct
State Literacy Resource Centers Direct
Rehabilitation Training- Continuing Education Direct
Rehabilitation Training- State Vocational Rehabilitation Unit In-Service Training Direct
Federal Direct Student Loan (SFA) Direct
Goals 2000 - State and Local Education Systemic Improvement Grants Direct Through Effingham County Board of Education
Eisenhower Professional Development State Grants Direct
Public Charter Schools Direct
Innovative Education Program Strategies Direct
National Institute on the Education of At-Risk Students Through: University of Georgia Research Foundation
Other Federal Assistance Direct Through: Alabama A&M Univer.ity Through Georgia Tech Research Corporation Through: Michigan State University Through: National Writing Project Corporation
AGENCY TOTAL
Energy, U.S. Department of
State Energy Conservation Direct
Weatherization Assistance for Low-Income Persons Direct

CFDA NUMBER

PASS.THROUGH ENTI1Y IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

84.226 84.243

84.249 84.254 84.264 84.265
84.268 84.276

84.281 84.282 84.298 84.306 84.XXX

2-408-16-3140
96-GA06 94-GA03

2,907,803.40 5,000.00 10,500.00 5,500.00
23,030.35 2,951,833.75
21,213.72
27,278.34
341,986.27 (R)

130,838.00 (3)

178,339.64 233,351,507.40

8,061,845.18 (5) 31,286.78 (5)
8,093,131.96
6,442,861.39 (R)
681,166.11
7,149,482.92
164,093.90 (R)
369,431.96 (R) 1,346.48
42,927.80 (R) 7,287.00 (R) 7,340.20
28,146.84 456,480.28
781,785,127.86

1,441,835,989.13

81.041 81.042

814,540.60 (2), (R) 1,950,510.00 (2)

B- 15

State of Georgia-------
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

Energy, U.S. Department of
Basic Energy Sciences -University and Science Education Direct Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation

CFDA
NUMBER
81.049

University Coal Research Through: Georgia Tech Research Corporation
Conservation Research and Development Direct
Renewable Energy Research and Development Direct
Environmental Restoration Through: Georgia Tech Research Corporation
Nuclear Energy, Reactor Systems, Development, and Technology Direct
National Industrial Competitiveness through Energy, Environment, and Economics Direct
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute Through: National Institute for Petroleum and Energy Research Through University of Medicine and Dentistry of New Jersey Through: University of Georgia Research Foundation Through Xavier University

81.057 81.086 81.087 81.092 81.095
81.105 8l.XXX

AGENCY TOTAL
Environmental Protection Agency
Air Pollution Control Program Support Direct
State Indoor Radon Grants Direct
Water Pollution Control~ State and Interstate Program Support Direct
State Public Water System Supervision Direct
State Underground Water Source Protection Direct
Water Pollution Control ~ Lake Restoration Cooperative Agreements Direct
Construction Management Assistance Direct

66.001 66.032 66.419
66.432 66.433 66.435 66.438

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY
EXPENDITURES

NONMONETARY
EXPENDITURES

G4P51609 DE-FCOI95EW55084

103,505.05 (R) 1,283.409.61 (R) 2,782,840.50 (R) 4,169,755.16
125,700.47 (R)
253,530.00
11,286.44 (R)
30,443.15 (R)
496,959.98
57,400.00
1,410,334.68 (R) 1,521.495.38 (R)
73,159.01 (R) 49,753.30 31,975.77 12,236,876.00 (R)
8,224.32 15,331,818.46
23,241,944.26

931,230.00 45,551.00

583,186.00

s

893,346.00

64,036.00

31,326.00 283,832.00

B- 16

State of GeorfJia - - - - - - -
Schedule of Expenditures of Federal Awards For the FISCal Ycar Ended Jmc 30. 1997

Environmental Protection Agency
Water Quality Management Planning Direct Through: Florida Department of Environmental Protection Through: State of florida

CFDA NUMBER
66.454

PAS5-mROUGH ENTITY IDENTIFYING
NUMBER

Capitalization Grants for State Revolving Funds Direct
Non point Source Implementation Grants Direct
Wetlands Protection- State and Tribal Development Grants Direct Through: University of Georgia Research Foundation

66.458 66.460 66.461

National Pollutant Discharge Elimination System Related State Program Grants Direct
Chesapeake Bay Program Through: University of Georgia Research Foundation
Environmental Protection - Consolidated Research Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation

66.463 66.466 66.500

Air Pollution Control Research Through: University of Georgia Research Foundation
Solid Waste Disposal Research Direct Through: University of Georgia Research Foundation

66.501 66.504

Water Pollution Control- Research, Development, and Demonstration Direct Through: University of Georgia Research Foundation

66.505

Safe Drinking Water Research and Demonstration Direct Through: University of Georgia Research Foundation

66.506

Toxic Substances Research Through: University of Georgia Research Foundation
Performance Partnership Grant Direct
Consolidated Pesticide Compliance Monitoring and Program Cooperative Agreements Direct
TSCA Title IV State Lead Grants- Certification of LeadBased Paint Professionals
Direct

66.507 66.605 66.700 66.707

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

24,476.00 92,810.94 (R)
2,321.13 (R) 119,608.07
27,059,814.22 (3)
867,190.00
237,413.00 27,933.66 (R)
265,346.66
397,049.00
21,377.89 (R)
2,461,911.14 (R) 90,569.28 (R)
2,552,480.42
563,749.48 (R)
76,641.49 (R) 79,990.40 (R) 156,631.89
213,631.95 91,334.24 (R)
304,966.19
19,416.00 144.18 (R)
19,560.18
-403.21 (R)
5,925,406.00
733,649.34
356,057.00

173,649,273.00 (3)

B- 17

State of GeortJia - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended Jlflc 30, 1997

Environmental Protection Agency
Pollution Prevention Grants Program Direct
Hazardous Waste Management State Program Support Direct
Superfund State Site ~ Specific Cooperative Agreements Direct
State Underground Storage Tanks Program Direct
Leaking Underground Storage Tank Trust Fund Program Direct
Solid Waste Management Assistance Direct
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
AGENCY TOTAL
Equal Employment Opportunity Commission
Employment Discrimination- Title VII of the Civil Rights Act of I964 Direct
Other Federal Assistance Through: Albany/Dougherty Planning Commission
AGENCY TOTAL
Federal Emergency Management Agency
Community-Based Anti-Arson Program Direct
Hazardous Materials Training Program for Implementation of the Superfund Amendment and Reauthorization Act (SARA) of I986 Direct
Flood Insurance Direct
Community Assistance Program - State Support Services Element (CAP-SSSE) Direct
State Disaster Preparedness Grants Direct
Disaster Assistance Direct
Hazard Mitigation Assistance Direct

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

66.708 66.801 66.802 66.804 66.805 66.808 66.XXX

30.001 30.XXX
83.008 83.011 83.100 83.105 83.505 83.516 83.519

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

105,305.00
604,786.00
1,263,839.80
52,483.00
651,073.00
10,350.13
37,223.36 (R) 564,079. IS (R)
6,318.21 (R) 283,940.94 (R) 891,561.69
45,754,388.75

I 73,649,273.00

97,799.48 47,024.44 (R) 144,823.92
49,977.73
82,272.76 222,477.00
80,000.00 48,677.90 143,990,666.79 (5) 67,395.31

B- 18

State of Georffia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

Federal Emergency Management Agency
Hurricane Program Direct
Earthquake Hazards Reduction Grants Direct
Emergency Management- State and Local Assistance Direct
Mitigation Assistance Program Direct
National Arson Prevention Initiative Direct
AGENCY TOTAL
General Services Administration
Donation of federal Surplus Personal Property Direct
Other Federal Assistance Direct
AGENCY TOTAL
Health and Human Services, U.S. Department of
Public Health and Social Services Emergency Fund Direct
Special Programs for the Aging- Title VII, Chapter 3 Programs for Prevention of Elder Abuse, Neglect, and Exploitation Direct
Special Programs for the Aging- Title VII, Chapter 2Long-Term Care Ombudsman Services for Older Individuals Direct
Special Programs for the Aging - Title III, Part F - Disease Prevention and Health Promotion Services Direct
Special Programs for the Aging- Title III, Part B Grants for Supportive Services and Senior Centers
Direct
Special Programs for the Aging -Title lll, Part C Nutrition Services Direct
Special Programs for the Aging -Title III, Part D -In-Home Services for Frail Older Individuals Direct
Special Programs for the Aging- Title IV- Training, Research and Discretionary Projects and Programs Direct
Demonstration Grants for Residential Treatment for Women and Their Children Through: Thomas County MHMRSA Area Services

CFDA NUMBER

PASs-mROUGH ENTITY IDENTIFYING
NUMBER

83.520 83.52! 83.534 83.535 83.546

39.003 39.XXX

93.003 93.041
93.042 93.043 93.044 93.045 93.046 93.048 93.102

I UD8TI00594-03

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

52,683.37 !91.61
3,003,936.61 38,897.30 10,000.00
147,647,!76.38

831,151.42 831,151.42

16,217,711.00 16,217,711.00

3,382,087.61
93,827.45 93,856.06 323,357.40 6,05!,629.90 9,004,!85.75 195,415.28 602,078.21 69,369.45 (R)

18,750.00

B- 19

State of Georgia-------
Schedule of Expenditures of Federal Awards
For the Hscal Year Ended June 30, 1997

Health and Human Services, U. S. Department of
Food and Drug Administration -Research Direct
Maternal and Child Health Federal Consolidated Programs Direct
Biological Response to Environmental Health Hazards Through: Medical College of Georgia Research Institute
Applied Toxicological Research and Testing Direct
Biometry and Risk Estimation -Health Risks from Environmental Through: University of Georgia Research Corporation
Project Grants and Cooperative Agreements for Tuberculosis Control Programs Direct
Grants for Technical Assistance Activities Related to the Block Grant for Community Mental Health Services -Technical Assistance Centers for Evaluation Direct
Oral Diseases and Disorders Research Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Mental Health Planning and Demonstration Projects Direct
Emergency Medical Services for Children Direct
Primary Care Services Resource Coordination and Development Primary Care Offices Direct
Financial Assistance for Disadvantaged Health Professions Students (F ADHPS) Direct
Projects for Assistance in Transition from Homelessness (PATH) Direct
IDV Demonstration Program for Children, Adolescents, and Women
Direct
Health Program for Toxic Substances and Disease Registry Through: Georgia Tech Research Corporation
Grants for State Loan Repayment Direct
Human Genome Research Through Georgia Tech Research Corporation Through: Medical College of Georgia R:esearch Institute Through: University of Georgia Research Foundation

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.103 93.110 93.113 93.114 93.115 93.116 93.119
93.121
93.125 93.127 93.130 93.139 93.150 93.153 93.161 93.165 93.172

43,193.85 S _ _ _ _1_1_9;..,2_15_.2_1_
173,941.28 (R) s _ _ _ _~11~8;..,5_8o_.2_8_ (R)
15,628.51 (R)
2,352,706.98
15,175.90 41,863.83 (R) 443,546.65 (R) 102,342.59 (R) 587,753.07 173,135.00 58,095.32
149,194.35
41,932.00 (R)
308,936.00
513,422.31 300,975.22 (R)
95,000.00 72,914.62 (R) 31,932.39 60,580.30 (R) 165,427.31

147,679.16

B -20

State of GeorfJia - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

Health and Human Services, U. S. Department of
Research Related to Deafness and Communication Disorders Direct Through: Medical College of Georgia Research Institute
Disabilities Prevention Direct
Allied Health Project Grants Direct
Interdisciplinary Training for Health Care for Rural Areas Direct
Childhood Lead Poisoning Prevention Projects State and Community-Based Childhood Lead Poisoning Prevention and Surveillance of Blood Lead Levels in Children Direct
Family Planning- Services Direct
Health Services Research and Development Grants Direct Through: Georgia Tech Research Corporation
Mental Health Research Grants Direct Through. Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Migrant Health Centers Grants Direct
Childhood Immunization Grants Direct
Alcohol National Research Service Awards for Research Training Through: University of Georgia Research Foundation
Alcohol Research Programs Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Drug Abuse Research Programs Direct Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Mental Health Research Career/Scientist Development Awards Through: University of Georgia Research Foundation

CFDA NUMBER

PASS-THROUGH ENTI1Y IDENTIFYING
NUMBER

93.173

93.184 93.191 93.192 93.197
93.217 93.226

93.242

93.246 93.268 93.272 93.273
93.279

93.281

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

229,287.45 (R) 12,645.69 (R)
241,933.14
292,498.78
136,210.50
155,073.58

531,642.54
5,787,892.57
634,289.46 147,141.87 (R) 781,431.33
760,015.70 (R) 191,613.98 (R) 719,241.84 (R) 1,670,871.52
705,096.89
8, 722,505.32
108,537.22 (R)
213,602.06 (R) 759,394.23 (R) 972,996.29
144,378.55 (R) 413,342.23 (R) 265,653.86 (R) 145,334.40 (R) 968,709.04
164,204.80 (R)

19,264,469.52 (4)

B- 21

State of Georf}ia - - - - - - -
Schedule of Expenditures of Federal Awards For the Hscal Ycar Ended Jmc 30. 1997

Health and Human Services, U.S. Department of
Centers for Disease Control and Prevention -Investigations and Technical Assistance Direct Through: Medical College of Georgia Research Institute
Nurse Practitioner and Nurse-Midwifery Education Programs Direct
Comparative Medicine Program Through: University of Georgia Research Foundation
Health Professions Student Loans, Including Primary Care Loans/Loans for Disadvantaged Students (SFA) Direct
Professional Nurse Traineeships Direct
Nurse Training Improvement- Special Projects Direct
Nursing Research Direct
Nursing Student Loans (SFA) Direct
Biomedical Technology Direct Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Grants for Graduate Training in Family Medicine Direct
Academic Research Enhancement Award Direct Through: University of Georgia Research Foundation
Cancer Cause and Prevention Research Direct Through. Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Cancer Treatment Research Direct
Cancer Biology Research Through: University of Georgia Research Foundation
Cancer Control Direct Through: Medical College of Georgia Research Institute
Family Preservation and Support Services Direct

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

93.283

93.298 93.306 93.342
93.358 93.359 93.361 93.364 93.371

93.379 93.390
93.393

93.395 93.396 93.399
93.556

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

1,870.863.69 -2,761.34 (R)
1,868,102.35
527,427.69
8,588.18 (R)

-309,893.00 (3)
287,100.00
262,472.64 (R)
22,754.67 (R)
-17,872.18 (1),(3) $
-34,101.52 (R) 25,299.89 851,538.72 (R) 842,737.09
79,716.13
27,302.36 83.923.61 (R) 111,225.97
115,258.98 (R) 93,087.17 (R) 12,628.97 (R) 220.975.12
10,379.85 (R)
270,714.16 (R)
52,041.63 484,979.88 (R) 537.021.51
5.287,133.04

3,964,902.10 (3) 1,101,536.80 (1), (3)

B -22

State of GeorfJia
Schedule of Expenditures of Federal Awards
For the FLSCal Ycar Ended Jmc 30, 1997

Health and Human Services, U. S. Department of
Temporary Assistance for Needy Families Direct
Family Support Payments to States - Assistance Payments Direct
Job Opportunities and Basic Skills Training Direct
Child Support Enforcement Direct
State Legalization Impact Assistance Grants Direct
Refugee and Entrant Assistance- State Administered Programs Direct
Low-Income Home Energy Assistance Direct
Community Services Block Grant Direct
Community Services Block Grant- Discretionary Awards Through: National Collegiate Athletic Association Through: Virginia Water Project, Incorporated
Community Services Block Grant Discretionary AwardsCommunity Food and Nutrition Direct
Child Care for Families At-Risk of Welfare Dependency Direct
Child Care and Development Block Grant Direct Through: Georgia Child Care Council
Refugee and Entrant Assistance Discretionary Grants Direct
Refugee and Entrant Assistance Targeted Assistance Direct
Empowerment Zones Program Direct
State Court Improvement Program Direct
Child Care Mandatory and Matching Funds of the Child Care and Development Fund Direct
Head Start Direct Through: Ninth District Opportunity, Incorporated Through: University of Georgia Research Foundation

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.558 93.560 93.561 93.563 93.565 93.566 93.568 93.569 93.570
93.571 93.574 93.575
93.576 93.584 93.585 93.586 93.596 93.600

151,155,743.18 134,633,770.85
13,719,115.21 60,412.855.02
236,894.85

5,671,776.54
14,116,320.37 (2)
13,693,105.33
116,495.77 11.006.09
127,501.86

427-9371553 &54 427-93-17429

63,391.00

3,794,454.82

44,116,841.89 106.572.33 (R) 21,028.21 12,810.00
44,257,252.43

$

250,000.00

581,323.45

47,387,500.00

96,829.61

50,321,116.94
2,362.729.40 (R) 14,000.00
313,709.Q4 (R) 2,690,438.44

B -23

State of Georgia-------
Schedule of Expenditures of Federal Awards
For the FLSCal Year Ended Jme 30. 1997

Health and Human Services, U. S. Department of
Child Welfare Research and Demonstration Direct
Developmental Disabilities Basic Support and Advocacy Grants Direct Through: Georgia Council on Development Disabilities
Developmental Disabilities Projects of National Significance Direct
Developmental Disabilities University Affiliated Programs Direct
Children's Justice Grants to States Direct
Child Welfare Services- State Grants Direct
Adoption Opportunities Direct
Temporary Child Care and Crisis Nurseries Direct
Foster Care- Title IV-E Direct
Adoption Assistance Direct
Social Services Block Grant Direct Through: City of Albany
Child Abuse and Neglect State Grants Direct
Family Violence Prevention and Services Grants to States and Indian Tribes Direct
Community-Based Prevention Program Direct
Grants to States for Planning and Development of Dependent Care Programs Direct
Independent Living Direct
Medicare -Hospital Insurance Direct Human Resources, Department of
State Medicaid Fraud Control Units (MC) Direct
State Survey and Certification of Health Care Providers and Suppliers (MC) Direct

CFDA NUMBER

PASs-THROUGH EN1TIY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.608 93.630

93.631 93.632 93.643 93.645 93.652 93.656 93.658 93.659 93.667

1200-006-20-00-012-3000

93.669 93.671

93.672 93.673

93.674 93.773

93.775 93.777

67,929.86 (R)
2, 142,246.73 62,696.06 (R)
2,204,942. 79 83,741.28 (R)
413,510.14 (R) 228,096.85 9,745,687.13 146,730.71 194,000.00 34,765,839.17 5,998,973.55 38,838,178.85
3,529.50 38,841,708.35
1,461,991.03
946,942.65 757,351.15
16,036.91 683,019.93 2,771,472.51
2,145,682.21
2,652, 705.75

B -24

State of Georgia--------
Schedule of Expenditures of Federal Awards For the FLSCal Year Ended Jme 30. 1997

Health and Human Services, U.S. Department of
Medical Assistance Program (MC) Direct
Health Care Financing Research, Demonstrations and Evaluations Direct Through: Medical College of Georgia Research Institute

CFDA NUMBER
93.778 93.779

Scholar;hips for Students of Exceptional Financial Need (SFA) Direct
Cell Biology and Biophysics Research Direct Through: Georgia Tech Research Corporation Through University of Georgia Research Foundation

93.820 93.821

Area Health Education Centers Direct
Heart and Vascular Diseases Research Through: Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through. University of Georgia Research Foundation

93.824 93.837

Lung Diseases Research Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation

93.838

Blood Diseases and Resources Research Direct Through: Georgia Tech Research Corporation Through Medical College of Georgia Research Institute

93.839

Arthritis, Musculoskeletal and Skin Diseases Research Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation

93.846

Diabetes, Endocrinology and Metabolism Research Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation

93.847

Digestive Diseases and Nutrition Research Direct Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation

93.848

Kidney Diseases, Urology and Hematology Research Through: University of Georgia Research Foundation
Clinical Research Related to Neurological Disorders Through: Medical College of Georgia Research Institute

93.849 93.853

PASS-mROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

s 2,324,311,996.75
193,010.30 170,004.99 (R) 363,015.29
61,511.00
40,226.95 (R) 24.445.52 (R) 1,439,538.22 (R) 1,504,210.69
637,660.12
218,040.19 (R) 1,780,897.89 (R)
48,681.59 (R) 2,047,619.67
316,655.59 (R) 320,737.66 (R) 637,393.25
53,411.23 71,453.56 (R) 3,570,752.37 (R) 3,695,617.16
312,807.54 (R) 67,201.95 (R)
380,009.49
11,631.89 (R) 201,898.23 (R) 387,602.87 (R) 601,132.99
5,272.17 (R) 632,553.11 (R) 337,570.82 (R) 975,396.10
360,305.59 (R)
21,353.74 (R)

B -25

State of G e o r g i a - - - - - - - -
Schedule of Expenditures of Federal Awards
For the Hscal Ycar Ended Jmc 30. 1997

Health and Human Services, U. S. Department of Biological Basis Research in the Neurosciences Direct Through: Medical College of Georgia Research lnstirute
Allergy, Immunology and Transplantation Research Direct Through Georgia Tech Research Corporation Through University of Georgia Research Foundation
Microbiology and Infectious Diseases Research Direct Through Medical College of Georgia Research Institute Through: National Institute of Health Through University of Georgia Research Foundation
Pharmacology, Physiology, and Biorelated Chemistry Research Through Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Genetics and Development Biology Research Direct Through: Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through National Institute of Health Through: University of Georgia Research Foundation
Population Research Direct Through: Medical College of Georgia Research Institute
Research for Mothers and Children Direct Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Aging Research Direct Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Vision Research Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute
Medical Library Assistance Through: Georgia Tech Research Corporation

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.854 93.855 93.856 93.859 93.862
93.864 93.865 93.866 93.867 93.879

$

349,560.97 (R)

305,146.73 (R)

654,707.70

262,675.42 (R) 98,466.47 (R) 219,752.25 (R)
580,894.14

504,652.62 (R) 2,820.93 (R) 31,692.88 (R)
2,108,477.56 (R)
2,642,002.13

189,473.95 (R) 75,705.47 (R) 558,934.19 (R) 824, I 13.61
166,544.10 (R) 86.61 (R)
223,309.57 (R) 8,287.18 (R)
1,219,706.21 (R) 1,617,933.67
63,280.20 378,622.97 (R) 441,903.17
622,094.64 (R) 484,870.66 (R) 367,287.80 (R) 1,474,253.10
208,433.58 (R) 624,491.81 (R) 204,172.79 (R)
1,037,098.18
31,880.65 (R) 1,449,727.24 (R) 1,481,607.89
213,738.47 (R)

B -26

State of Georffkt - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FLSCal Ycar Ended Jmc 30, 1997

Health and Human Services, U. S. Department of
Minority Access to Research Careers Direct
Grants for Physician Assistant Training Program Direct
Grants for Faculty Development in Family Medicine Direct
Rural Health Medical Education Demonstration Projects Direct Through Georgia Tech Research Corporation
Rural Health Services Outreach Through Ninth District Opportunity, Incorporated
Grants to States for Operation of Offices of Rural Health Direct
Nurse Anesthetist Education Programs Direct
HIV Care Formula Grants Direct
Grants to Provide Outpatient Early Intervention Services with Respect to HIV Disease Direct
Cooperative Agreements for State-Based Comprehensive Breast and Cervical Cancer Early Detection Programs Direct
Scholarships for Health Professions Students from Disadvantaged Backgrounds
Direct
Special Projects of National Significance Through: Emory University
Center for Medical Rehabilitation Research Through: University of Georgia Research Foundation
Demonstration Grants to States for Community Scholarships Direct
Fogarty International Research Collaboration Award Direct Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Project Grants for Renovation or Construction at Tertiary Perinatal Facilities Direct
Comprehensive Residential Drug Prevention and Treatment Projects for Substance-Using Women and Their Children Direct
Cooperative Agreements to Support Comprehensive School Health Programs to Prevent the Spread of HIV and Other Important Health Problems Direct

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.880 93.886 93.895 93.906
93.912 93.913 93.916 93.917 93.918 93.919 93.925 93.928 93.929 93.931 93.934
93.935 93.937 93.938

118,104.59 299,156.01 100,706.20 232,264.72 (R)
215.00 (R) 232,049.72
81.002.26 (R) 59.828.57 83,252.97 13,765.)53.17

440,309.87

1.825,992.75

222,575.00 (R)

295.00

35,736.56 (R)

26,121.00

13,258.26 3,331.02 (R) 39,651.20 (R)

s

56,240.48

101.452.53

927.320.48

3,706.60

B -27

State of Georf)la - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

Health and Human Services, U.S. Department of
IDV Prevention Activities -Health Department Based Direct
IDV Demonstration, Research, Public and Professional Education Projects Direct
Research, Treatment and Education Programs on Lyme Disease in the United States Direct
Epidemiologic Research Studies of Acquired Immunodeficiency Syndrome (AIDS) and Human Immunodeficiency Virus (HIV) Infection in Selected Population Groups Direct Through: University of Georgia Research Foundation
Human Immunodeficiency Virus (HIV)/Acquired Immunodeficiency Virus Syndrome (AIDS) Surveillance Direct
Assistance Program for Chronic Disease Prevention and Control Direct
Community- Based Comprehensive HlV/STDITB Outreach Services for High Risk Substance Abusers Demonstration Program Direct
Demonstration Grants to States with Respect to Alzheimer's Disease Direct
Agricultural Health and Safety Programs Direct Through: University of Georgia Research Foundation
Block Grants for Community Mental Health Services Direct
Block Grants for Prevention and Treatment of Substance Abuse Direct Through: University of Georgia Research Foundation
Special Minority Initiatives Direct
Preventive Health Services - Sexually Transmitted Diseases Control Grants Direct
Mental Health Disaster Assistance and Emergency Mental Health Direct
Grants for Establishment of Departments of Family Medicine Direct

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.940 93.941 93.942 93.943
93.944 93.945 93.949 93.951 93.956
93.958 93.959
93.960 93.977 93.982 93.984

4,912,421.85 78,630.66 96,270.60

13,500.00

276,208.45 (R) 341,300.25 (R) 617,508.70
1,195.233.07
140,002.16
1,160.72
156,361.20 188,513.89 100,161.61 (R) 288,675.50 7, I 13,864.91
26,327,418.10 10,833.84
26,338,251.94 133.237.79
2,092,552.40
543,062.09
68,076.78

571,069.56

B -28

State of GeorfJia - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended June 30. 1997

Health and Human Services, U.S. Department of
Cooperative Agreements for State-Based Diabetes Control Programs and Evaluation of Surveillance Systems Direct
Senior International Fellowships Direct Through: University of Georgia Research Foundation

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

93.988 93.989

National Health Promotion Direct
Preventive Health and Health Services Block Grant Direct
Maternal and Child Health Services Block Grant to the States Direct
Other Federal Assistance Direct Through Centers for Disease Control Through Georgia Council on Development Disabilities Through: Georgia Mountains Regional Development Center Through: Georgia Tech Research Corporation Through. Morehouse School of Medicine Through: National Association for Equal Opportunity in Higher Education Through: National Collegiate Athletic Association Through. Southwest Georgia Community Health Institute Through: University of Connecticut Through: University of Georgia Research Foundation

93.990 93.991 93.994 93.XXX

90AT053601 & 90AM041601 1071!1505DA07215

AGENCY TOTAL
Housing and Urban Development, U.S. Department of
Manufactured Home Construction and Safety Standards Direct Through: National Conference of States on Building Codes Through: Various Mobile Home Manufacturers
Community Development Block Grants/State's Program Direct
Emergency Shelter Grants Program Direct
Supportive Housing Program Direct
Historically Black Colleges and Universities Program Direct
HOME Investment Partnerships Program Direct
Housing Opportunities for Persons with AIDS Direct

14.171
14.228 14.231 14.235 14.237 14.239 14.241

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

211,613.86
89,110.02 9,583.86 (R) 98,693.88
78,555.11
3,712,571.74

195,540.06

17,175,997.84

1,458,286.13 125,007.20 73,488.51 10,340.50 148,444.76 987.09

(3),(R) (R) (R)
(R)

17.79 118,557.45
15,492.15 16,079.48 (R) 953,914.65 (R)

2,920,615.71

3,136,549,894.48

1,240,047.23 (3)
1,240,047.23 26,517,494.43

484,093.50 6,743.01
1,043,621.48 1,534,457.99 53,626,902.88 1,354,810.00
561,331.00 127,294.43 15,445,751.00 852,252.00

B -29

State of G e o r g i a - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

Housing and Urban Development, U. S. Department of
Fair Housing Assistance Program State and Local Direct
Community Development Work-Study Program Direct
Public and Indian Housing Drug Elimination Program Direct
Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation (SBC) Direct
Lead-Based Paint Hazard Control in Priority Housing Direct
Other Federal Assistance Direct Through: University of Georgia Research Foundation
AGENCY TOTAL
Interior, U.S. Department of the
Sport Fish Restoration Direct
Wildlife Restoration Direct
Endangered Species Conservation Direct Through. State of Tennessee Through; University of Georgia Research Foundation
Clean Vessel Act Direct
Assistance to State Water Resources Research Institutes Direct
National Water Resources Research Program Through: University of Georgia Research Foundation
Earthquake Hazards Reduction Program Through: Georgia Tech Research Corporation
Geological Survey - Research and Data Acquisition Direct Through: University of Georgia Research Foundation
Historic Preservation Fund Grants-In-Aid Direct Through: National Park Service Through: University of Georgia Research Foundation

CFDA NUMBER

PASs-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

14.401 14.512 14.854 14.856
14.900 14.XXX

$

246,585.80

52,837.44

4,590.00

46,157,239.00
65,735.53
438,433.59 11,964.94 (R)
450,398.53
120,480,185.60

15.605 15.611 15.612
15.616 15.805 15.806 15.807 15.808
15.904

3,779,66!.00

4,130,984.00

274,574.96 (R) 31,97!.70 (R) !0,596.50 (R)
317,143.16

63,856.00

125,925.87 (R)

7,368.16 (R)

64,562.39 (R)

21,784.00 -0.12 (R)
21.783.88

869,065.99 (R) 10,216.53 81,719.06 (R)

s

961,00!.58

B -30

State of Georf)la - - - - - - -
Schedule of Expenditures of Federal Awards
For the: FLSCal Year Ended Jmc: 30. 1997

Interior, U.S. Department of the National Historic Landmark Direct
Outdoor Recreation - Acquisition, Development and Planning Direct Through: University of Georgia Research Foundation
Migratory Bird Banding and Data Analysis Direct
State Partnerships Direct
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through University of Georgia Research Foundation
AGENCY TOTAL
Japan-U. S. Friendship Commission Other Federal Assistance Through University of Georgia Research Foundation
AGENCY TOTAL
Justice, U.S. Department of Juvenile Justice and Delinquency Prevention Allocation to States Direct Through: Children and Youth Council of Georgia
Victims of Child Abuse Direct
PartE State Challenge Activities Direct
Criminal Justice Statistics Development Direct
Justice Research, Development and Evaluation Project Grants Direct
State Criminal Alien Assistance Program Direct
Crime Victim Assistance Direct
Crime Victim Compensation Direct

CFDA NUMBER

PAS5-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

15.912 15.916
15.976 15.977 15.XXX

7,500.00
173,338.70 82,152.09 (R) 255,490.79
50,386.00
8,277.11 (R)
313,687.89 (R) 1,221.60 (R)
949,065.14 (R) 1,263,974.63
11,057,914.57

87.XXX

690.02 (R) 690.02

16.540
16.547 16.549 16.550 16.560 16.572 16.575 16.576

]95040037

1,816,669.80 (S),(R) 15,528.44
1,832,198.24 640,222.75 254,000.00 48,890.14
454,522.77 595,814.67 3,241,299.67
76,000.00

B- 31

State of Georgia--------
Schedule of Expenditures of Federal Awards
For the fLSCal Year Ended Jme 30. 1997

Justice. U. S. Department of
Byrne Fonnula Grant Program Direct
Edward Byrne Memorial State and Local Law Enforcement Assistance Discretionary Grants Program
Direct Through: Community Research Associates, Incorporated
Violent Offender Incarceration and Truth in Sentencing Incentive Grants Direct
Violence Against Women Formula Grants Direct
Local Law Enforcement Block Grants Program Direct
Corrections- Training and Staff Development Through: Federal Correctional Institution
Public Safety Partnership and Community Policing Grants Direct
Other Federal Assistance Direct Through: Metro Atlanta Crime Commission
AGENCY TOTAL
Labor, U. S. Department of
Labor Force Statistics Direct
Compensation and Working Conditions Data Direct
Employment Service Direct
Unemployment Insurance Direct
Senior Community Service Employment Program Direct
Trade Adjustment Assistance - Workers Direct
Employment and Training AssistanceDislocated Workers Direct
Employment ServiceS and Job Training- Pilot and Demonstration Programs Direct

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

16.579 16.580
16.586 16.588 16.592 16.601 16.710 i6.XXX

13,392,688.84

$

5,531,992.34

16,968.30

5,548,960.64

803,69!.60 1,358,629.19
899,480.82 53,90!.00 31,750.12
2,235,843.81 (R) 25,258.85
2,261,102.66 31,493,153.11

17.002 17.005 17.207 17.225 17.235 17.245 17.246
17.249

1,740,902.56 81,96!.87
20,786,938.77 42,458,306.99
1,758,142.22 1,524,129.81
21,144,751.23 510,439.56

B- 32

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the Hscal Year Ended Jme 30, 1997

Labor, U.S. Department of
Job Training Partnership Act Direct Through: Appalachian Regional Commission Through: Atlanta Regional Commission
Through: C. S.R.A. Employment and Training Consortium Through: City of Columbus Consolidated Government Through: Coosa Valley Regional Development Center
Through: DeKalb Private Industry Council Through: East Central Georgia Employment
and Training Consortium Through: Heart of Georgia
Regional Development Center Through Lower Chattahoochee Private Industry Council Through: Middle Flint Regional Development Center
Through Middle Georgia Consortium, Incorporated
Through Northeast Georgia Regional Development Center
Through Richmond/Burke Job Training Authority Through: South Georgia Regional Development Center Through: Southeast Georgia
Regional Development Center Through: Southwest Georgia
Regional Development Center
Through: West Central Georgia Private Industry Council
Consultation Agreements Direct
Mine Health and Safety Grants Direct
Women's Special Employment Assistance Direct
Disabled Veterans' Outreach Program (DVOP) Direct
Veterans' Employment Program Direct
Local Veterans' Employment Representative Program Direct
Other Federal Assistance Direct Through: East Central Georgia Consortium Through: Georgia Tech Research Corporation
AGENCY TOTAL

CFDA NUMBER

PASS.mROUGH ENTfiY IDENTIFYING
NUMBER

17.250

01-96-14-714 JT9723

0 1-96-!4-090 01-96-14-993 01-96-14-922
JT9714

03-96-11-11-114 97-00-1-1-03
9901797

17.504 17.600 17.700 17.801 17.802 17.804 17.XXX

96-155 96-!B-01 97VEN-01

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

33,150,667.99 (5) 136,700.09 116,842.00 53,106.65 120,037.20
94,373.37 156,896.81 246,965.71 149,475.09 180,601.57 121,809.32 103,261.49 31,501.66
169,957.31
4,664.72 76,990.99 533,921.02 54,877.74 170,084.54 120,900.66 78,769.79
124,952.19 163,693.41 170,264.41
33,172.91
817,058.67 118,231.40 70,184.08
9,717.39
37,379,680.18
101,457.33
176,375.00
12,945.00
2,013,762.42
9,986.07
1,341,214.89
100,811.17 16,366.33
934,022.38 (R)
1,051,199.88
132,092,193.78

B -33

State of Georgia--------
Schedule of Expenditures of Federal Awards For the Frscal Year Ended Jme 30. 1997

National Aeronautics and Space Administration Aerospace Education Services Program Through: Space Telescope Science Institute Technology Transfer Direct Through: Georgia Tech Research Corporation
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through Howard University Through: Lewis Research Center Through: Universities Space Research Association Through University of Georgia Research Foundation
AGENCY TOTAL
National Archives and Records Administration National Historical Publications and Records Grants Direct Other Federal Assistance Direct
AGENCY TOTAL
National Association of State Development Agencies Other Federal Assistance Direct
AGENCY TOTAL
National Foundation on the Arts and the Humanities Promotion of the Arts Grants to Organizations and Individuals Direct Through: Georgia Council for the Arts Through: Georgia Tech Research Corporation
Promotion of the Arts Partnership Agreements Direct
Promotion of the Humanities. FederalState Partnership Direct Through: Georgia Humanities Council

CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

43.001 43.002

G0-5321.02-93A

43.XXX
NAG8-1107 NAS8-401 81;3606-041

20,853.79 (R)
3,188.74 (R) 8,043,629.55 (R)
8,046,818.29
1,226,375.60 (R)
1,152,480.45 (R)
21,376.00 196,362.44
20,488.63 (R)
6,219.69 (R)
355,345.39 (R)
2,978,648.20
11,046,320.28

89.003 89.XXX

225,828.21
4,475.00 (R)
230,303.21

105.XXX

11,601.44 11,601.44

45.024
45.025 45.129

95-103G S0-21357-95 GHC-95-130-G

15,000.00 (R)
297.09
-337.59 (R)
14,959.50

s

489,639.06

12,700.63 19,327.02 (R)
500.00 4,285.44 3,202.23
40,015.32

B- 34

State of GeortJia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the Hscal Ycar Ended Jmc 30. 1997

National Foundation on the Arts and the Humanities Promotion of the Humanities - Collaborative Research Direct Promotion of the Humanities - Education Development -and Demonstration Direct Through: Georgia Tech Research Corporation Through: University of California
Institute of Museum Services Through: Institute of Museum and Library Services
Other Federal Assistance Direct Through Georgia Council for the Arts Through: Georgia Humanities Council Through Institute of Museum and Library Services
AGENCY TOTAL
National Science Foundation
Engineering Grants Through Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Mathematical and Physical Sciences Direct Through: Georgia Tech Research Corporation Through: Harvard University Through: University of Georgia Research Foundation
Geosciences Direct Through: Georgia Tech Research Corporation
Computer and Infonnation Science and Engineering Direct Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Biological Sciences Direct Through: Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute Through: University of Georgia Research Foundation

CFDA NUMBER

PASS.THROUGH ENTITY IDENTIFYING
NUMBER

45.161 45.162

45.301 45.XXX

GHC-95-084-G

47.Q41

47.049 47.050

PHY-912572

47.070

47.074

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

15,878.10 (R)
14,410.28 (R) 20,004.52 (R)
34,170.94 68,585.74
2,680.00 (R)
65,591.16 (R}
4,925.62 (R)
1,800.00 92,344.99 (R) 164,661.77
796,419.49

7,389,674.02 (R} 79,850.64 (R}
7,469,524.66
912,946.35 (R}
1,702,514.98 (R)
44,547.70 (R) -134.77 (R)
2,659,874.26
15,951.96 (R) 821,168.31 (R)
837,120.27
65,186.75 (R) 1,863,738.35 (R)
488.89 (R)
1,929,413.99
286,960.71 (R) 507,099.93 (R) 130,297.82 (R) 108,840.22 (R)
1,033,198.68

B- 35

State of GeorfJia - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended Jlf\c 30. 1997

National Science Foundation
Social, Behavioral, and Economic Sciences Direct Through: Georgia Tech Research Corporation Through: National Research Council Through: University of Georgia Research Foundation

CFDA
NUMBER

PASS.THROUGH ENTITY IDENTIFYING
NUMBER

47.075

Education and Human Resources Direct Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation

47.076

Other Federal Assistance Direct Through: Boston College Through Florida Agricultural and Mechanical University Through. Georgia Tech Research Corporation Through Institute of Ecosystem Studies Through: Michigan State University Through University of Georgia Research Foundation

47.XXX

ESJ-9550002;865-6 C-9549
61-2345

AGENCY TOTAL
Nuclear Regulatory Commission Enhance Technology Transfer and Dissemination of Nuclear Energy Process and Safety Information Direct
AGENCY TOTAL
Personnel Management, U. S. Office of Intergovernmental Personnel Act (IPA) Mobility Program Direct
AGENCY TOTAL
Postal Service, U. S. Other Federal Assistance Direct
AGENCY TOTAL
Small Business Administration
Business Development Assistance to Small Business Direct Through: Georgia Tech Research Corporation

77.003 27.011 98.XXX 59.005

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

66,506.23 (R) 89,037.99 (R) 1,092.10 (R) 2,605.07 (R)
159,241.39

357,982.31 (R) 1,755,913.60 (R)
160,634.46 (R)
2,274,530.37

1,692,928.76 83,263.47 40,989.46
630,729.93 341.92 781.03
10,470,649.47

(5),(R)
(R) (R) (5),(R)

12,919,684.04

29,282,587.66

31,419.00 31,419.00
-2,140.21 -2,140.21
10,756.24 (R)
10,756.24
304.71 114,349.32 (R) 114,654.03

B -36

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards For the FISCal Ycar Ended Jmc 30, 1997

Small Business Administration
Small Business Development Center Direct
AGENCY TOTAL
Smithsonian Institute
Other Federal Assistance Through. University of Georgia Research Foundation
AGENCY TOTAL
Social Security Administration Social Security- Disability Insurance Direct
AGENCY TOTAL
State, U. S. Department of
Special Domestic Assignments Through: Georgia Tech Research Corporation
Other Federal Assistance Direct Through Amidest Through: University of Georgia Research Foundation
AGENCY TOTAL
Tennessee Valley Authority
TVA Environmental Research Center Through: Georgia Tech Research Corporation
Other Federal Assistance Direct Through: University of Kentucky Research Foundation
AGENCY TOTAL
Transportation, U.S. Department of
Boating Safety Financial Assistance Direct
Aviation Research Grants Through Georgia Tech Research Corporation
Highway Planning and Construction Direct

CFDA NUMBER

PASS-1HROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

59.037

2,060,042.95 (R) 2,174,696.98

60.XXX

22,633.37 (R) 22,633.37

96.001

38,209,607.07 38,209,607.07

19.202 19.XXX

50,183.92 (R)
830,360.25 (R) 8,237.00 (R)
4,142,676.44 (R) 4,981,273.69
5,031,457.61

62.001 62.XXX

2,258.41 (R)
30,417.26 (R) 8,834.63 (R)
39,251.89
41,510.30

20.005 20.108 20.205

788,236.00 382,887.01 (R) 370,622,706.00

B -37

State of Georfjla - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30, 1997

Transportation, U. S. Department of
Highway Training and Education Direct
Motor Carrier Safety Assistance Program Direct
National Recreational Trails Funding Program Direct
Federal Transit Capital Improvement Grants Direct
Federal Transit Technical Studies Grants Direct
Federal Transit Capital and Operating Assistance Fonnula Grants Direct
Public Transportation for Nonurbanized Areas Direct
Capital Assistance Program for Elderly Persons and Persons With Disabilities Direct
Transit Planning and Research Through: Georgia Tech Research Corporation
State and Community Highway Safety Direct
Pipeline Safety Direct
Interagency Hazardous Materials Public Sector Training and Planning Grants Direct
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through: Office of Small and Disadvantaged Business Utilization Through: South Carolina State University
AGENCY TOTAL
Treasury, U.S. Department of the
Alcohol, Tobacco, and Firearms - Training Assistance Through: Georgia Tech Research Corporation
Other Federal Assistance Direct Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation
AGENCY TOTAL

CFDA NUMBER

PASs-mROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

20.215 20.218 20.219 20.500 20.505 20.507
20.509 20.513
20.514 20.600 20.700 20.703
20.XXX

EITAP9596ALB

15,890.96 2,22\.323.87 (5)
23,078.84 -322,127.65 846,094.88
3,543,490.10 3,158,728.71
1,218,019.34 659,128.75 (R)
3,095,562.43 195,201.00 (5)
102,254.06 94,968.60 (R) 2,776,627.06 (R) 49,851.54 20,094.25 2,941,541.45 389,492,015.75

21.052 2l.XXX

20,490.15 (R)
36,913.44 2,059.09 (R) 16,665.07 (R)
55,637.60
76,127.75

B -38

State of GeorfJia - - - - - - - -
Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30. 1997

United States Arms Control and Disarmament Agency Other Federal Assistance Through: University of Georgia Research Foundation
AGENCY TOTAL
United States Information Agency Educational Exchange- Graduate Students Direct Educational Exchange- University Lecturers (Professors) and Research Scholars Direct Other Federal Assistance Direct Through: NAFSA
AGENCY TOTAL
Veterans Affairs, U.S. Department of Veterans State Domiciliary Care Direct Veterans State Nursing Home Care Direct Veterans State Hospital Care Through: Georgia Tech Research Corporation Veterans Educational Assistance Direct Vocational Rehabilitation for Disabled Veterans Direct Other Federal Assistance Direct
AGENCY TOTAL
GRAND TOTAL EXPENDITURES OF FEDERAL AWARDS

CFDA NUMBER

PASS-THROUGH ENTI1Y IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

JOOXXX

163.00 (R) 163.00

82.001 82.002 82.XXX

23,564.43
3,342.24 393,105.90 (R)
4,511.30 (R) 397,617.20 424,523.87

64.014 64.015 64.016 64.111 64.116 64.XXX

515,693.08 7,384,575.78
-1,183.75 (R) 320,289.17
527.00 1,262,086.79 (R) 9,481,988.07 5,584,774,677.86

2,321,435,691.92

B -39

(This page ntrnNonallv ldt blank)

- - - - - - - - S t a t e of G e o r g i a - - - - - - - -
Notes to the Schedule of Expenditures of Federal Awards
For the FISCal Year Ended Jme 30.1997

PURPOSE OF THE SCHEDULE

Office of Management and Budget (OMB) Circular A-133, Audits of States. Local Governments. and Non-Profit Organizations, requires a Schedule of Expenditures of Federal Awards reflecting total expenditures for each Federal fmancial assistance program as identified in the Catalog of Federal Domestic Assistance (CFDA).

SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity -The accompanying schedule includes all Federal fmancial assistance programs administered by the State of Georgia for the fiscal year ended June 30, 1997. Refer to Appendix "A" for a comprehensive listing of organizational units comprising the reporting entity.

Basis of Presentation- The accompanying Schedule ofExpenditures ofFederal Awards is presented in accordance with OMB Circular A- 133.

A.

Federal Financial Assistance- Pursuant to the Single Audit Act Amendments of 1996 and OMB Circular

A-133, Federal financial assistance is defmed as assistance that a non-Federal entities receive or administer

in the form of grants, loans, loan guarantees, property (including donated surplus property), cooperative

agreements, interest subsidies, insurance, food commodities, direct appropriations, and other assistance,

but does not include amounts received as reimbursements for services rendered to individuals for Medicare

and Medicaid.

B.

Major Programs- The Single Audit Act Amendments ofl996 and OMB Circular A-133 established a risk-

based approach for defming Major Federal fmancial assistance programs. The State of Georgia has elected

to exercise the first year audit deviation and classify all Type A programs as major programs. Type A

programs are those which exceeded $18,848,815.00 in expenditures/disbursements/issuances for the fiscal

year ended June 30, 1997.

Basis of Accounting- The Schedule ofExpenditures ofFederal Awards is prepared using the basis of accounting as described in Note 1 of the Notes to the Financial Statements of the General Purpose Financial Statements (See Section A of this Report).

Expenditures and Expenses - When a state organization receives Federal monies and redistributes such monies to another state organization, (i.e., pass-through funds from the primary recipient to a subrecipient), the Federal assistance is reported in both the primary recipient's and the subrecipient's accounts. This method of reporting expenditures/expenses results in an overstatement of the aggregate level of Federal expenditures/expenses. Therefore, net Federal expenditures/expenses is reported.

OTHER

The following Notes provide additional pertinent information regarding Federal financial assistance, and accordingly, are referenced to specific programs within the body ofthe Schedule.

(1)

Represents total expenditures for program. Matching expenditures were not segregated in the accounting records.

(2)

The amount denoted for this program, in whole or in part, was audited by other auditors and was considered a major

program for that organization.

B- 41

State of GeortJia - - - - - - -
Notes to the Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended Jmc 30. 1997

(3)

Federally funded loan programs incurred the following current fiscal year monetary and nonmonetary expenditures:

CFDA NUMBER

GRANT PROGRAM

NEW FEDERAL CAPITAL

MONETARY

FEDERAL REIMBURSEMENT

ADMINISTRATIVE COSTS

NONMONETARY

WANS OUTSTANDING
AT 07/01/96

LOANS MADE DURING YEAR

23.011 66.458 84.032 84.038 84.226 93.342
93.364 93.XXX 93.XXX
(4)

Appalachian State Research, Technical

Assistance. and Demonstration Projects

0.00

Capitalization Grants for State Revolving Funds

$ 26,193,502.65 $

Federal Family Education Loans

0.00

Federal Perkins Loan Program Federal Capital Contributions

84,531.93

Income Contingent Loan Program

$

0.00

Health Professions Student Loans, Including Primary Care Loans/Loans for Disadvantaged Students

-309,893.00

Nursing Student Loans

-18,647.00

Pharmacy Loans('')

-69,145.00

Veterinary Medicine Loans(**)

-92,064.00

0.00 $ 0.00 $ 37,622,547.00 $ 52,556.00 0.00
0.00 $ 0.00 0.00 $ 0.00

286,100.47

973,962.28

506,452.41

866,311.57 $ 127,188,363.00

46,460,910.00

1,720,780.00 $ I,222,786,842.00 $ 181,213,158.00

126,481.67 $ 0.00

32,393,760.08 130,838.00

5,311,391.05 0.00

0.00 774.82
0.00 -14.04 $

3,806,166.10 902,860.80 $ 609,721.92 630,325.31

158,736.00 198,676.00
0.00 0.00

(**) The monetary amount for this program does not equal the monetary amount shown in the schedule. Numerous grants and contracts have been combined for reporting purposes.

Certain programs administered by the Federal government provide goods and services to organizational units of the

State in lieu of monetary assistance. An analysis, for major programs, of nonmonetary assistance and the values

assigned by the Federal government during the year under review is reflected below:

,

CFDA NO.

10.550 10.551 93.268

The reported amounts, incurred by four organizational units of the State, represent the U. S. Department of Agriculture assigned value of the donated commodities for the Food Distribution Program.
The Federal government provides food stamps to low-income households. The amount offood stamps a household receives depends on the household's size and fmancial circumstances. The Georgia Department ofHuman Resources is responsible for determining eligibility for participation in the Food Stamp Program. For the year under review, the total value offood stamps distributed as approved by the Department was $633,236,891.00.
The amount reported represents the U.S. Department of Health and Human Services assigned value of immunizations for vaccine-preventable diseases to eligible individuals.

B -42

--------State of Georffia - - - - - - - -
Notes to the Schedule of Expenditures of Federal Awards
For the FLSCal Ycar Ended Jlf1c 30.1997

(5)

Expenditures for this program includes federal, state and/or other funds.

(6)

During the fiscal year ended June 30, 1997, the Georgia Department of Human Resources received $40,068,537.82

in cash rebates from infant formula manufacturers on sales of formula to participants in the Special Supplemental

Food Program for Women, Infants, and Children (WIC) (CFDA NO. I0.557). Rebate contracts with infant formula

manufacturers are authorized by 7 CFR 246.16(m) as a cost containment measure. Rebates represent a reduction

of expenditures previously incurred for WlC benefit costs. The rebate contract allowed the Department to serve

approximately 77,397 additional persons per month during fiscal year 1997.

(7)

Major program clusters are detailed on the Schedule ofCluster Programs and identified as follows on the Schedule

ofExpenditures ofFederal Awards:

(FSC) (NC) (S8C) (SFA) (MC) (R)

Food Stamp Nutrition Section 8 Student Financial Aid Medicaid Research and Development

(8)

Circular A-133 requires the Schedule ofExpenditures ofFederal Awards to include, to the extent practical, an

identification of the total amount provided to subrecipients from each Federal program. Major programs

expenditures presented in the schedule account for approximately 95% of total Federal expenditures for the State

of Georgia. Provided below is the amount of major programs awards provided to subrecipients:

CFDA NUMBER

GRANT PROGRAM

AMOUNT PROVIDED TO SUBRECIPIENTS

10.550
10.557 14.228
17.207 17.225 17.246 17.250 20.205 66.458 83.516

Food Distribution (Includes Nonmonetary Expenditures)

$

25,820,967.24

Food Stamp Cluster

0.00

Nutrition Cluster

280,358,893.51

Special Supplemental Food Program for Women, Infants, and Children

0.00

Community Development Block Grants/State's Program

53,431,580.90

Section 8 Cluster

0.00

Employment Services

0.00

Unemployment Insurance

0.00

Employment and Training Assistance- Dislocated Workers

0.00

Job Training Partnership Act

653,590.97

Highway Planning and Construction

0.00

Capitalization Grants for State Revolving Funds

0.00

Disaster Assistance

0.00

B -43

--------State of Georgia--------
Notes to the Schedule of Expenditures of Federal Awards
For the FISCal Ycar Ended June 30.1997

CFDA NUMBER

GRANT PROGRAM

AMOUNT PROVIDED TO SUB RECIPIENTS

84.010 84.027
84.048 84.126 93.268 93.558 93.560 93.563 93.575 93.585 93.596
93.658 93.667
93.959 96.001

Title I Grants to Local Educational Agencies Special Education - Grants to States Student Financial Aid Cluster Vocational Education - Basic Grants to States Rehabilitation Services - Vocational Rehabilitation Grants to States Childhood Immunization Grants Temporary Assistance for Needy Families Family Support Payments to States - Assistance Payments Child Support Enforcement Child Care and Development Block Grant Empowerment Zones Program Child Care Mandatory and Matching Funds of the Child Care and Development Fund Foster Care- Title IV-E Social Services Block Grant Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse Social Security - Disability Insurance Research and Development Cluster
Total

$

169,087,764.20

52,260,519.69

0.00

14,348,572.55

0.00

0.00

0.00

0.00

0.00

0.00

4,057 ,670. 72

0.00 0.00 0.00 0.00 0.00 0.00 19,471,736.82

$

619,491,296.60

B -44

&Ftcdufe of Ouster 9?roarams

(This page iltenHonallv left blanR)

- - - - - - - - S t a t e of GeorfJia - - - - - - - -
Schedule of Cluster Programs
For the FISCal Year Ended Jme 30, 1997

Food Stamp Cluster (FSC)
Food Stamps State Administrative Matching Grants
for Food Stamp Program
Nutrition Cluster (NC)
School Breakfast Program National School Lunch Program Special Milk Program for Children Child and Adult Care Food Program Summer Food Service Program for Children
Section 8 Cluster (S8C)
Lower Income Housing Assistance Program Section 8 Moderate Rehabilitation
Student Financial Aid Cluster (SFA)
Federal Supplemental Educational Opportunity Grants Federal Family Education Loans Federal Work-Study Program Federal Perkins Loan Program -
Federal Capital Contributions Federal Pell Grant Program Federal Direct Student Loan Health Professions Student Loans, Including Primary Care
Loans/Loans for Disadvantaged Students Nursing Student Loans Scholarships for Students of Exceptional Financial Need
Medicaid Cluster (MC)
State Medicaid Fraud Control Units State Survey and Certification of Health Care Providers
and Suppliers Medical Assistance Program
Research and Development Cluster (R)
Agricultural Research -Basic and Applied Research Plant and Animal Disease, Pest Control, and Animal Care Grants for Agricultural Research, Special Research Grants Cooperative Forestry Research Payments to Agricultural Experiment Stations Under
Hatch Act Grants for Agricultural Research -
Competitive Research Grants

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

10.551 10.561
$
$

$ 58,679,709.85 58,679,709.85 $

633,236,891.00 633,236,891.00

10.553 $ 10.555 10.556 10.558 10.559
$

55,303,735.67 183,466,704.88
26,777.57 41,836,045.56
145,127.56
280,778,391.24

14.856 $

46,157,239.00

84.007 $ 84.032 84.033 84.038
84.063 84.268 93.342
93.364 93.820
$

5,799,218.41 39,343,327.00 $
5,497,958.60
263,569.60 93,749,361.43 233,351,507.40
-309,893.00 -17,872.18 61,511.00
377,738,688.26 $

1,404,000,000.00 37,705,151.13
3,964,902.1 0 1,101,536.80 1,446,771,590.03

93.775 $ 93.777
93.778

2,145,682.21
2,652,705.75 2,324,311,996.75

$ 2,329,110,384.71

10.001 $ 10.025 10.200 10.202 10.203
10.206

10,959.79 276,927.09 4,490,646.98 672,220.51
4,347,733.78
1,218,379.77

B-47

State of GeorfJkt - - - - - - - -
Schedule of Cluster Programs For the FLSCal Year Ended Jme 30. 1997

Research and Development Cluster (R)
Food and Agricultural Sciences National Needs Graduate Fellowship Grants
Higher Education Challenge Grants Buildings and Facilities Program Human Nutrition Information Service Cooperative Extension Service Commodity Supplemental Food Program Forestry Research Cooperative Forestry Assistance International Agricultural Research Program International Training - Foreign Participant Scientific and Technical Cooperation Other Federal Assistance Research and Evaluation Program Trade Adjustment Assistance Geodetic Surveys and Services (Geodesy and Applications of
the National Geodetic Reference System) Sea Grant Support Fisheries Development and Utilization Research and
Development Grants and Cooperative Agreements Program Marine Sanctuary Program Climate and Atmospheric Research Marine Fisheries Initiative Marine Research -Regional Programs Telecommunications and Information Infrastructure Measurement and Engineering Research and Standards Advanced Technology Program Other Federal Assistance Procurement Technical Assistance for Business Firms Aquatic Plant Control Collaborative Research and Development Basic and Applied Scientific Research Military Medical Research and Development Basic Scientific Research Basic, Applied, and Advanced Research in Science
and Engineering Air Force Defense Research Sciences Program Mathematical Sciences Grants Program Research and Technology Development Other Federal Assistance Other Federal Assistance Endangered Species Conservation Assistance to State Water Resources Research Institutes National Water Resources Research Program Earthquake Hazards Reduction Program Geological Survey -Research and Data Acquisition Historic Preservation Fund Grants-In-Aid Outdoor Recreation - Acquisition, Development
and Planning State Partnerships Other Federal Assistance

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

10.210 $
10.217 10.218 10.375 10.500 10.565 10.652 10.664 10.961 10.962 10.963 IO.XXX 11.312 11.313 11.400
11.417 11.427
11.429 11.431 11.433 11.464 11.552 11.609 11.612 !!.XXX 12.002 12.100 12.114 12.300 12.420 12.431 12.630
12.800 12.901 12.910 12.XXX 14.XXX 15.612 15.805 15.806 15.807 15.808 15.904 15.916
15.977 15.XXX

22,679.11 67,016.09 1,957,634.33
5,590.10 10,408,336.08
2,369.70 732,432.45 196,457.64
18,917.53 3,603.83 7,133.07 3,071,365.62 4,282,646.87 74,361.29
7,112.44 1,078,121.07
57,466.71 5,197.81 15,228.95
77,046.47 1,100.56 -6,391.98 -6,837.28
166,836.14 274,380.65 162,394.55
229.00 5,612,580.65 8,983,989.33
4,141.96 20,599.43
1,376,197.75 3,238,385.57
78,577.09 472,989.04 72,264,662.10
11,964.94 53,270.16 125,925.87
7,368.16 64,562.39
-0.12 81,719.06
82,152.09 8,277 .II
1,162,229.07

B- 48

--------State of GeorfJ1a--------
Schedule of Cluster Programs For the FLSCal Ycar Ended June 30. 1997

Research and Development Cluster (R) Juvenile Justice and Delinquency Prevention Allocation to States Other Federal Assistance Other Federal Assistance Special Domestic Assignments Other Federal Assistance Aviation Research Grants Transit Planning and Research Other Federal Assistance Alcohol, Tobacco, and Firearms- Training Assistance Other Federal Assistance Other Federal Assistance Aerospace Education Services Program Technology Transfer Other Federal Assistance Promotion of the Arts - Grants to Organizations and Individuals Promotion of the Humanities- Federal-State Partnership Promotion of the Humanities- Collaborative Research Promotion of the Humanities- Education Development and Demonstration Institute of Museum Services Other Federal Assistance Engineering Grants Mathematical and Physical Sciences Geosciences Computer and Information Science and Engineering Biological Sciences Social, Behavioral, and Economic Sciences Education and Human Resources Other Federal Assistance Business Development Assistance to Small Business Small Business Development Center Other Federal Assistance TVA Environmental Research Center Other Federal Assistance Veterans State Hospital Care Other Federal Assistance Water Quality Management Planning Wetlands Protection- State and Tribal Development Grants Chesapeake Bay Program Environmental Protection - Consolidated Research Air Pollution Control Research Solid Waste Disposal Research Water Pollution Control- Research, Development, and Demonstration Safe Drinking Water Research and Demonstration Toxic Substances Research Other Federal Assistance State Energy Conservation Basic Energy Sciences - University and Science Education

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

16.540 $
16.XXX 17.XXX 19.202 19.XXX 20.108 20.514 20.XXX 21.052 21.XXX 30.XXX 43.001 43.002 43.XXX 45.024
45.129 45.161 45.162
45.301 45.XXX 47.041 47.049 47.050 47.070 47.074 47.075 47.076 47.XXX 59.005 59.037 60.XXX 62.001 62.XXX 64.016 64.XXX 66.454 66.461 66.466 66.500 66.501 66.504 66.505
66.506 66.507 66.XXX 81.041 81.049

-858.47 47,111.02 934,022.38 50,183.92 4,834,797.65 382,887.01 659,128.75 2,780,501.06 20,490.15 18,724.16 47,024.44 20,853.79 8,046,818.29 2, 760,909.76
14,662.41 8,149.08 15,878.10
33,768.18 2,680.00
135,109.77 7,469,524.66 2,659,874.26
837,120.27 1,929,413.99 1,027,945.08
157,917.45 2,204,031.46 11,035,4 77.20
114,349.32 2,060,042.95
22,633.37 2,258.41
21,989.32 -1,183.75 1,259,752.44 95,132.07 27,933.66 21,377.89 2,552,480.42 563,749.48 156,631.89
91,334.24 144.18 -403.21
874,738.70 122,227.11 4,149,512.21

B -49

State of GeortJia - - - - - - -
Schedule of Cluster Programs
For the Rscal Year Ended Jme 30. 1997

Research and Development Cluster (R) University Coal Research Renewable Energy Research and Development Environmental Restoration Other Federal Assistance Other Federal Assistance Undergraduate International Studies and Foreign Language Programs Special Education -Innovation and Development Early Education for Children with Disabilities Special Education -Personnel Development and Parent Training TRIO - Student Support Services TRIO - Upward Bound Higher Education - Cooperative Education TRIO -Educational Opportunity Centers State Student Incentives Grants National Diffusion Network Special Education - Program for Severely Disabled Children Harris Fellowships Fund for the Improvement of Postsecondary Education Educational Research and Development Rehabilitation Long-Term Training National Institute on Disability and Rehabilitation Research Business and International Education Eisenhower Mathematics and Science Education State Grants Eisenhower Professional Development- National Activities Technology Applications for Individuals with Disabilities Drug & Violence Prevention/Higher Education/ Institution-Wide Safe and Drug-Free Schools and Communities - State Grants Bilingual Education - Professional Development Graduate Assistance in Areas of National Need McNair Post-Baccalaureate Achievement Centers for International Business Education Rehabilitation Training - Continuing Education Eisenhower Professional Development State Grants National Institute on the Education ofAt-Risk Students Other Federal Assistance Other Federal Assistance Other Federal Assistance Demonstration Grants for Residential Treatment for Women and Their Children Biological Response to Environmental Health Hazards Applied Toxicological Research and Testing Biometry and Risk Estimation - Health Risks from Environmental Oral Diseases and Disorders Research Financial Assistance for Disadvantaged Health Professions Students (FADHPS) Health Program for Toxic Substances and Disease Registry

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

81.057 $ 81.087 81.092 8l.XXX 82.XXX 84.016
84.023 84.024 84.029
84.042 84.047 84.055 84.066 84.069 84.073 84.086 84.094 84.116 84.117 84.129 84.133 84.153 84.164
84.168 84.180 84.183
84.186 84.195 84.200 84.217 84.220 84.264 84.281 84.306 84.XXX 87.XXX 89.XX.X 93.102
93.113 93.114 93.115
93.121 93.139
93.161

125,700.47 11,286.44 30,443.15
13,831,530.39 391,940.73
30,820.23 113,920.15 83,089.88
1,058,904.66 190,804.80 837,486.86 25,746.61 533,009.52 200,845.00 14,026.65 348,051.42 74,372.97 811.56
1,552,064.54 376,263.24 215,286.68 63,150.53
657,767.58 8,448.91
94,402.95
8,187.67 149,300.07
14,761.63 115,230.10 195,004.36 249,154.05 341,986.27 551,995.68 164,093.90 416,208.45
690.02 4,475.00
69,369.45 173,941.28 118,580.28
15,628.51 587,753.07
41,932.00 300,975.22

B- 50

State of Georffia - - - - - - -
Schedule of Cluster Programs
For the Hscal Ycar Ended Jmc 30. 1997

Research and Development Cluster (R)
Human Genome Research Research Related to Deafuess and Communication Disorders Health Services Research and Development Grants Mental Health Research Grants Alcohol National Research Service Awards for Research Training Alcohol Research Programs Drug Abuse Research Programs Mental Health Research Career/Scientist
Development Awards Centers for Disease Control and Prevention -Investigations
and Technical Assistance Comparative Medicine Program Nurse Training Improvement- Special Projects Nursing Research Biomedical Technology Academic Research Enhancement Award Cancer Cause and Prevention Research Cancer Treatment Research Cancer Biology Research Cancer Control Child Care and Development Block Grant Head Start Child Welfare Research and Demonstration Developmental Disabilities Basic Support and
Advocacy Grants Developmental Disabilities Projects ofNational Significance Developmental Disabilities University Affiliated Programs Health Care Financing Research, Demonstrations
and Eva! uations Cell Biology and Biophysics Research Heart and Vascular Diseases Research Lung Diseases Research Blood Diseases and Resources Research Arthritis, Musculoskeletal and Skin Diseases Research Diabetes, Endocrinology and Metabolism Research Digestive Diseases and Nutrition Research Kidney Diseases, Urology and Hematology Research Clinical Research Related to Neurological Disorders Biological Basis Research in the Neurosciences Allergy, Immunology and Transplantation Research Microbiology and Infectious Diseases Research Pharmacology, Physiology, and Biorelated
Chemistry Research Genetics and Development Biology Research Population Research Research for Mothers and Children Aging Research Vision Research Medical Library Assistance Rural Health Medical Education Demonstration Projects

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.172 $
93.17~
93.226 93.242 93.272
93.273 93.279 93.281
93.283
93.306 93.359 93.361 93.371 93.390 93.393 93.395 93.396 93.399 93.575 93.600 93.608 93.630
93.631 93.632 93.779
93.821 93.837 93.838 93.839 93.846 93.847 93.848 93.849 93.853 93.854 93.855 93.856 93.859
93.862 93.864 93.865 93.866 93.867 93.879 93.906

133,494.92 241,933.14 147,141.87 1,670,871.52
108,537.22 972,996.29 968,709.04
164,204.80
-2,761.34 8,588.18 54,025.89 20,696.91 817,437.20 83,923.61 220,975.12 10,379.85 270,714.16 484,979.88 61,468.50 871,819.50 67,929.86
62,696.06 83,741.28 413,510.14
170,004.99 1,475,660.15 2,047,619.67
637,393.25 3,642,205.93
380,009.49 601,132.99 975,396.10 360,305.59
21,353.74 654,707.70 580,894.14 2,509,332.55
824,113.61 1,617,933.67
378,622.97 1,474,253.10 1,037,098.00 1,481,607.89
213,738.47 232,049.72

B- 51

- - - - - - - - S t a t e of Georfjia - - - - - - - -
Schedule of Cluster Programs
For the FLSCal Ycar Ended Jmc 30. 1997

Research and Development Cluster (R) Rural Health Services Outreach Scholarships for Health Professions Students from Disadvantaged Backgrounds Center for Medical Rehabilitation Research Fogarty International Research Collaboration Award Epidemiologic Research Studies of Acquired Immunodeficiency Syndrome (AIDS) and Human Immunodeficiency Virus (HIV) Infection in Selected Population Groups Agricultural Health and Safety Programs Senior International Fellowships Other Federal Assistance AmeriCorps Other Federal Assistance Other Federal Assistance Other Federal Assistance

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

93.912 $ 93.925
93.929 93.934 93.943

81,002.26
91,365.00 35,736.56 42,982.22

93.956 93.989 93.XXX 94.006 94.XXX 98.XXX 100.XXX
$

617,508.70 100,161.61
9,583.86 2,556,140.91
79,324.25 44,320.97
56.24 163.00
244,918,970.72

B- 52

SectionC
~ort on CompHance and on gnterna( Contro( over g;inancia[ ~ortinB &ased on
an Audit of g;inancia[ Statements performed in Accordance with GovernmentAuditinB Standards

v CLAUDE L. ICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400

REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENTAUDITING STANDARDS

The Honorable Zell Miller Governor of Georgia
and Members of the General Assembly of the State of Georgia
We have audited the financial statements of the State of Georgia as of and for the year ended June 30, 1997, and have issued our report thereon dated May 19, 1998. This report was qualified for various departures from generally accepted accounting principles.
We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained Government Auditing Standards, issued by the Comptroller General of the United States. The financial statements of the Employees' Retirement System of Georgia, Georgia Lottery Corporation, Georgia Ports Authority, Georgia State Financing and Investment Commission, and Teachers' Retirement System of Georgia were not audited in accordance with Government Auditing Standards, and accordingly, this report does not extend to those organizations. We did not audit the financial statements of certain organizations which, combined, represent less than 1% ofthe assets and revenues of the general fund, 100% of the assets and revenues ofthe capital projects funds, 62% ofthe assets and 29% ofthe revenues of the internal service funds, 68% ofthe assets ofthe fiduciary funds and less than 1% ofthe expendable trust funds revenues and 100% ofthe pension trust funds revenues, and 7% ofthe assets and less than 1% ofthe liabilities of the general fixed assets and general long-term debt account groups, respectively. In addition, we did not audit certain discretely presented component units which represent less than 1% of the assets and revenues ofthe component unit governmental fund types, 83% ofthe assets and 95% of the revenues of the component unit proprietary fund types and 98% of the assets and 99% of the revenues of the component unit fiduciary fund types. The financial statements of these organizations and component units were audited by other auditors whose reports have been furnished to us, and our report, insofar as it relates to the amounts included for those financial statements, is based solely upon the reports of the other auditors.

Compliance As part of obtaining reasonable assurance about whether the State of Georgia's financial statements are free of material misstatement, we and other auditors performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination offinancial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly we do not express such an opinion. The results of our and other auditors tests disclosed the following instance of noncompliance that is required to be reported under Government Auditing Standards and which is described in the Financial Statement sections ofthe accompanying Schedule ofFindings and Questioned Costs.
(1) General Fixed Assets/Property Management Inadequacies in Operation of Property Management System Various Organizations

FS-40 I-97-02 FS-4I4-97-03 FS-4I5-97-03 FS-4I9-97-0I FS-422-97-0 I FS-427-97-0I FS-467-97-02 FS-472-97-0I FS-474-97-05

FS-484-97-02 FS-509-97-0I FS-527-97-0I FS-528-97-03 FS-58I-97-02 FS-590-97-0I FS-820-97-05 FS-824-97-01 FS-826-97-03

FS-828-97-0 I FS-830-97-03 FS-910-97-0I FS-958-97-0I FS-977-97-0 I FS-8504-97-01 FS-8524-97 -02 FS-8544-97 -02 FS-8564-97-0 I

FS-8584-97 -02 FS-8604-97-0 I FS-8664-97 -01 FS-8724-97-01 FS-8764-97-0 I FS-8804-97-0 I FS-8884-97-0 I

Internal Control Over Financial Reporting In planning and performing our audit, we and other auditors considered the State of Georgia's internal control over financial reporting in order to determine our auditing procedures for the pwpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over fmancial reporting. However, we noted certain matters involving the internal control over fmancial reporting and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation ofthe internal control over financial reporting that, in our judgment, could adversely affect the State ofGeorgia's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. The following reportable conditions are described in the Financial Statement sections of the accompanying Schedule of Findings and Questioned Costs.
(1) Revenue/Receivables/Receipts Deficiencies in the State Revenue Collections Fund (Overall) FS-474-97-02 - Department of Revenue Deficiencies in the Income Tax Division Subsidiary Records FS-474-97-03- Department ofRevenue

C-4

(2) Expenditures/Liabilities/Disbursements Deficiencies in the Sales Tax Division Subsidiary Records FS-474-97-04 - Department of Revenue fuadequacies in Operation ofWorkers' Compensation Program FS-401-97-03- Department ofAdministrative Services
(3) General Fixed Assets/Property Management fuadequacies in Operation of Property Management System Various Organizations

FS-401-97-02 FS-414-97-03 FS-415-97 -03 FS-419-97-01 FS-422-97 -01 FS-427 -97-01 FS-467 -97-02 FS-472-97-01 FS-474-97-05

FS-484-97 -02 FS-509-97-01 FS-527-97-01 FS-528-97-03 FS-581-97-02 FS-590-97-01 FS-820-97-05 FS-824-97 -01 FS-826-97-03

FS-828-97-01 FS-830-97-03 FS-91 0-97-0 1 FS-958-97 -01 FS-977-97-01 FS-8504-97 -01 FS-8524-97 -02 FS-8544-97 -02 FS-8564-97 -01

FS-8584-97 -02 FS-8604-97 -01 FS-8664-97-0 1 FS-8724-97 -01 FS-87 64-97-01 FS-8804-97-0 1 FS-8884-97 -01

(4) Electronic Data Processing Controls fuadequacies in Operations and Control Procedures Various Organizations

401a-97-01 401a-97-02 401a-97-03 401a-97-04 484a-97-01 484a-97-02

484a-97-03 484a-97-04 484a-97-05 484a-97-06 484a-97-07 484a-97-08

484a-97-09 484a-97-10 484a-97-11 484a-97-12 484a-97-13 509a-97-01

509a-97-02 509a-97-03 509a-97-04 509a-97-05

A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned fi.mctions. Our consideration ofthe internal control over financial reporting would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, of the reportable conditions described above, we consider the following items to be material weaknesses.

C-5

(1) Revenue/Receivables/Receipts Deficiencies in the State Revenue Collections Fund (Overall) . FS-474-97-02- Department ofRevenue
(2) Expenditures/Liabilities/Disbursements Deficiencies in the Sales Tax Division Subsidiary Records FS-474-97-04- Department of Revenue
(3) General Fixed Assets/Property Management Inadequacies in Operation ofProperty Management System Various Organizations

FS-401-97-02 FS-414-97-03 FS-415-97 -03 FS-419-97-01 FS-422-97-01 FS-427-97-01 FS-467-97-02 FS-472-97-01 FS-474-97-05

FS-484-97-02 FS-509-97-01 FS-527-97-01 FS-528-97-03 FS-581-97-02 FS-590-97-01 FS-820-97-05 FS-824-97-01 FS-826-97-03

FS-828-97 -01 FS-830-97-03 FS-91 0-97-01 FS-958-97-01 FS-977-97-01 FS-8504-97-01 FS-8524-97-02 FS-8544-97 -02 FS-8564-97-01

FS-8584-97-02 FS-8604-97 -01 FS-8664-97 -01 FS-8724-97-01 FS-8764-97-01 FS-8804-97-01 FS-8884-97 -01

This report is intended for the information of management, federal awarding agencies and passthrough entities. However, this report is a matter of public record and its distribution is not limited.
z~
Claude L. Vickers State Auditor
June 12, 1998

C-6

en Section
~ort on Compfiance witft ~quirements Appfica&fe to eacftS\\.ajor Wrogram amf on qnternaf
Controf over Compfiance in Accordance witft
CP\.CB Circufar A- 133

CLAUDE L. VICKERS
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND AccouNTS
254 Washington Street, S.W, Suite 214 Atlanta, Georgia 30334-8400

REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN
ACCORDANCE WITH OMB CIRCULAR A-133

The Honorable Zell Miller Governor of Georgia
and Members of the General Assembly of the State of Georgia
Compliance We have audited the compliance of the State of Georgia with the types of compliance requirements described in the US. Office ofManagement and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 1997. The State of Georgia's major federal programs are identified in the summary of auditor's results section of the accompanying Schedule of Findings and Questioned Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the State of Georgia's management. Our responsibility is to express an opinion on the State of Georgia's compliance based on our audit. We did not audit the following major federal programs or percentages of federal programs:

CFDA NO.

PROGRAM NAME

% AL'DITED BY OTHER AUDITORS

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

66.458

Capitalization Grants for State Revolving Funds Section 8 Cluster Student Financial Aid Cluster Research and Development Cluster

97% 100% 84% 90%

$20,605,070 $46,157,239 $112,006,260 $219,567,691

$173,649,273 $0
$1,412,739,220 $0

The programs listed above were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to compliance requirements for these programs, is based solely upon the reports of the other auditors.
Except as discussed in the following paragraphs, we conducted our audit of compliance in accordance with generally accepted auditing standards; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits ofStates, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material affect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the State of Georgia's compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the State of Georgia's compliance with those requirements.
We were unable to include in our report the work of other auditors regarding certain types of compliance requirements for the Research and Development Cluster at the Georgia Institute of Technology as previously agreed upon. Research and Development Cluster expenditures at the Georgia Institute of Technology constitute 54% oftotal program cluster expenditures. Types of compliance requirements not included are Equipment and Real Property Management; Procurement and Suspension and Debarment; Real Property Acquisition and Relocation Assistance; and Subrecipient Monitoring. Our opinion does not extend to the foregoing compliance requirements because the reports of other auditors were not completed as of the date of the issuance of this report. These reports will be issued under separate cover at a later date.
Other auditors were unable to obtain sufficient documentation supporting compliance for the Research and Development Cluster at the Georgia Institute ofTechnology with requirements governing cash management; Davis-Bacon Act; matching, level of effort, earmarking; period of availability of federal funds; program income and reporting that are applicable to contract no. :XXXXXX:-93-C-0001 ofthe U.S. Department of Defense, and other auditors did not have security clearance to perform any procedures with respect to this contract; nor were other auditors able to satisfy themselves as to the Georgia Institute of Technology's compliance with the aforementioned requirements with respect to contract no. :XXXXXX:-93-C-0001 by other auditing procedures.
In our opinion, based on our audit and the reports of other auditors, except for the effects of the matters discussed in the preceding paragraphs, the State of Georgia complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 1997. However, the results of our and other auditors' auditing procedures disclosed the following instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the Federal Awards sections ofthe accompanying Schedule ofFindings and Questioned Costs.
D-4

Allowable Costs/Cost Principles
FA-401-97-01 FA-401-97-02 FA-472-97-01 FA-503-97-01 FA-503-97-02 FA-503-97-03 FA-503-97-04 FA-503-97-05 FA-503-97-06
Cash Management
FA-837-97-01
Program Income
FA-472-97-01

Eligibility
FA-427-97-02 FA-427-97-03 FA-427-97-04 FA-521-97-01 FA-528-97-01 FA-533-97-01 FA-554-97-01 FA-554-97-02 FA-554-97-03 FA-827-97-02
Equipment and Real Property Management
FA-414-97-01 FA-415-97-02 FA-419-97-01 FA-427-97-01 FA-826-97-01 FA-828-97-01

Reporting
FA-503-97-07 FA-503-97-08 FA-503-97-09 FA-503-97-010 FA-503-97-011 FA-503-97-012 FA-503-97-013 FA-503-97-014 FA-533-97-03 FA-827-97-03
Subrecipients Monitoring
FA-414-97-02
Special Tests and Provisions
FA-528-97-04 FA-550-97-02 FA-827-97-04

Internal Control Over Compliance The management ofthe State of Georgia is responsible for establishing and maintaining effective internal control over compliance with the requirements oflaws, regulations, contracts and grants applicable to federal programs. We did not consider the internal control structures applicable to the federal programs listed in the table in paragraph one. Those internal control structures were considered by other auditors whose reports have been furnished to us. Our report, insofar as it relates to the internal control structures used in administering federal programs ofthe organizations mentioned previously is based solely upon the reports ofthe other auditors.
In planning and performing our audit, except as discussed in the following paragraph, we and other auditors considered the State of Georgia's internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133.
As discussed in paragraph four, tests of internal controls were not performed for certain types of compliance requirements at the Georgia Institute of Technology for the Research and Development Cluster.
We and other auditors noted certain matters involving the internal control over compliance and its operation that we consider to be reportable conditions. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal control over compliance that, in our judgment, could adversely affect the State of Georgia's ability to administer a major federal program in accordance with applicable requirements oflaws, regulations, contracts and grants. Reportable conditions are described in the Federal Awards section of the accompanying Schedule of Findings and Questioned Costs.

D-5

Activities Allowed or Unallowed
FA-827-97-01
Allowable Costs/Cost Principles
FA-401-97-01 FA-401-97-02 FA-415-97-01 FA-472-97-01 FA-503-97-01 FA-503-97-02 FA-503-97-03 FA-503-97-04 FA-503-97-05 FA-503-97-06
Cash Management
FA-827-97-01 FA-837-97-01
Program Income
FA-472-97-01

Eligibility
FA-427-97-02 FA-427-97-03 FA-427-97-04 FA-521-97-01 FA-528-97-01 FA-528-97-02 FA-533-97-01 FA-554-97-01 FA-554-97-02 FA-554-97-03 FA-827-97-02
Equipment and Real Property Management
FA-414-97-01 FA-415-97-02 FA-419-97-01 FA-427-97-01 FA-826-97-01 FA-828-97-01

Reporting
FA-503-97-07 FA-503-97-08 FA-503-97-09 FA-503-97-010 FA-503-97-011 FA-503-97-012 FA-503-97-013 FA-503-97-014 FA-528-97-03 FA-533-97-02 FA-533-97-03 FA-533-97-04 FA-539-97-01 FA-550-97-01 FA-569-97-01 FA-820-97-01 FA-827-97-03 FA-918-97-01
Subrecipients Monitoring
FA-414-97-02
Special Tests and Provisions
FA-528-97-02 FA-528-97-04 FA-550-97-02 FA-551-97-01 FA-827-97-04

A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that noncompliance with applicable requirements oflaws, regulations, contracts and grants that would be material in relation to a major federal program being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. Our consideration ofthe internal control over compliance would not necessarily disclose all matters in the internal control that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. However, as described in the Federal Awards section of the accompanying Schedule of Findings and Questioned Costs, ofthe reportable conditions described above, we consider the following item to be a material weakness.
(1) Equipment and Real Property Management FA-414-97-01 FA-415-97-02 FA-419-97-01 FA-427-97-01 FA-826-97-01 FA-828-97-01
D-6

This report is intended for the information of management, federal awarding agencies and pass-through entities. However, this report is a matter of public record and its distribution is not limited.
Rez:~
Claude L. Vickers State Auditor June 12, 1998
D-7

(This page intentionallY left blanR)

Section CE 7\..udltee's ~ponse Summar~ SclleduCe of Wrior Year
g;indinas and Questioned Costs

- - - - - - - - - - S t a t e of GeorfJia - - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDJTEE RESPONSE/STATUS

COMMENTS

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Department ofAdministrative Services 401-96-01 Partially Resolved 401-96-02 Partially Resolved 40la-95-0l No Response Provided 40la-95-02 No Response Provided 40la-95-03 No Response Provided 40la-95-04 No Response Provided 40la-95-05 No Response Provided 40la-95-06 No Response Provided 40la-95-07 No Response Provided 401a-95-08 No Response Provided 401a-95-09 No Response Provided 40la-95-10 No Response Provided 40la-95-ll No Response Provided 40la-95-12 No Response Provided Department ofInsurance 408-96-01 Previously Reported Corrective Action Implemented Department ofEducation 414-96-01 Further Action Not Warranted 414-96-02 Partially Resolved 414-96-03 Partially Resolved 414-96-05 Further Action Not Warranted 414-96-07 Previously Reported Corrective Action Implemented 414a-96-0l No Response Provided 414a-96-02 No Response Provided 414a-96-03 No Response Provided 414a-96-04 No Response Provided 414a-96-05 No Response Provided 414a-96-06 No Response Provided 414a-96-07 No Response Provided 414a-96-08 No Response Provided 414a-96-09 No Response Provided 414a-96-10 No Response Provided 414a-96-ll No Response Provided 414a-96-12 No Response Provided 414a-96-13 No Response Provided 414a-96-14 No Response Provided 414a-96-15 No Response Provided 414a-96-16 No Response Provided 414a-96-17 No Response Provided 414a-96-18 No Response Provided 414a-96-19 No Response Provided 414a-96-20 No Response Provided 414a-96-21 No Response Provided
E-3

See Comments - Page E-17 See Comments - Page E-17 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998 Follow-up wil be performed in Fiscal Year 1998
See Comments - Page E-18 See Comments - Page E-18 See Comments - Page E-19 See Comments - Page E-20
Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999

---------State of Georgia---------
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

414a-96-22 No Response Provided 414a-96-23 No Response Provided 414a-96-24 No Response Provided 414a-96-25 No Response Provided 414a-96-26 No Response Provided 414a-96-27 No Response Provided 414a-96-28 No Response Provided 414a-96-29 No Response Provided 414a-96-30 No Response Provided 414a-96-31 No Response Provided 414a-96-32 No Response Provided 414a-96-33 No Response Provided Department of Technical and Adult Education 415-96-01 Partially Resolved Department ofMedical Assistance 419-96-01 Previously Reported Corrective Action Implemented 419-96-02 Previously Reported Corrective Action Implemented 419-96-04 Previously Reported Corrective Action Implemented 419-96-05 Previously Reported Corrective Action Implemented 419-96-06 Previously Reported Corrective Action Implemented 419-96-07 Previously Reported Corrective Action Implemented 419-96-08 Partially Resolved Office ofthe Governor 422-96-01 Partially Resolved 422-96-02 Unresolved Department ofHuman Resources 427-96-01 Partially Resolved Department ofCommunity Affairs 428-96-01 Previously Reported Corrective Action Implemented Judicial Branch 430-96-01 Previously Reported Corrective Action Implemented 430-96-02 Previously Reported Corrective Action Implemented Department ofLabor 440-96-03 Partially Resolved Department ofChildren and Youth Services 461-96-01 Previously Reported Corrective Action Implemented 461-96-02 Previously Reported Corrective Action Implemented Department ofCorrections 467-96-01 Partially Resolved 467-96-02 Previously Reported Corrective Action Implemented 467-96-03 Previously Reported Corrective Action Implemented Board ofRegents ofthe University System ofGeorgia 472-96-01 Previously Reported Corrective Action Implemented 472-96-02 Previously Reported Corrective Action Implemented 472-96-03 Partially Resolved 472a-95-01 Previously Reported Corrective Action Implemented

E-4

COMMENTS Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 Follow-up will be performed in Fiscal Year 1999 See Comments - Page E-20
See Comments - Page E-21 See Comments - Page E-21 See Comments- Page E-21 See Comments- Page E-21
See Comments - Page E-23
See Comments - Page E-24
See Comments - Page E-24

--------State of Georgia--------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesNoned Costs
For the Hscat Ycar Ended Jmc 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

472a-95-02 Unresolved 472a-95-03 Previously Reported Corrective Action Implemented 472a-95-04 Previously Reported Corrective Action Implemented 472a-95-05 Previously Reported Corrective Action Implemented Department ofRevenue 474-96-01 Previously Reported Corrective Action Implemented 474-96-02 Unresolved 474-96-03 Partially Resolved 474-96-04 Partially Resolved 474-96-05 Partially Resolved 474a-96-0l Corrective Action Implemented 474a-96-02 Corrective Action Implemented 474a-96-03 Corrective Action Implemented 474a-96-04 Corrective Action Implemented 474a-96-05 Unresolved 474a-96-06 Unresolved 474a-96-07 Unresolved 474a-96-08 Corrective Action Implemented 474a-96-09 Corrective Action Implemented 474a-96-10 Corrective Action Implemented 474a-96-ll Corrective Action Implemented 474a-96-12 Corrective Action Implemented 474a-96-13 Unresolved 474a-96-14 Partially Resolved 474a-96-15 Unresolved 474a-96-16 Corrective Action Implemented 474a-96-17 Corrective Action Implemented 474a-96-18 Unresolved 474a-96-19 Unresolved 474a-96-20 Partially Resolved 474a-96-21 Unresolved 474a-96-22 Unresolved 474a-96-23 Corrective Action Implemented 474a-96-24 Partially Resolved 474a-96-25 Corrective Action Implemented 474a-96-26 Corrective Action Implemented 474a-96-27 Corrective Action Implemented 474a-96-28 Partially Resolved 474a-96-29 Unresolved 474a-96-30 Partially Resolved 474a-96-31 Unresolved 474a-96-32 Unresolved 474a-96-33 Corrective Action Implemented 474a-96-34 Corrective Action Implemented 474a-96-35 Partially Resolved 474a-96-36 Corrective Action Implemented

E-5

COMMENTS See Comments - Page E-25
See Comments - Page E-25 See Comments - Page E-25 See Comments - Page E-26 See Comments - Page E-27
See Comments - Page E-27 See Comments - Page E-27 See Comments - Page E-27
See Comments - Page E-27 See Comments - Page E-28 See Comments - Page E-28
See Comments - Page E-28 See Comments - Page E-28 See Comments - Page E-28 See Comments - Page E-28 See Comments - Page E-28 See Comments - Page E-29
See Comments - Page E-29 See Comments - Page E-29 See Comments - Page E-29 See Comments - Page E-29 See Comments - Page E-29
See Comments - Page E-29

----------State of Georgia----------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and Questioned Costs
For the FLSCal Ycar Ended Jmc 30, 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

474a-96-37 Corrective Action Implemented 474a-96-38 Corrective Action Implemented Georgia Student Finance Commission 476-96-01 Further Action Not Warranted Department ofTransportation 484-96-0 I Partially Resolved 484-96-02 Partially Resolved Subsequent Injury Trust Fund 489-96-01 Unresolved Georgia Institute of Technology 503a-95-0 1 Corrective Action Implemented 503a-95-02 Corrective Action Implemented 503a-95-03 Corrective Action Implemented 503a-95-04 Corrective Action Implemented 503a-95-05 Corrective Action Implemented 503a-95-06 Corrective Action Implemented 503a-95-07 Corrective Action Implemented 503a-95-08 Partially Resolved 503a-95-09 Partially Resolved 503a-95-10 Corrective Action Implemented 503a-95-11 Corrective Action Implemented 503a-95-12 Corrective Action Implemented 503a-95-13 Corrective Action Implemented 503a-95-14 Corrective Action Implemented 503a-95-15 Corrective Action Implemented Georgia State University 509-96-01 Previously Reported Corrective Action Implemented 509-96-02 Previously Reported Corrective Action Implemented 509-96-03 Previously Reported Corrective Action Implemented 509a-95-0 1 Corrective Action Implemented 509a-95-02 Unresolved 509a-95-03 Partially Resolved 509a-95-04 Unresolved 509a-95-05 Unresolved 509a-95-06 Corrective Action Implemented 509a-95-07 Partially Resolved 509a-95-08 Unresolved 509a-95-09 Partially Resolved Medical College ofGeorgia 512-96-01 Previously Reported Corrective Action Implemented 512-96-03 Previously Reported Corrective Action Implemented 512a-95-0 1 Partially Resolved 512a-95-02 Corrective Action Implemented 512a-95-03 Unresolved 512a-95-04 Corrective Action Implemented 512a-95-05 Corrective Action Implemented
E-6

COMMENTS
See Comments - Page E-30 See Comments - Page E-30 See Comments - Page E-30 See Comments -Page E-31
See Comments - Page E-31 See Comments- Page E-32
See Comments - Page E-33 See Comments - Page E-33 See Comments - Page E-34 See Comments - Page E-34 See Comments -Page E-35 See Comments - Page E-35 See Comments -Page E-35
See Comments - Page E-36 See Comments - Page E-36

---------State of Georftia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and Questioned Costs
For the Hscal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

5I2a-95-06 Unresolved 5I2a-95-07 Corrective Action Implemented University ofGeorgia 5I8-96-0 I Previously Reported Corrective Action Implemented 5I8-96-02 Previously Reported Corrective Action Implemented 5I8a-95-0 I Corrective Action Implemented 5I8a-95-02 Corrective Action Implemented 5I8a-95-03 Partially Resolved 5I8a-95-04 Corrective Action Implemented 5 I 8a-95-05 Corrective Action Implemented 5 I 8a-95-06 Corrective Action Implemented 5 I 8a-95-07 Corrective Action Implemented 5 I 8a-95-08 Corrective Action Implemented Albany State University 52I-96-0I Unresolved 52 I-96-02 Partially Resolved Armstrong Atlantic State University 524-95-0 I Previously Reported Corrective Action Implemented 524-95-02 Previously Reported Corrective Action Implemented 524-96-0I Previously Reported Corrective Action Implemented 524-96-02 Previously Reported Corrective Action Implemented 524-96-03 Partially Resolved 524-96-04 Partially Resolved 524-96-05 Unresolved Augusta State University 527-96-0 I Unresolved Fort Valley State University 533-95-05 Previously Reported Corrective Action Implemented 533-96-0I Partially Resolved 533-96-02 Unresolved 533-96-03 Partially Resolved 533-96-04 Previously Reported Corrective Action Implemented 533-96-05 Partially Resolved 533-96-06 Previously Reported Corrective Action Implemented 533-96-07 Previously Reported Corrective Action Implemented 533-96-11 Previously Reported Corrective Action Implemented 533-96-I2 Previously Reported Corrective Action Implemented 533a-95-0I Previously Reported Corrective Action Implemented 533a-95-02 Previously Reported Corrective Action Implemented 533a-95-03 Previously Reported Corrective Action Implemented 533a-95-04 Previously Reported Corrective Action Implemented 533a-95-05 Previously Reported Corrective Action Implemented 533a-95-06 Previously Reported Corrective Action Implemented 533a-95-07 Previously Reported Corrective Action Implemented Georgia Southern UnivPrsity 539-96-01 Partially Resolved

E-7

COMMENTS See Comments - Page E-36
See Comments - Page E-36
See Comments- Page E-37 See Comments- Page E-37
See Comments- Page E-37 See Comments- Page E-37 See Comments- Page E-37 See Comments- Page E-38 See Commt:nts- Page E-38 See Comments- Page E-38 See Comments - Page E-38 See Comments - Page E-39
See Comments - Page E-40

- - - - - - - - - - S t a t e of GeorfJia - - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesNoned Costs
For the F15Cal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

539a-95-01 Partially Resolved 539a-95-02 Corrective Action Implemented 539a-95-03 Corrective Action Implemented 539a-95-04 Partially Resolved 539a-95-05 Corrective Action Implemented 539a-95-06 Corrective Action Implemented Kennesaw State University 543-96-01 Partially Resolved North Georgia College and State University 545-96-01 Previously Reported Corrective Action Implemented Savannah State University 548-96-01 Partially Resolved 548-96-02 Unresolved 548-96-03 Partially Resolved 548-96-04 Previously Reported Corrective Action Implemented 548-96-05 Unresolved 548-96-06 Previously Reported Corrective Action Implemented Southern Polytechnic State University 550-96-01 Unresolved 550-96-02 Partially Resolved Valdosta State University 551-96-01 Previously Reported Corrective Action Implemented 551-96-03 Partially Resolved Atlanta Metropolitan College 561-96-01 Unresolved 561-96-03 Previously Reported Corrective Action Implemented Macon College 581-96-01 Partially Resolved 581-96-02 Unresolved Middle Georgia College 584-96-01 Unresolved South Georgia College 587-96-01 Unresolved Georgia Military College 590-96-02 Unresolved 590-96-03 Previously Reported Corrective Action Implemented 590-96-04 Previously Reported Corrective Action Implemented 590-96-05 Further Action Not Warranted Skidaway Institute ofOceanography 593-96-01 Unresolved Okefenokee Technical Institute 818-96-01 Previously Reported Corrective Action Implemented West Georgia Technical Institute 819-96-01 Unresolved 819-96-03 Unresolved 819-96-04 Previously Reported Corrective Action Implemented
E-8

COMMENTS See Comments - Page E-41
See Comments - Page E-41
See Comments - Page E-41
See Comments - Page E-41 See Comments - Page E-41 See Comments- Page E-42 See Comments - Page E-42
See Comments -Page E-42 See Comments- Page E-42
See Comments - Page E-43 See Comments - Page E-43
See Comments - Page E-44 See Comments - Page E-45 See Comments - Page E-46 See Comments - Page E-46 See Comments - Page E-47
See Comments - Page E-47 See Comments- Page E-47
See Comments - Page E-48 See Comments - Page E-48

----------State of Georgia----------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and Questloned Costs
For the FISCal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

Albany Technical Institute 820-96-0 I Unresolved 820-96-02 Partially Resolved Athens Area Technical Institute 822-96-0 I Previously Reported Corrective Action Implemented Augusta Technical Institute 824-96-0 I Unresolved 824-96-02 Unresolved Chattahoochee Technical Institute 827-95-01 Partially Resolved Coosa Valley Technical Institute 829-96-0 I Previously Reported Corrective Action Implemented DeKalb Technical Institute 830-93-01 Previously Reported Corrective Action Implemented 830-95-01 Previously Reported Corrective Action Implemented 830-96-01 Partially Resolved 830-96-02 Previously Reported Corrective Action Implemented 830-96-03 Unresolved 830-96-04 Previously Reported Corrective Action Implemented Middle Georgia Technical Institute 836-96-01 Previously Reported Corrective Action Implemented Moultrie Area Technical Institute 83 7-96-0 I Partially Resolved 837-96-02 Previously Reported Corrective Action Implemented North Georgia Technical Institute 838-96-01 Further Action Not Warranted North Metro Technical Institute 839-96-01 Partially Resolved 839-96-02 Previously Reported Corrective Action Implemented 839-96-03 Previously Reported Corrective Action Implemented Pickens Technical Institute 840-93-02 Previously Reported Corrective Action Implemented 840-96-0I Unresolved Valdosta Technical Institute 848-96-0 I Unresolved Walker Technical Institute 849-96-01 Previously Reported Corrective Action Implemented Jekyll Island State Park Authority 910-96-01 Partially Resolved 910-96-02 Partially Resolved 910-96-03 Partially Resolved 910-96-04 Partially Resolved 9I0-96-05 Unresolved 910-96-06 Partially Resolved 910-96-07 Further Action Not Warranted 910-96-08 Partially Resolved

E-9

COMMENTS
See Comments - Page E-48 See Comments - Page E-49
See Comments - Page E-49 See Comments - Page E-49 See Comments - Page E-50
See Comments - Page E-5I See Comments - Page E-5I
See Comments - Page E-52
See Comments - Page E-53
See Comments - Page E-53 See Comments- Page E-53
See Comments - Page E-53 See Comments - Page E-53 See Comments - Page E-53 See Comments - Page E-53 See Comments- Page E-53 See Comments - Page E-53 See Comments - Page E-54 See Comments- Page E-54

- - - - - - - - S t a t e of Georgia--------
Auditee's Response Summarv Schedule of Prior Year Fndi"\gs and QucsNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

910-96-09 Partially Resolved Lake Lanier Islands Development Authority 913-96-01 Previously Reported Corrective Action Implemented Georgia World Congress Center Authority, George L. Smith II 922-96-01 Previously Reported Corrective Action Implemented Georgia Housing and Finance Authority 923a-95-0 1 Partially Resolved 923a-95-02 Partially Resolved 923a-95-03 Partially Resolved 923a-95-04 Significantly Differing Corrective Action Implemented 923a-95-05 Significantly Differing Corrective Action Implemented 923a-95-06 Previously Reported Corrective Action Implemented 923a-95-07 Partially Resolved 923a-95-08 Partially Resolved 923a-95-09 Further Action Not Warranted 923a-95-1 0 Partially Resolved 923a-95-ll Partially Resolved 923a-95-12 Partially Resolved 923a-95-13 Partially Resolved 923a-95-14 Partially Resolved 923a-95-15 Previously Reported Corrective Action Implemented Georgia Agricultural Exposition Authority 926-96-01 Unresolved 926-96-02 Previously Reported Corrective Action Implemented State Tollway Authority 927-96-01 Previously Reported Corrective Action Implemented GeorgiaNet Authority 941-96-01 Previously Reported Corrective Action Implemented 941-96-02 Previously Reported Corrective Action Implemented Peace Officers' Annuity and Benefit Fund ofGeorgia 947-96-01 Partially Resolved Georgia Firemen's Pension Fund 950-96-01 Significantly Differing Corrective Action Implemented Georgia Public Telecommunications Commission 977-96-01 Previously Reported Corrective Action Implemented 977-96-02 Previously Reported Corrective Action Implemented 977-96-03 Previously Reported Corrective Action Implemented 977-96-04 Partially Resolved *Northwest Georgia Regional Educational Service Agency 8504-93-01 Unresolved *North Georgia Regional Educational Service Agency 8524-93-01 Unresolved 8524-96-01 Partially Resolved *Pioneer Regional Educational Service Agency 8544-93-01 Unresolved 8544-93-02 Unresolved

E-10

COMMENTS See Comments - Page E-54
See Comments - Page E-55 See Comments -Page E-55 See Comments -Page E-55 See Comments -Page E-55 See Comments- Page E-56 See Comments - Page E-56 See Comments - Page E-56 See Comments - Page E-56 See Comments - Page E-56 See Comments -Page E-56 See Comments - Page E-56 See Comments - Page E-57 See Comments - Page E-57 See Comments - Page E-57
See Comments - Page E-57
See Comments - Page E-57 See Comments- Page E-58
See Comments - Page E-58 See Comments - Page E-58 See Comments - Page E-58 See Comments - Page E-59 See Comments - Page E-59 See Comments - Page E-59

---------State of Georgia---------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

COMMENTS

*Metropolitan Regional Educational Service Agency 8564-93-02 Unresolved 8564-93-03 Unresolved *Northeast Georgia Regional Educational Service Agency 8584-93-02 Unresolved *West Georgia Regional Educational Service Agency 8604-93-01 Unresolved *Middle Georgia Regional Educational Service Agency 8644-93-01 Unresolved *Oconee Regional Educational Service Agency 8664-93-01 Unresolved 8664-93-02 Unresolved 8664-94-01 Previously Reported Corrective Action Implemented 8664-96-01 Unresolved *Chattahoochee-Flint Regional Educational Service Agency 8724-93-01 Unresolved 8724-93-02 Unresolved *Heart ofGeorgia Regional Educational Service Agency 8764-93-01 Unresolved 8764-95-01 Unresolved 8764-96-0 I Unresolved *First District Regional Educational Service Agency 8804-93-02 Previously Reported Corrective Action Implemented 8804-93-03 Unresolved 8804-94-01 Previously Reported Corrective Action Implemented *Southwest Georgia Regional Educational Service Agency 8844-93-02 Previously Reported Corrective Action Implemented 8844-95-0 I Unresolved 8844-96-01 Unresolved *Coastal Plains Regional Educational Service Agency 8864-93-02 Previously Reported Corrective Action Implemented *Okefenokee Regional Educational Service Agency 8884-93-01 Unresolved

See Comments - Page E-59 See Comments - Page E-59 See Comments - Page E-60 See Comments - Page E-60 See Comments - Page E-60 See Comments - Page E-61 See Comments - Page E-61 See Comments - Page E-61 See Comments - Page E-62 See Comments - Page E-62 See Comments - Page E-62 See Comments - Page E-62 See Comments - Page E-62
See Comments - Page E-62
See Comments - Page E-63 See Comments - Page E-63
See Comments - Page E-63

PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

Department ofAdministrative Services 401-96-03 Previously Reported Corrective Action Implemented 401-96-04 Previously Reported Corrective Action Implemented Department ofEducation 414-96-03 Partially Resolved 414-96-04 Unresolved 414-96-06 Further Action Not Warranted Department ofTechnical and Adult Education 415-96-0 I Partially Resolved

See Comments - Page E-19 See Comments - Page E-19 See Comments- Page E-20
See Comments- Page E-20

E-ll

- - - - - - - S t a t e of GeorfP't-------
Auditee's Response Summarv Schedule of Prior Year Fndi1g.s and Que.sHoned Costs
For the Hscal Year Ended Jme 30, 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

Department ofMedical Assistance 4I9-96-0 I Previously Reported Corrective Action Implemented 4I9-96-03 Previously Reported Corrective Action Implemented 4I9-96-04 Previously Reported Corrective Action Implemented 4I9-96-07 Previously Reported Corrective Action Implemented 4I9-96-08 Partially Resolved Office ofthe Governor 422-96-0 I Previously Reported Corrective Action Implemented Department ofHuman Resources 427-96-0 I Partially Resolved 427-96-02 Previously Reported Corrective Action Implemented 427-96-03 Previously Reported Corrective Action Implemented Department ofCommunity Affairs 428-96-0 I Previously Reported Corrective Action Implemented Department ofLabor 440-96-0I Further Action Not Warranted 440-96-02 Further Action Not Warranted 440-96-03 Further Action Not Warranted Department ofRevenue 474-96-05 Further Action Not Warranted Office ofTreasury and Fiscal Services 486-96-01 Further Action Not Warranted Georgia Institute ofTechnology 503-96-01 Previously Reported Corrective Action Implemented Georgia State University 509-96-04 Previously Reported Corrective Action Implemented Medical College ofGeorgia 512-96-02 Previously Reported Corrective Action Implemented University ofGeorgia 518-96-02 Previously Reported Corrective Action Implemented 518-96-03 Previously Reported Corrective Action Implemented Albany State University 521-96-03 Previously Reported Corrective Action Implemented 521-96-04 Unresolved Armstrong Atlantic State University 524-95-02 Previously Reported Corrective Action Implemented 524-96-06 Previously Reported Corrective Action Implemented Fort Valley State University 533-94-13 Previously Reported Corrective Action Implemented 533-94-14 Previously Reported Corrective Action Implemented 533-94-15 Previously Reported Corrective Action Implemented 533-94-16 Previously Reported Corrective Action Implemented 533-94-17 Previously Reported Corrective Action Implemented 533-95-05 Previously Reported Corrective Action Implemented 533-95-16 Previously Reported Corrective Action Implemented 533-95-17 Previously Reported Corrective Action Implemented
E-12

COMMENTS
See Comments- Page E-21 See Comments - Page E-21
See Comments -Page E-23 See Comments- Page E-23 See Comments - Page E-23 See Comments - Page E-27 See Comments - Page E-30
See Comments -Page E-37

----------State of Georaia - - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

533-95-19 Previously Reported Corrective Action Implemented 533-96-05 Partially Resolved 533-96-06 Previously Reported Corrective Action Implemented 533-96-08 Previously Reported Corrective Action Implemented 533-96-09 Previously Reported Corrective Action Implemented 533-96-10 Unresolved 533-96-13 Unresolved 533-96-14 Unresolved 533-96-15 Previously Reported Corrective Action Implemented 533-96-16 Previously Reported Corrective Action Implemented 533-96-17 Unresolved 533-96-18 Unresolved 533-96-19 Unresolved 533-96-20 Previously Reported Corrective Action Implemented 533-96-21 Previously Reported Corrective Action Implemented 533-96-22 Previously Reported Corrective Action Implemented Georgia College and State University 536-96-01 Previously Reported Corrective Action Implemented Georgia Southern University 539-96-02 Previously Reported Corrective Action Implemented 539-96-03 Previously Reported Corrective Action Implemented 539-96-04 Previously Reported Corrective Action Implemented 539-96-05 Previously Reported Corrective Action Implemented North Georgia College and State University 545-96-01 Previously Reported Corrective Action Implemented Savannah State University 548-96-07 Previously Reported Corrective Action Implemented Valdosta State University 551-95-11 Previously Reported Corrective Action Implemented 551-96-02 Partially Resolved 551-96-04 Partially Resolved 551-96-05 Previously Reported Corrective Action Implemented 551-96-06 Previously Reported Corrective Action Implemented 551-96-07 Previously Reported Corrective Action Implemented 551-96-08 Previously Reported Corrective Action Implemented Atlanta Metropolitan College 561-96-01 Further Action Not Warranted 561-96-02 Unresolved 561-96-04 Partially Resolved 561-96-05 Partially Resolved Floyd College 573-96-01 Partially Resolved 573-96-02 Previously Reported Corrective Action Implemented Macon College 581-92-01 Previously Reported Corrective Action Implemented 581-96-03 Unresolved
E-13

COMMENTS See Comments - Page E-39 See Comments - Page E-39 See Comments - Page E-39 See Comments - Page E-39 See Comments - Page E-39 See Comments - Page E-40 See Comments - Page E-40
See Comments - Page E-43 See Comments - Page E-43
See Comments - Page E-43 See Comments - Page E-44 See Comments - Page E-44 See Comments - Page E-44 See Comments - Page E-45

- - - - - - - - - S t a t e of Georf)ia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

COMMENTS

581-96-04 Previously Reported Corrective Action Implemented

581-96-05 Unresolved

See Comments - Page E-45

581-96-06 Unresolved

See Comments - Page E-46

Middle Georgia College

584-91-006 Further Action Not Warranted

See Comments - Page E-46

584-96-02 Previously Reported Corrective Action Implemented

South Georgia College

587-95-01 Previously Reported Corrective Action Implemented

Georgia Military College

590-96-01 Previously Reported Corrective Action Implemented

590-96-06 Partially Resolved

See Comments - Page E-47

West Georgia Technical Institute

819-96-02 Unresolved

See Comments - Page E-48

819-96-05 Unresolved

See Comments - Page E-48

Albany Technical Institute

820-94-07 Previously Reported Corrective Action Implemented

820-96-02 Partially Resolved

See Comments - Page E-49

820-96-03 Partially Resolved

See Comments - Page E-49

Chattahoochee Technical Institute

827-95-03 Partially Resolved

See Comments - Page E-50

827-96-01 Significantly Differing Corrective Action Plan Implemented See Comments -Page E-50

827-96-02 Partially Resolved

See Comments - Page E-50

827-96-03 Partially Resolved

See Comments - Page E-50

827-96-04 Partially Resolved

See Comments - Page E-51

827-96-05 Partially Resolved

See Comments - Page E-51

DeKalb Technical Institute

830-95-02 Previously Reported Corrective Action Implemented

830-95-03 Previously Reported Corrective Action Implemented

830-96-06 Previously Reported Corrective Action Implemented

Middle Georgia Technical Institute

836-94-04 Previously Reported Corrective Action Implemented

836-95-04 Unresolved

See Comments - Page E-52

836-96-01 Previously Reported Corrective Action Implemented

Moultrie Area Technical Institute

837-96-02 Previously Reported Corrective Action Implemented

837-96-03 Partially Resolved

See Comments - Page E-52

837-96-04 Previously Reported Corrective Action Implemented

837-96-05 Unresolved

See Comments - Page E-52

837-96-06 Unresolved

See Comments - Page E-52

North Metro Technical Institute

839-96-03 Previously Reported Corrective Action Implemented

839-96-04 Previously Reported Corrective Action Implemented

839-96-05 Previously Reported Corrective Action Implemented

839-96-06 Previously Reported Corrective Action Implemented

Walker Technical Institute

849-96-01 Previously Reported Corrective Action Implemented

E-14

----------State of Geor5ia - - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

Georgia Student Finance Authority 917-96-01 Previously Reported Corrective Action Implemented 917-96-02 Previously Reported Corrective Action Implemented *North Georgia Regional Educational Service Agency 8524-96-02 Unresolved *Pioneer Regional Educational Service Agency 8544-96-01 Previously Reported Corrective Action Implemented *Metropolitan Regional Educational Service Agency 8564-96-01 Previously Reported Corrective Action Implemented *Northeast Georgia Regional Educational Service Agency 8584-96-01 Previously Reported Corrective Action Implemented *Griffin Regional Educational Service Agency 8624-95-02 Previously Reported Corrective Action Implemented 8624-96-01 Unresolved *Chattahoochee-Flint Regional Educational Service Agency 8724-94-01 Previously Reported Corrective Action Implemented *Heart ofGeorgia Regional Educational Service Agency 8764-96-01 Unresolved *Southwest Georgia Regional Educational Service Agency 8844-93-04 Previously Reported Corrective Action Implemented 8844-96-02 Previously Reported Corrective Action Implemented *Coastal Plains Regional Educational Service Agency 8864-93-03 Previously Reported Corrective Action Implemented

COMMENTS See Comments - Page E-55 See Comments- Page E-55 See Comments - Page E-59
See Comments - Page E-60
See Comments - Page E-60
See Comments - Page E-62

*Findings related to this organizational unit do not appear in the Fiscal Year 1996 Single Audit Report ofthe State of Georgia. This organizational unit was added to the reporting entity in Fiscal Year 1997.
E-15

(This page intmtionallv left blank)

--------State of GeorfJia - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QucsHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF ADMINISTRATIVE SERVICES
Finding Control Number 401-96-01 EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequacies in Operation of the Workers' Compensation Fund
DOAS has completed the corrective action plan. Workers' Compensation is now issuing vendor checks for non-medical fee-schedule services to providers on a daily basis rather than the previous weekly check runs. This change in payment processing has further minimized rebilling and the exposure to duplicate processing.
Furthermore, the implementation of the Tele-Claim system allows DOAS to have an outside service provider do the actual claims entry and coding prior to its arrival in our offices. This system has made claims reporting easier on our customers and increased filing time by an average of 20 days. Previously, DOAS would frequently receive invoices for medical services prior to receiving a first report of injury. Once the first report of injury arrived some 20 days later, a second invoice for the same services would often times have already been received, thus setting the stage for the possibility of duplicate billing.
In addition to Tele-Claim, DOAS has made enhancements to its Risk Management Information System which feed all entries by the Workers' Compensation Specialists into the pending payables file. Once this information is fed into the system, it automatically reads the files of all previous payments made and reconciles it against the new entry. If three of five previously defined key elements match, a flag is sent up, and the Specialist making the entry is alerted to a possible duplication. Upon further investigation, the Specialist may override this flag, but a permanent indication is made in the record which ensures accountability.
Finding Control Number 401-96-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
DOAS concurs with this recommendation. DOAS has taken actions to ensure better control of equipment assets. During the reorganization of the Department effective September I, 1997, the Internal Business Services unit was created to centralize certain support functions previously located in various DOAS divisions.
Within Internal Business Services, a centralized Inventory/Facilities sub-unit has been created to control all types ofDOAS equipment inventories - computer, telecommunications and other personal property. This is the first time that all of the DOAS inventory has been the responsibility of a single office. The Inventory/Facilities unit will ensure that a bi-annual inventory audit will occur.
An inventory has been taken for the fiscal year 1997. This new emphasis and centralized control will offer improved controls over the previous decentralized system. Property insurance coordination and reporting has been assigned to the Inventory/Facilities sub-unit along with the processing of property insurance claims. As a result, it is possible to have closer coordination of inventory control and related insurance claims on the inventoried equipment. During fiscal year 1997, an internal design team was created to review the inventory process and to make recommendations. The design team's research and recommendations have been turned over to Coopers & Lybrand for the redesign of the DOAS inventory processes, which should be completed by the end of the fiscal year 1998 or early fiscal year 1999. They are examining methods for improved tracking of equipment from the time it is placed on an inventory schedule until the equipment is disposed either through transfer or declared surplus.
Issues currently being studied include: modification of forms related to installation or moving of equipment, assignment of equipment for employee use in offsite locations, consolidation of the three separate inventory systems used for inventory tracking, improvement of accuracy of data entry, and better methods of communicating inventory-related
E-17

--------State ofGeorfJla--------
Auditec's Response Summarv Schedule of Prior Ycar Fndilgs and QucsHoncd Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF ADMINISTRATIVE SERVICES (Continued)
infonnation. Also, DOAS is currently in the process of acquiring services to conduct a statewide inventory that will allow independent review and verification of property control status.
DEPARTMENT OF EDUCATION
Finding Control Number 414-96-01 COMPLIANCE WITH LAWS AND REGULATIONS Instructions to Boards of Education Not Consistent With the Official Code of Georgia
The Department adjusted the affected boards of education local fair share for fiscal years 1993 and 1994 to resolve the finding. Code section 20-2-182 was revised in FY 95 to eliminate the limitation on transferring funds between staff development and professional development programs.
Finding Control Number 414-96-02 CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Agency Funds - Deficiencies in Accounting Procedures
The deficiencies in the management of trust fund accounts involved the Vocational Education Club Accounts, an Academy for the Blind Account, and two Georgia School for the Deaf Accounts. Infonnation was requested from vocational education and State schools staff, so that Accounting Services personnel could detennine the appropriate corrective action. A follow-up Jetter was sent to management level personnel outlining the corrective action needed. A meeting was also held with these individuals to go over the deficiencies.
Some of the deficiencies involving the Vocational Education Club Accounts are questionable. A number of accounts were cited for expenditures that were not within the intent of the funds. All of the expenditures were reviewed and detennined to be appropriate. The club accounts have a very broad range of activities that requires many different types of expenditures.
Some of the accounts were also cited for inadequate supporting documentation for payment of services. The supporting documentation for services provided by speakers, photographers, and other individuals often consisted of a single page invoice. Most of the individuals are one person companies and have simple billing and accounting procedures. They do not use multi-page preprinted invoices. Other times, cash register receipts are the only documentation received by custodians or others purchasing items for the clubs.
The finding involving checks signed by individuals other than the custodians of the accounts has been discussed with the Director of the Vocational Education section to reemphasize the requirement that only State employees may be custodians and sign checks. There were procedures in place that would have prevented the fmding, but Vocational Education personnel did not follow them.
The finding concerning sales tax is also questionable. Many of the purchases made for the club accounts involve stores that are not use to exempting purchases from sales tax, such as restaurants, discount stores, grocery stores, etc. The fact that purchases are also made by individuals paying with a check or cash, instead of by a field purchase order (FPO), causes difficulty getting the sales tax exemption. Since the custodians and other individuals purchasing items for the clubs encounter difficulty in getting the sales tax exemption, the procedures established to provide guidance in managing the trust fund accounts are being changed to no longer require sales tax be deducted from purchases. The procedures will only recommend that individuals making purchases for the clubs try to obtain exemption from sales tax when it is possible and practical to do so, such as hotel charges, large purchases, etc.
E-18

--------State of GeortJia - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesHoned Costs
For the F15Cal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF EDUCATION (Continued)
Finding Control Number 414-96-03 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
A new procedure is being adopted that requires receiving reports to go through Property Control on their way to Accounting Services for payment. Adopting this procedure by Property Control and Accounting Services should eliminate the deficiencies involving the three findings relating to inappropriate management practices.
The Department requires all units to conduct a physical inventory annually. The inventories are monitored by Property Control for timeliness. They are reconciled with all changes to the DOE Property System prior to the end of the current fiscal year. All units are required to notify Property Control when the items(s) they reported on their annual inventory is/are moved from its current location. The units should complete a Property Inventory Transfer Control form if the item(s) are moved to another unit along with the losing and gaining signatures of the respective unit supervisors. If the item is moved within the unit, the unit supervisor is required to notify Property Control either by memorandum or e-mail. The movement of equipment within the Department is the sole responsibility of the unit supervisors to notify Property Control to update the Property Control System to avoid audit exceptions. Failure to do so will result in equipment not being in its proper place as indicated by the DOE Property System. Property Control maintains and monitors new equipment purchases by issuing Receipt of Equipment forms, DE Form 0513, upon receipt of equipment Field Purchase Orders (FPOs) into Internal Support's Procurement Office. The Receipt of Equipment form is completed with all equipment indicated on the form that is scheduled to be purchased by the FPO. There are two conditions for the Receipt of Equipment form; the first condition is: if the equipment being purchased is being delivered directly to the unit that initiates the FPO, DOE decal number(s) will be issued and indicated on the Receipt of Equipment form by Property Control. When the equipment arrives, the unit supervisor will indicate the Serial Number and the Room Number (suite and initials of individual that is using the equipment), sign and date the Receipt of Equipment form and return to Property Control. The second condition is: if the equipment is being delivered to Internal Technology for building/loading of software, DOE decal numbers will be affixed to the equipment by Internal Technology. When the equipment arrives at the unit, the unit supervisor will indicate the Serial Number and the Room Number (suite and initials of individual that is using the equipment), sign and date the Receipt of Equipment form and return to Property Control. This procedure was developed by the current Agency Property Control Officer to prevent equipment from arriving into the Department without identification, however, some equipment FPOs fall through the system and eventually equipment is received without proper coding to the DOE Property System as indicated ru; a deficiency where two (2) items of equipment were located but were not in the equipment inventory records (DOE Property System).
Finding Control Number 414-96-04 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period
Although the Department is responsible for tracking and reviewing the audits on local units of administration (LUAs), the Department of Audits is required by State law to audit the LUAs, because LUAs receive the majority of their funding from the State. An LUA may elect to have a private CPA firm perform an audit of their fmancial records instead of the Department of Audits, with the cost of the audit being paid from local funds. In addition to the LUA audits, the Department of Audits has the responsibility to audit all State agencies, commissions, etc. The LUAs are audited after the State agencies, commissions, etc. Because the LUAs are audited last and the large number of LUAs to be audited, the Department of Audits cannot complete the audits in the thirteen-month period required by OMB Circulars A-128 and A133. The only solution to this problem is to have the Department of Education pay private CPA firms to perform audits of LUAs to help meet the thirteen-month time period, which would not be a cost effective solution. The U.S. Department of Education is aware of the problem, and realizes there is not currently a viable solution to the fmding. The LUA audits are
E-19

-------State ofGeorfJ1a--------
Auditee's Response Summarv Schedule of Prior Year fndi1gs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF EDUCATION (Continued)
nonnally completed within a 15-18 month time period. The Department has a six-month resolution period to resolve fmdings in the LUA audits after being received from the Department of Audits.
Finding Control Number 414-96-05 BUDGET PREPARATIONIEXECUTION Overexpenditure of Budget Unit Object Class
The object class Non-QBE Grants- Retirement (H.B. 272 and H.B. 1321) was overspent in the amount of $135,226.18. The Teachers Retirement System annually bills the Department for retirement charges involving local school system personnel. The budget amount can only be an estimate of anticipated expenditures. Since the charges are incurred by local systems, the Department has no control over the amount or number of charges that will occur in this program.
Finding Control Number 414-96-06 CASH MANAGEMENT Failure to Amend Agreement for Change in Funding Technique
The Department did change the funding technique for the Child and Adult Care Food Program (CACFP) from zero balance to average clearance technique. The average clearance technique was an approved funding method for other expenditures (accounts payable) in the same bank account used for the CACFP payments. The Department was using a PC-based software program from the bank to do electronic fund transfers (EFTs) to CACFP sponsors. The process requires a lot of personnel time to do the entries required for the EFTs and the accounting entries needed in FACS. Because of personnel reduction, the decision was made to stop doing EFTs and have FACS write paper checks. FACS disbursements are made using the average clearance technique.
The CACFP was transferred to the Office of School Readiness, effective April16, 1996. Effective with the FY 97 CACFP claims processing that began November 1, 1996, department personnel no longer has responsibility for processing CACFP claims. The Office of School Readiness had been advised to contact the Office of Treasury and Fiscal Services to adopt a funding technique for the account used to disburse CACFP payments.
DEPARTMENT OF TECHNICAL AND ADULT EDUCATION
Finding Control Number 415-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
During the fiscal year I997, the Department of Technical and Adult Education implemented a number of procedures to correct the deficiencies noted in the prior audit report. However, not all of the necessary tasks, as outlined in the Corrective Action Plan for 1996, needed to resolve this fmding were completed by June 30, 1997. The Department of Technical and Adult Education will continue to pursue the 1996 Corrective Action Plan. The completion of these procedures should eliminate the remaining deficiencies indicated in fmding number 415-96-01.
E-20

---------State of Georgia---------
Auditee'.s Response Summarv Schedule of Prior Year Fndilg.s and Que.sHoned Co.st.s
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF MEDICAL ASSISTANCE
Finding Control Number 419-96-08 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
During the fiscal year, the Department hired a person to fill the position responsible for properly maintaining equipment inventory records. Although this person has left the Department and the position has not been filled, equipment additions were properly updated on the inventory system. There are problems with equipment deletions and the Department will make sure a person is responsible for maintaining an accurate equipment inventory.
OFFICE OF THE GOVERNOR
Finding Control Number 422-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management
Corrective action has been taken to address the deficiencies in procedures used to account for general fixed assets. The focus of this finding was the Georgia Emergency Management Agency (GEMA), which is administratively attached to the Office of the Governor. The following actions have been taken: I. Quarterly the Administrative Division of the Office of Planning and Budget provides GEMA with copies of inventory reports for review and updating. 2. Recently, GEMA has reassigned responsibility for inventory management control. They are more aggressive in the resolution of inventory discrepancies. 3. Specific actions related to audit fmdings of missing inventory and unrecorded transactions in the last audit include; (a) Four pieces of equipment totaling $16,941.39 have been located, (b) Three pieces of equipment totaling $7,603.00 are recorded as missing in the inventory system and will be removed from inventory pending authorization from GEMA, (c) Four pieces of equipment totaling $5,565.00 and listed as surplused or traded-in will be removed from inventory pending authorization from GEMA, (d) Four pieces of equipment totaling $5,427.82 are still missing and additional efforts are being made to locate this property, (e) One piece of equipment totaling $1,860.00 has been removed from the inventory system.
Finding Control Number 422-96-02 EXPENDITURESILIABILITIES/DISBURSEMENTS Improper Reporting and Budgeting Expenditures
A unique State Chart of Account and Object Class entitled Criminal Justice Grants has been established for budgeting and reporting grants awarded and previously classified as Per Diem, Fees and Contracts. The corrective action plan was implemented July I, 1997.
DEPARTMENT OF HUMAN RESOURCES
Finding Control Number 427-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
The DHR Office of Technology and Support, Asset Services Section follows the Department of Administrative Services PROP Procedures for reconciliation of equipment purchases, Part l.F.3. During fiscal year 1997 DHR began a monthly
E-21

---------State of Georaia - - - - - - - - -
Auditecs Response Summarv Schedule of Prior Year Fndilg.s and Quesfioned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF HUMAN RESOURCES (Continued)
review of equipment purchase exception reports. Property coordinators are required to provide appropriate documentation to satisfy the exceptions. The department expanded efforts to increase responsiveness on the part of coordinators to provide the appropriate documentation. The exceptions are now reconciled monthly. We believe the procedures we have in place are adequate for reconciling to the general ledger expenditure accounts.
Equipment purchases are supported and documented in our property system. During fiscal years 1993, 1994, and 1995, the State auditors could not locate certain items that were sampled in the inventory review. However, following the issuance of the final audit in each year in question, DHR property management staff located, for all material purposes, the items in question. As a result of these audits, DHR took action to expedite the recording of inventory on central property records.
A physical inventory is now required by DHR at each of its locations annually. In addition, DHR's Office of Audits performs an equipment inventory review at each audit site as part of our standard audit program.
The SCHEDULE OF FINDINGS AND IMPROPER OR QUESTIONED COSTS YEAR ENDED JUNE 30, 1996 lists five (5) deficiencies that were noted during the test of the accuracy of the DHR's general fixed assets. The following is a list of those deficiencies and DHR's response.
1. "Five (5) items totaling $11,977.00 could not be located."
Response- We do not concur. Two items were stolen or missing and were listed in accordance with State Property System Manual as missing or stolen items. The manual requires that these items be identified and remain on the system for two years. They are identified as such and will be deleted as required during the fiscal year 1998 physical inventory process. Two items were transferred to another location after the date of the report used by the auditor to conduct the test; the system had been properly updated in accordance with property management regulations and the State auditor conducting the test was provided that information during the audit in November 1996. We agree that one item was unlocated and the system was corrected to reflect the surplus action during the fiscal year 1997 inventory.
2. "Ten (1 0) items totaling $53,876.00 were surplused, but were not removed from the equipment inventory records."
Response - We agree with this finding. The system was updated to reflect the surpluses during the fiscal year 1997 inventory process.
3. "Nine (9) items were located in locations other than the location in the equipment inventory records."
Response- We do not agree with this finding. The auditors used a "room number" field to identify certain locations. For vehicles and other equipment that is not assigned to a permanent location, we insert a special code (such as a vehicle number) to identify the piece of equipment as such. These items were identified properly.
4. "Forty-eight (48) items did not have decal numbers attached. Items were identified by serial numbers or descriptions."
Response- We concur with this finding. The department has since purchased special decals for the items identified above (vehicles, mowers, hospital kitchen equipment) that would adhere better in adverse temperature and moisture conditions.
5. "Two items were located with the wrong decal attached."
Response- We agree with the finding. The decals were properly affixed during the fiscal year 1997 inventory process.
E-22

---------State of GeorfJkt---------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsNoned Costs
For the Hscal Year Ended June 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF LABOR
Finding Control Number 440-96-01 FEDERAL FINANCIAL REPORTS Failure to Submit Required Reports in Timely Manner
The Department was prepared to complete JTPA PY-92 close-outs in a timely manner. However, some Service Delivery Areas (SDA)s were late which caused the Department to be late. All JTPA PY-92 close-outs were submitted by the Department to the U.S. Department of Labor (USDOL) March 18, 1996.
The JTPA PY-93 SDA close-outs are all in except Cobb County and Southwest Georgia. In both of these cases the SDA Administrative Entity had changed. The Department is working with both of the previous Administrative Entity's to close out all financial reports, and should be able to submit PY-93 close-outs to USDOL by June 30, 1997.
Based on the above, the Department considers the PY-92 finding resolved.
Finding Control Number 440-96-02 ELIGIBILITY Inadequate Documentation to Support Eligibility Determinations
Title III dislocated worker participant was ineligible because draft compliance was not met. The Department reviewed this file and found that although an enrollment was entered into the MIS, the participant never received any services.
Since no services were rendered and no costs incurred for the participant, the Department considers this finding resolved.
Title II participant in the Oconee JTPA, SDA-S Milledgeville, was not picked up by the newly redesignated SDA. Participant files were stored at the Overview Administrative Entity office in Milledgeville. A search of their files did not locate the participant folder, also, original SDA staff involved with the program could not be located to determine if there were other file locations. Total cost for this participant was $120.00 and was charged to Grant #20-C4-00-l-l-08 under the Direct Training Cost category. The Department has since picked up and stored all of the JTPA participant files for this SDA, however, the Department has been unable to locate the folder for this participant.
Since the SDA responsible for eligibility of the participant no longer exists and collection efforts have been unsuccessful, the Department requests that this finding be considered resolved.
Title II, SDA 14, participant files could not be located. These participants were automatically enrolled in objective assessment for Title II B, however, neither was enrolled into any other activity and no costs were incurred.
Since no services were rendered and no costs incurred for these two participants, the Department considers this fmding resolved.
Finding Control Number 440-96-03 CASH AND CASH EQUIVALENTS Internal Accounting Procedures
I. The June 1996 bank reconciliation for the operating account did not agree with the general ledger because of accounting procedures not being followed. These procedures were reviewed with the current staff to ensure that this does not happen again.
2. The deposit of$95,000.00 was recorded in the general ledger in July 1996. E-23

- - - - - - - - - - S t a t e of Georgia----------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF LABOR (Continued)
3. In the future all cash reconciliations will be signed when the administrative review is completed. All of the administrative reviews were performed during the audit year, but were not signed by the person performing the review.
4. The procedure of voiding outstanding checks older than six months old has been reviewed with the accounting staff to ensure that all outstanding checks are voided after they are six months old.
DEPARTMENT OF CORRECTIONS
Finding Control Number 467-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
In the past, equipment purchases were put on by property audits when the paper work was received. In many cases the paper work for new purchases was not received by property audits so the equipment was never put on inventory records.
Our new procedure is that each department that receives new equipment is responsible to see that this equipment is put on inventory when it is received.
When property audits found equipment not on inventory, when an audit was done, they would enter this property on inventory. Because they would not have the invoices on this property, it was put on inventory at some value or in some cases it was put on at zero because we did not know the cost. We felt it was better to put this equipment on inventory at some cost rather than not have on inventory at all.
Again, the department that now receives the equipment and the invoice is responsible to enter the property on inventory and they will have the invoice to ensure that the current value will be listed.
It is the mission of property audits to inventory equipment and to discover what inventory is missing, listed on inventory and not listed on inventory. It is the responsibility of each department now to list all equipment on inventory at the invoice price when they receive it. We will continue to insist that these departments comply to the standards we have set forth.
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
Finding Control Number 472-96-03 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
The Office of Information and Instructional Technology, which is part of the Administrative Central Office, hired an accounting assistant effective March 17, 1997 specifically for the purpose of reviewing and revising inventory control procedures and for ensuring that adequate records are maintained for all central office equipment in accordance with the State Property System Manual. This action only partially resolved the finding for the following reasons: The actual staff hiring and implementation of new procedures came too late to have changes become effective before subsequent audit review; The move by the Central Office from 244 Washington Street to the Trinity-Washington Building in April 1997, required an overhaul of inventory records before we could get started. However, we are confident that the new procedures will resolve this matter.
E-24

---------State of GeorfJia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesNoned Costs
For the Hscal Year Ended Jmc 30. 1997
AUDITEE'S COMMENTS
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA (Continued)
Finding Control Number 472a-95-02 Information Security Policy
The ACIT approved the amended report format in the Fall meeting in October 1997. The OIIT will now:
setup a process by which the campuses will submit the reports on a regular or as updated basis (by April 1998),
agree upon a set of minimum standards in specific areas the campuses must meet (by July 1998),
setup a review team including internal and campus reviewers (by July 1998),
decide on annual submission deadlines (proposed Feb. 1, 1999) and reviewers feedback mechanisms to the campuses and external agencies as needed (by July 1998).
DEPARTMENT OF REVENUE
Finding Control Number 474-96-02 REVENUESIRECEIV ABLES/RECEIPTS GENERAL LEDGER Deficiencies in the State Revenue Collections Fund (Overall)
Currently under development, completion date to be January 1, 1998. A PC based accounting software system is being developed which should be completed and tested by the end of December.
Finding Control Number 474-96-03 REVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Deficiencies in the Income Tax Division Subsidiary Records
Implementation of Program to Compile and Analyze W-2 Data: In the withholding income tax processing area, the Department's ultimate goal is to develop and implement a withholding system that will meet all the requirements of the users including the ability to match electronically income tax withholding data supplied by the employers to the income tax withholding data reported by the individual taxpayers. However at this time, the Department's highest priority in this area is to ensure that the withholding system will be Year 2000 compliant. Therefore, we cannot say with any certainty when we will have the ability to match this data electronically.
In the meantime, during the last legislative session HB 479 was passed and became effective on July 1, 1997. This law requires employers to submit copies of employee wage statements to the Department annually. The Department has published and is currently mailing the guidelines and instructions for complying with this new requirement.
Also, the Department is participating with the IRS in the Simplified Tax and Wage Reporting System (STAWRS). Under this program, the IRS receives W-2 information from employers, matches the employer/employee name and address information to the data, sorts by state and then sends the data to the appropriate state via magnetic tape or cartridge. With the information to be received from the STAWRS program and the information to be provided by employers, the Department will be able to match, on a limited basis, employer provided withholding income tax data to the individual taxpayer's reported withheld income tax amount. In the near future, the Income Tax Division will develop a program to analyze this data and identify discrepancies for possible audit leads.
E-25

---------State of GeorfJia---------
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF REVENUE (Continued)
Implementation of New Individual Income Tax System: At this time, the Department's biggest concern is to ensure that this system is Year 2000 compliant. So the development of the new system will be delayed. However, the Department has begun the preliminary work on the redesign of the individual income tax system with a preliminary planned completion date of December, 1999. Examination guidelines previously provided are currently being followed by the personnel in the Income Tax Division when making adjustments to accounts.
Finding Control Number 474-96-04 EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER Deficiencies in the Sales Tax Division Subsidiary Records
I. Consistent monthly cut-off date. Rather than establish a concrete monthly cut-off date, the Department has established a monthly cut-off date to which we adhere as a general rule.
As a general rule, the 17th of each month has been established as the Department's monthly cut-off date, and distributions are scheduled to be mailed on the 21st. In distributing money to local governments "as soon as practicable" (O.C.G.A. 48-8-89), however, the Department is charged with balancing the value of consistency in timing with the practical concerns of consistency in amount. Accordingly, during months in which we experience processing delays (e.g., unusually high taxpayer or operator error rates, system problems, etc.), our cut-off may be extended slightly when it appears to be in the best interest of the Department or local governments.
Communications with local governments have been enhanced so that they are aware of potential delays as we anticipate them. As a result, although we may experience fluctuations in distribution dates, local governments appear to be more satisfied with the Department's performance of distribution services.
2. Unprocessed returns backlog. In immediate response to the State Auditor's findings, policies and procedures were implemented to identify unmatched sales tax receipts to sales tax returns and to eliminate the backlog of unprocessed returns. As a result of the implementation of these procedures, the sales tax processing unit cleared up the existing backlog and experienced no further significant backlogs during fiscal year 1997.
At the same time that policies and procedures were implemented to help in the short term, resources were invested in the implementation of a completely new sales tax return system, along with audit controls within the maiVcash system and centralized taxpayer accounting systems for the long term. Further, conversion to this new system had to occur in August 1997, due to the enactment of new sales taxes (Education Local Option Sales Tax, Homestead Local Option Sales Tax, and the new statewide 7% sales tax rate cap) that the old system could not process.
The Department has put in place new management of the information systems function. One of the responsibilities of the new management is to ensure funding and planning for adequate testing of new programs and systems prior to implementation.
We are currently studying the need for restructuring within the Division and the need for additional staffmg as a result of the accounting features of the new system, the implementation of new local sales taxes, and the addition of local school boards to the group of local governments that must be served by the Sales and Use Tax Division.
E-26

---------State of Georaia---------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesNoned Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF REVENUE (Continued)
Finding Control Number 474-96-05 GENERAL LEDGER REPORTING Differences Between Reimbursement Requests and Subsidiary Ledgers
I. The Motor Fuel Tax (MFT) Unit has requested that a separate funding source be established for the Diesel Compliance Officer (DCO) Grant. This action will assist the MFT Unit and Central Taxpayer Accounting to reconcile the charges against this particular grant. Currently, the Tax Compliance Grant and the (DCO) Grant are being paid out of one funding source.
2. The Acting Assistant Director for the MFT Unit will ensure that the accuracy of the grant expenditures as noted in the Unit's ledgers will reconcile with the Divisional Expenditure Report on a monthly basis. Prior to submitting the Federal reimbursement voucher, a complete review will be made by the Unit Director to ensure the accuracy of the submitted reimbursement claim.
3. The MFT Unit will consider the filing of quarterly/semi-annual reimbursement vouchers instead of waiting until the end of the fiscal year to submit same. This will improve the cash flow of grant funding reimbursements and make it easier to reconcile expenditures.
Finding Control Number 474a-96-05 Completeness and Accuracy of Individual Income Tax
The Department continues to agree with the finding and the previous management response. However, we would like to add that the Department has decided not to make changes to the current system, but plans to enhance the redesign system to include compliance programs.
Finding Control Number 474a-96-06 No Reconciliation Between the Withholding Returns and the W-2's
The Department continues to agree with the fmding and the previous management response. However, we would like to add that the Department has decided not to make changes to the current system, but plans to enhance the redesign system to include compliance programs.
Finding Control Number 474a-96-07 Lack of Password Controls
The Department remains in agreement with the recommendation and has no revisions to the previous response at this time.
Finding Control Number 474a-96-13 Information Systems Department (lSD) Access to Production Data Files
The Department remains in disagreement with the recommendation and has no revisions to the previous response at this time.
E-27

---------State of Geor5ia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesNoned Costs
For the FISCal Year Ended Jme 30. I007
AUDITEE'S COMMENTS
DEPARTMENT OF REVENUE (Continued)
Finding Control Number 474a-96-14 Lack of Adequate User and Technical Application Documentation
The Department does not have the resources to update user and technical documentation for current systems. However, for new development projects, the lSD Division has implemented new management procedures to help ensure that documentation of the new systems remains up-to-date.
Finding Control Number 474a-96-15 Lack of Password Expiration Controls
The Department agrees with the recommendation. However, as noted earlier, this system is out dated and the programs are stand alone programs with no common entry processes. Also, several of the utilization routines are in assembler language with which the Department does not have expertise. Therefore, the Department will not enhance the system with better password security but will include such features in a redesigned system. Furthermore, it should be noted that the Department already has additional security by limiting specific terminals with system access.
In addition, with the upgrades required for Year 2000, the Department will be adding RACF security on top of current security measures for all Mainframe online CICS 4.1 programs.
Finding Control Number 474a-96-18 Manual Batch Controls
The Department remains in agreement with the recommendation and has no revisions to the previous response at this time.
Finding Control Number 474a-96-19 Processing of Returns with Errors
The Department remains in agreement with the recommendation and has no revisions to the previous response at this time.
Finding Control Number 474a-96-20 Authorization and Reconciliation of Adjustments
The Department remains in agreement with the recommendation and has no revisions to the previous response at this time.
Finding Control Number 474a-96-21 Bank Deposit Corrections
The Department agrees with the recommendation. The Central Accounting Section notifies divisions concerning bank deposit corrections.
Finding Control Number 474a-96-22 Logging of Changes to Data
The Department agrees that the system should automatically log all changes with the users' ID, rather than the users' manually inputting their ID. The Department will incorporate this feature in the redesigned income tax system. In addition, the Internal Audit Unit will conduct routine audits through sampling.
E-28

---------State of Georata - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsNoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
DEPARTMENT OF REVENUE (Continued)
Finding Control Number 474a-96-24 Lack of Supervisory Review and Approval of Return Modifications
The Department continues to disagree with this finding and has no revisions to the previous management response at this time.
Finding Control Number 474a-96-28 Manual Identification of Unprocessed Batches
The Department has no comments to add to the previous management response. The Department continues to agree that the balancing routine is tedious and that system controls should be improved, but does not agree that it is prone to error since any discrepancies are resolved immediately.
Finding Control Number 474a-96-29 Reconciliation of Amounts Paid with Cash Receipts
The Department remains in agreement with the recommendation and has no revisions to the previous response at this time.
Finding Control Number 474a-96-30 Authorization and Review of Journal Entries
The Internal Audit/Operations Analysis Unit conducted a sample of the journal vouchers in the Withholding Tax Unit to determine if there were problems of improper documentation or incorrect posting. In this sample of I0 I randomly selected documents, only I journal voucher did not have adequate documentation. In addition, all dollar amounts of the journal vouchers sampled were posted accurately on the withholding system.
Finding Control Number 474a-96-31 Lack of Password Controls
The Department does not want to enhance the system with better password security but will include such features in a redesigned system. The supervisor ofthe Unit plans to change the passwords periodically.
Finding Control Number 474a-96-32 Timeliness of Error Correction
The Department remains in agreement with the recommendation and has no revisions to the previous response at this time.
Finding Control Number 474a-96-35 Lack of Password Controls
The Department has implemented the new sales tax system as part of GRITS. Through Grits, system access is controlled by profiles. The profiles, which designate the level of system access (inquiry, data entry, update, etc.), are created by the IA/OA Unit then assigned to the Security Administrators of the user divisions to be assigned as needed. In addition, user Id. and passwords are needed to gain access to GRITS. Idle user IDs are automatically inactivated periodically and must be reset for the user to gain access again. The IA/OA Unit also monitors the security system periodically. During the Year 2000 effort the administration of user-id's and passwords will be converted to use RACF. This will allow additional controls, such as the ability to automatically enforce periodic changing of passwords, prevent password re-use, etc.
E-29

---------State of Georaia---------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and Quesfioned Costs
For the Hscal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS
GEORGIA STUDENT FINANCE COMMISSION
Finding Control Number 476-96-01 BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Classes
Controls implemented during fiscal year 1997 ensured that Budget Unit "A" did not violate expenditure limits for any budgeted object class.
However, Budget Unit "B" did violate those laws because the Agency did not submit a budget amendment request to properly allocate the reserve which had been established at the end of fiscal year 1996. Detailed instructions have now been issued which describe the prescribed procedures to ensure that such amendments will be submitted using the appropriate procedures designated to properly allocate any such reserves.
DEPARTMENT OF TRANSPORTATION
Finding Control Number 484-96-01 CASH AND CASH EQUIVALENTS Inadequate Bank Reconciliation Procedures
During the fiscal year, the Department implemented procedures to correct the deficiencies noted in the prior year report. Bank reconciliations for the months of December 1995 through June 1996 were completed and no adjustments to the accounting records were required. However, the Department failed to establish procedures to ensure that bank reconciliations for the Payroll Account are timely reconciled on a monthly basis. Adopting this procedure by Accounting Services should eliminate the remaining deficiencies indicated in finding 484-96-01.
Finding Control Number 484-96-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
During the fiscal year, the Department implemented a number of procedures to correct the deficiencies noted in the prior year report. The Department has appointed a property control coordinator for each major unit and a new procedure is being adopted that requires internal audits and periodic verification by inventory coordinators to ensure that equipment inventories are maintained in accordance with provisions of the State Property Management System Manual.
Adopting and implementing these procedures by Property Control and Accounting Services should eliminate the remaining deficiencies indicated in finding number 484-96-02.
OFFICE OF TREASURY AND FISCAL SERVICES
Finding Control Number 486-96-01 ALLOWABLE COSTS/COST PRINCIPLES Inadequate Documentation of Direct Cost Claim Reimbursement
This audit finding does not warrant further action. Nearly four fiscal years have passed since the audit report containing the finding was submitted to the Federal clearinghouse. We are not aware of any Federal agency or pass-through agency currently following up on the finding. To date we have not received a management decision by the Federal Agency.
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---------State of Georaia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesHoned Costs
For the Fiscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
SUBSEQUENT INJURY TRUST FUND
Finding Control Number 489-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties
The agency employs a total of27, one of which is the Fiscal Officer's position who also serves as accountant for all of the Fund's assets and expenditures. To separate the duties of accounting functions into six separate functions would necessitate the acquisition of five additional accountants or accountant assistants. Under the current procedure, all of the accounting jobs can be performed by one (1) full time position. Therefore, the additional cost involved to separate the accounting functions for an agency as small as ours would not be cost effective and cannot be justified.
GEORGIA INSTITUTE OF TECHNOLOGY
Finding Control Number 503a-95-08 Disaster Recovery
Current plans are to engage a commercial provider to deliver an objective evaluation of existing disaster preparedness and to propose a solution for a comprehensive plan. This action is dependent on securing funding, estimated at $50,000.
The last significant update to the Institute's Disaster Recovery Contingency Plan was completed in October 1995. At that time, the plan addressed only two areas of the information technology infrastructure, the printing of payroll checks and the production of student transcripts in the absence of the administrative Control Data Cyber mainframe. In November 1996 the plan was revisited, with the focus on a major expansion to address the growing and rapidly changing areas of responsibility managed by the Office oflnformation Technology.
Six major areas of responsibility, grouped in three categories, were defined for inclusion in the expanded contingency plan:
Administrative resources, defined as: Payroll Processing Banner WWWN oice Response Student Registration Administrative Financial Information Systems
Unix-based resources, defined as: The general-access Prism complex Network Support systems
Telephone-based resources, defmed as: Voice and data communications
A Configuration Management spreadsheet document has been created which contains a detailed description of every computer system managed by OIT. The categories include Vendor, Model, Network Name, Operating System, Applications, Departmental Users, and Location. This spreadsheet is updated weekly, and will serve as a contingency plan blueprint for hardware and software systems recovery in the event a disaster occurs.
Due to the number and complexity of systems being addressed, we decided to enlist the expertise of an outside consulting firm to draw up, implement, and test the new, expanded version of the Institute's contingency plan. Following the successful execution of this phase of the project the plan would be maintained by Georgia Tech staff. After some preliminary market research, it was decided to pursue a competitive acquisition of this service from commercial providers.
E-31

- - - - - - - - - S t a t e of Geor5ia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilg.s and QucsHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
GEORGIA INSTITUTE OF TECHNOLOGY (Continued)
We are currently in the process of completing a requirements document that describes our environment, the requirements and the deliverables expected from the effort. We will work closely with the Georgia Tech purchasing department to execute this effort. We are currently seeking the estimated $60-80K which will be required for this contract.
Recently, the University System of Georgia awarded a contract to PeopleSoft for the replacement of the current mainframe-based Human Resources/Payroll and Financial systems. During the implementation of PeopleSoft's administrative application software suite, the first phase of which is expected to take 18 months, the Control Data Cyber mainframe running the HRIPARS legacy applications represents the Office of Information Technology's greatest vulnerability in terms of disaster recovery capability. To address this vulnerability, Financial Data Processing has put in place a documented procedure for printing payroll checks using a departmental server with a Xerox MICR laser printer. Production check files backed up on that server make this recovery procedure possible completely independent of the Control Data Cyber mainframe.
In addition, as part of our year 2000 (Y2K) contingency efforts, we have strengthened our ties with the University of Georgia (UGA) and will be conducting a series of tests on the CDC 960 at UGA to ensure that the entire suite of CDC applications will successfully process. This testing will serve dual roles in that it will strengthen our alternate site processing capabilities along with the identification of Y2K modification requirements.
We are also engaged in efforts with the Board of Regents (BOR) to provide a high-speed fiber link between Georgia Tech and UGA. This will be a resource identified in the new plan to address alternate site processing in case of a disaster at Georgia Tech.
Finding Control Number 503a-95-09 Facilities
The assessment of environmental risks and exposures remain to be done in conjunction with the planning described in the response updated June 18, 1997 to 503a-95-08.
(a) During the first part of 1997, SPS systems were installed in both main Rich computer rooms (Rich 116 and 133). The unit in Rich 133 provides approximately 15 minutes battery backup protection; the unit in Rich 116 has a generator, which will provide power in case of lengthy outages. (Rich 116 has the generator because critical network backbone equipment is located there).
(b) The age of the Rich Building's infrastructure still poses a risk of water damage to computer systems. However, work done since the original assessment has seemingly eliminated leaks into the main computer room, although leaks into adjacent areas remain. A funding request is still on the Major Renovation and Repair list. OIT did not make the "short list" for FY 97, but remains on the MRRF long list for FY 98.
(c) The back doors to Rich still remain open for fire code compliance, and for wheelchair access to the lower level and to the Rich Sun computer cluster. We believe the surveillance cameras in place that are monitored by computer operations staff reasonably ameliorate the risk.
(d) As noted in the October 1995 response, in August 1995, the Novell Network servers were moved into a room having proper environmental controls.
E-32

---------State of GeortJia - - - - - - - - -
Auditee'.s Re.spon.se Summarv Schedule of Prior Year Fndi1g.s and Que.sNoned Co.st.s
For the Frscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
GEORGIA STATE UNIVERSITY
Finding Control Number 509a-95-02 Information Systems Security Policy
There are no university-wide information system security policies and plans, as this pertains to administrative systems and data. Historically, major applications supporting fmance and student systems were developed by independent groups. As a result, there is disparity in handling of security among administrative systems. For example, there is a security policy and agreement signed by every SIS system user, and there is user-specific, data-element content level security associated with all SIS system data elements for update, view and reporting. As a new user is added to SIS, the user's supervisor determines the permitted accesses. There is no similar individualized or data element specific security for Finance, Human Resources or Development/Alumni, though role based security for Development/Alumni is planned.
The Chief Information Officer will charge the two units, University Computing and Networking Services (UCNS) and University Information Systems and Processes (UISP) with development of a draft University-wide security policy for institutional information systems. This recommended policy will be forwarded through the appropriate University approval channels, with anticipated adoption as policy before June 30, 1998.
Finding Control Number 509a-95-03 Information Systems Security-Technology Specific Observations
RACF Minimal RACF Monitoring The RACF Data Security Monitor report is run and inspected once a week.
Database Administrators have RACF SPECIAL The database Administrators no longer have the RACF SPECIAL attribute on their individual userids. They do have access to a userid with RACF SPECIAL attribute.
RACF Options The minimum password length of three characters will be increased to six characters and userids that are inactive for more than 180 days will be automatically revoked. A reset password will still be the userid's default group even though it is less than six characters. Passwords that are less than six characters will continue to work and users will be required to enter a longer password when their current password expires. Userids that are revoked for inactivity can be resumed with the normal procedures. These changes will be implemented May 22, 1997.
Production JCL Currently the financial programmers still have update access to production JCL. Current resources do not allow establishment of a separate group to perform this function. A team was constituted this year to assess programming and version control standards for all of University Information Systems and Processes (UISP). Policies and procedures are being developed to address this in the new environment. The "SUMMIT'' budget for fiscal year 1998 includes funding for version control and change management software to handle this in the new HR!Finance application.
IDMS Changes to Production The risks so far have not been very high. However, policies and procedures are being developed to address this in the new environment. The "SUMMIT" budget for fiscal year 1998 includes funding for version control and change management software to handle this in the new HR/Finance application.
E-33

---------State of Georfjia - - - - - - - - -
Auditcc's Response Summarv Schedule of Prior Ycar Fndhgs and QucsHoncd Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
GEORGIA STATE UNIVERSITY (Continued)
Version 10.2 ofiDMS The plan is in place, contingent on year end funding, to migrate to version 12.x ofiDMS within the year. This version of IDMS has "hooks" into RACF which should address items a, b and d. Item c is a priority for the new HR/Finance system implementation which is presently commencing. Security at form and data element level does exist for student systems including student accounts.
Overall Security A "SUMMIT" steering committee and project team have been formed (from IS&T and the user community) to address these and other issues for the new environment. A University Data Administrator position is .being hired with a charge to develop a University data model, accountable to a broadly based Data Administration Steering Committee. That data model will include policies for distributed ownership (view vs. update) for operational data. We are also presently looking at software for the new environment which will give us a single sign-on. The distribution of security control among several infrastructure support areas, while not focusing attention on security control, does diminish the opportunity for a broad lateral security breach.
A UISP Production Control Initiative is under way. This proposed initiative will include the creation and staffing of a new Production Control Manager position, who will be charged with responsibility for guaranteeing a stable production environment. This position will:
a) advocate customer point of view on production issues. b)recommend procedures for testing and migration of production programs. c)enforce consistent application of procedures for program migration and testing. d)organize, actuate, staff and train the orderly migration of UISP Production Control to a 24-hour operation. e)establish a routine process for second shift Production Control operations. t) participate on UISP Standards Team as advocate of customer production concerns.
Also, the hiring of a University Data Administrator will result in the development of data ownership and security controls.
Finding Control Number 509a-95-04 Program Change Management Controls
Delays in filling MIS positions resulted in delays in implementation of a Quality Control function. However, this is currently scheduled to be addressed in the 1998 fiscal year. The University has established a team to defme the role of quality and change management functions.
During the 1998 fiscal year quality and change management will be addressed, along with plans for addressing the conversion of current systems to accommodate the year 2000.
The risks so far have not been very high. However, the team is in place to address policies and procedures in the new environment. The "SUMMIT" budget for fiscal year 1998 includes funding for version control and change management software to handle this in the new HR/Finance application.
Finding Control Number 509a-95-05 Disaster Recovery
Initial efforts to develop and document disaster recovery plans will be addressed in fiscal year 1998.
E-34

----------State of Georfjia - - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi\gs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
GEORGIA STATE UNIVERSITY (Continued)
Finding Control Number 509a-95-07 Wells Computer Center Facilities
Environmental Risks A sprinkler system has been installed and activated. Combustible materials in the computer room have been reduced as much as is practical.
The Amdahl disk drives have been replaced with an EMC RAID system that includes a UPS. These features significantly reduce the risk of data loss. The Unisys 2200 and some UNIX hosts are on uninterruptible power systems.
The issue of the basement level computer room water detection and drainage has been raised with Safety and Risk management. During fiscal year 1998 we will review alternatives for providing early detection and prevention of water damage to the computer center. Safety and Risk Management is assisting UCNS at this time to improve our ability to preclude any water-related accident in the computer room. Cost estimates will be obtained during fiscal year 1998 and appropriate corrective action will be undertaken.
Control Improvements Maintenance calls are recorded and the data analyzed as needed.
A new badging/security access system is in place and procedures to deactivate badges upon termination are in development as a part of the campus-wide Panther card deployment. Panther cards must be surrendered as a part of employment termination clearance.
Finding Control Number 509a-95-08 Computer Operations
UCNS has located an off-site backup area and is ordering cabinets to hold the off-site tapes. New procedures will be in place by January, 1998.
Finding Control Number 509a-95-09 System Software Change Control
MVS Version 2.3.3 We are in the early planning stages of upgrading to MVS/ESA. Upgrading to a more current version ofMVS is part of the University's plans for meeting year 2000 requirements. Proposals are being reviewed for an upgrade to the Amdahl equipment which will greatly aid a conversion to MVS/ESA.
IDMS System Change Procedures We have not developed any documented procedures for making IDMS system changes at this date. We do, however have procedures for applying patches to IDMS. Because the version 12.x upgrade is not backward compatible with 10.2, this upgrade will have to be done very differently from any other upgrade. Since IDMS is on its way out, we have made the decision not to document procedures for IDMS but will be working on policies and procedures for the new environment.
Number of System Support Staff Currently there is one full-time MVS system programmer.
E-35

---------State of GeorfJia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
MEDICAL COLLEGE OF GEORGIA
Finding Control Number 512a-95-0l Information Security Framework
Information Security policies are in draft, but have not been published. The Chief Information Officer is requesting funding for a campus data security coordinator position for fiscal year 1999. This position will be responsible for implementing the institution-wide information systems security policy and will act as a liaison to the campus Systems Administrator group. The Systems Administrators Group consists of the departmental computing representatives that are responsible for managing computing systems across the campus. Through this liaison function, the security coordinator will be able to expand the implementation of the institution-wide information systems security policy to the departmental systems.
Finding Control Number 512a-95-03 Physical Security Alternatives regarding physical access controls over the MCG Annex Building under consideration.
Finding Control Number 512a-95-06 Business Continuity Planning
The above findings from the 1995 audit remain outstanding.
UNIVERSITY OF GEORGIA
Finding Control Number 518a-95-03 Disaster Recovery
The State Department of Audits does not have resources to assist UGA financially or technically in the recommended risk assessment cost benefit analysis. The State Department of Audits has supplied reference materials to UCNS in an effort to help provide guidelines for such as assessment. Given these conditions, the UCNS will undertake to the best of its abilities the recommended evaluation and planning processes. We continue to believe that this type of assessment and ultimate provision of recovery facilities would be best met through a coordinated State initiative where the costs could be leveraged across multiple participants.
Discussions were held with Georgia State University (GSU) to determine the feasibility of establishing a cooperative agreement to provide back-up processing capabilities. The result of these discussions was determination that such an arrangement was not practical because of the significant operating system dissimilarities which existed between the central data processing environments on our two campuses.
E-36

---------State of GeorfJia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesNoned Costs
For the FLscal Year Ended Jmc 30. 1997
AUDITEE'S COMMENTS
ALBANY STATE UNIVERSITY
Finding Control Number 521-96-01 REVENUEIRECEIV ABLE/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid
KPMG Peat Marwick has consulted with the appropriate Financial Aid staff regarding the proper procedures for making fmancial aid awards. Additionally, the institution has outsourced the collection of current receivable balances to private companies and feels confident that these balances will be significantly reduced.
Finding Control Number 521-96-02 FUND EQUITIES Deficits to be Funded from Subsequent Years' Operation
The Athletic Director, the Business Office and the Vice President for Fiscal Affairs have developed a plan of action to control operations of the Athletic Program, so that expenditures would not exceed revenues within the current fiscal year. Additionally, a plan to reduce the current deficit has been developed.
Finding Control Number 521-96-04 ELIGIBILITY Satisfactory Academic Progress
The institution has contracted with KPMG Peat Marwick to provide training for the Financial Aid staff, to ensure that students' financial aid eligibility is monitored. Additionally, the Director of Financial Aid, the Director of Financial Operations and the Vice President for Student Affairs are finalizing procedures to ensure the same.
ARMSTRONG ATLANTIC STATE UNIVERSITY
Finding Control Number 524-96-03 CASH AND CASH EQUIVALENTS Uncollateralized Deposits
The University has implemented procedures to ensure certificates of deposit are collateralized.
Audit Control Number 524-96-04 GENERAL LEDGER H.O.P.E. Program Reconciliation Report Not Reconciled to Accounting Records
The University has established procedures to ensure the H.O.P.E. Program Reconciliation Report is reconciled to the accounting records with sufficient documentation.
Audit Control Number 524-96-05 GENERAL LEDGER Unearned Revenue Not Supported by Detail Listing
The University was unable to provide a detail listing of unearned revenue for summer quarter from the Banner Student information system. This deficiency cannot be resolved at the institutional level because the Banner student information system is maintained by the Office oflnstruction and Information Technology.
E-37

- - - - - - - - - - S t a t e of Georgia----------
Auditee'.s Rc.spon.se Summarv Schedule of Prior Year Fndi1g.s and Quc.sHoned Co.st.s
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
AUGUSTA STATE UNIVERSITY
Finding Control Number 527-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT General Ledger not Supported by Subsidiary Records
College was unable to resolve the discrepancy and reconcile accounting records to subsidiary inventory records. The comptroller will immediately begin working with the property control manager to reconcile the difference. Reconciliation will be performed quarterly instead of annually in the future.
FORT VALLEY STATE UNIVERSITY
Finding Control Number 533-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
This finding is only partially resolved for following reasons:
1) Bank reconciliations were performed by the comptroller. 2) The accounting supervisor investigated lost checks, issued stop-payments and reissued replacement
checks without the procedures being reviewed or authorized by anyone else.
Corrective actions subsequent to year-end include the training of a staff assistant to prepare bank reconciliations and that they are done on a monthly basis. The form for reissuance of lost checks has been revised to include a sign off by the comptroller. Additionally, all lost or stolen checks will be voided and a new check will be issued as a replacement. The log will show the old check number that is being replaced and all back-up documentation will be filed in the accounting office.
Finding Control Number 533-96-02 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
The procedure for recording and tracking wire transfers was implemented during fiscal year 1997. However, the bank reconciliation procedures were not fully implemented until July 1997. The previously implemented action failed to correct the deficiency because the bank reconciliations were not performed in a timely manner.
Beginning in June 1997 the responsibility for bank reconciliation was assigned to a staff assistant who had completed the reconciliations for the first quarter on time. This employee's work will continue to be monitored by the Director of Accounting Services and follow-ups will be made for all reconciling items.
Finding Control Number 533-96-03 REVENUESIRECEIVABLES/RECEIPTS Improper Student Accounts Receivables
Due to problems with the Banner system, bills were not mailed on a monthly basis. The problem was fixed during the Fall of 1997 and monthly bills will be mailed to all students beginning in October 1997.
E-38

- - - - - - - S t a t e of GeorfJia-------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS
FORT VALLEY STATE UNIVERSITY (Continued)
Finding Control Number 533-96-05 GENERAL LEDGER ADMINISTRATIVE REQUIREMENTS Dormant Restricted Funds
The Grants and Contracts Accountant contacted all grantor agencies with dormant accounts on Fort Valley State University's books. Where applicable funds have been returned and for any funds retained there are letters on file giving FVSU permission to keep them. All of the accounts listed in the finding have been resolved, except for three, and the grants accountant is in contact with the agency and we anticipate these last accounts being cleared prior to November 1997.
Finding Control Number 533-96-10 SPECIAL TESTS AND PROVISIONS In-Person Entrance and Exit Counseling Not Conducted
We do not concur with this finding. We are awaiting final determination from the Federal government.
Finding Control Number 533-96-13 TYPES OF SERVICES/ALLOWED OR UNALLOWED Improper Calculation of Cost of Attendance
We do not concur with this finding. The auditors cited three cases where they contend that an improper calculation of cost of attendance had occurred. Fiscal year 1996 was the first year of using a new system to generate the student's budget. It was explained and documented in the respective student's file that the budget listed contained amounts generated as a result of a computer error and the budget was not used for any of the students in determining their cost of attendance. The corrected budget was generated off the system. Additionally, actual budgets used were present in the folders as well as appropriate award information that was within the actual limits imposed and not that of the computer error.
The computer system problem was corrected and efforts were made to provide new notices for all students that had been caught in the problem. However, no overawards from actual cost of attendance had taken place and manual sheets were available at the time of the audit inspection.
Finding Control Number 533-96-14 TYPES OF SERVICES/ALLOWED OR UNALLOWED Disbursement in Excess of Cost of Attendance
The institution has mandated a policy that all payments to students, regardless of the source, must be approved by the financial aid office before disbursement. This policy was already in effect, but apparently not adhered to sufficiently. Therefore, the emphasis that the institution now places on the procedure should provide the appropriate enforcement of the policy.
Finding Control Number 533-96-17 ELIGIBILITY Inadequate Documentation of Dependency Status Adjustments
We do not concur with this finding. As in the past, our position on matters in this area has been upheld by the U. S. Office of Education as the right of the financial aid officer to exercise professional judgment, as well as to determine what documentation is adequate.
E-39

-------State ofGeorfjla--------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsHoned Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
FORT VALLEY STATE UNIVERSITY (Continued)
Finding Control Number 533-96-18
ELIGIBILITY
Student Financial Aid in Excess of Maximum Time Frame
We submitted information to the Federal government concerning this student's specific situation. Documentation supporting this was available in the student's folder, but was not appropriately listed for the audit year. We have appealed this finding with the understanding that documentation will always be appropriately listed in the future.
Finding Control Number 533-96-19
ELIGIBILITY
Satisfactory Academic Progress Not Maintained
We do not concur with this finding. Satisfactory Academic Progress (SAP) reviews are made at the end of the Spring quarter, with allowances for Summer enrollment before suspension takes place. The auditors were informed of this policy. Beginning the 1995-1996 school year appeals were approved for the same period. The auditors were given this information and requested not to use the old catalogs since the latest one had not been received from the printing company. Further, an analysis of the cases cited by the auditors revealed the following:
The two students cited for incremental measurement violation had complied with requirements at the end of the Summer '95 period, preceding Fall '95. Therefore, no fmancial suspension was warranted. Two students had been suspended from fmancial aid at the end of Spring '95, and have appealed their suspension and it has been approved for 1995-1996, and documentation was available in the respective student's records attesting to action taken. Two students began the 1995-1996 school year in compliance of satisfactory academic progress. During the course of the school year, academic problems prevailed. However, as long as the institution allowed the students to re-enroll during this period, no action was warranted until the end ofthe 1995-1996 school year.
As a result of all the aforestated information, we do not concur with audit findings in this area.
GEORGIA SOUTHERN UNIVERSITY
Finding Control Number 539-96-01 REVENUESIRECEIVABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid
Georgia Southern University is following the Board of Regents Policy, Section 704, on collecting fees at student registration and ensuring that allowable exceptions to the Board of Regents' Policy have supporting documentation. Student fee deferments are only granted to students whose fees are guaranteed by an agreement with an outside agency and whose student fees will be paid from approved fmancial aid.
Procedures to collect outstanding accounts receivable balances have been implemented. This is evident by the fact that the accounts receivable balances have declined during fiscal year 1997 and prior fiscal years. Georgia Southern University will continue its collection efforts on the outstanding student accounts receivable balances. In addition, to assist in the collection of the accounts, Georgia Southern has placed a financial record hold on the academic records of students who have outstanding accounts receivable balances.
E-40

---------State of GeorfJkl---------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesHoned Costs
For the Fiscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
GEORGIA SOUTHERN UNIVERSITY (Continued)
Finding Control Number 539a-95-01 Strategic and Resource Planning
The Information Technology Advisory Council has been actively involved in establishing policies and procedures for the past two years. The council is currently working on an assessment of existing technology preliminary to the development of a strategic information technology plan.
Finding Control Number 539a-95-04 Disaster Recovery
In conjunction with the Board of Regents Georgia Southern has established a recovery plan for the fmancial systems, but an alternate processing site has not yet been identified. A disaster recovery plan for the BANNER student system has not yet been developed.
KENNESAW STATE UNIVERSITY
Finding Control Number 543-96-01 REVENUESIRECEIVABLES/RECEIPTS Student Accounts Receivable not Supported by Financial Aid
The process for collecting Masters of Experienced Professional student fees has been completely restructured. The policies developed are designed to ensure that the University is in compliance with Regents policy. The number of students who owe fees has been reduced. These students' accounts have been placed for litigation.
SAVANNAH STATE UNIVERSITY
Finding Control Number 548-96-01 REVENUESIRECEIV ABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid
The University used the services of its local collection agency and the loan Collection Clerk to assist with the collection efforts of accounts receivables. To further reduce accounts receivable, the University wrote-off uncollectible debts of $100 or less under House Bill 1536 (codified as O.C.G.A. Section 50-16-17). The University also used a portion of its surplus funds to increase the reserve for uncollectible debts in excess of $100. The Financial Aid Deferment Memo form was used to assist with managing quarterly deferments.
Finding Control Number 548-96-02 EXPENDITURES/LIABILITIES/DISBURSEMENTS Deficit Cash Balance
To gradually eliminate this deficit over a period of time, the University's corrective action plan was to apply a portion of its annual General Scholarship Funds to the Naval Science Scholarship account. A portion of these funds were applied to the deficit. However, the amount applied was relatively small compared to the size of the deficit. The University has plans to significantly increase its fund raising efforts in the future to generate a substantial amount of funds for the General Scholarship Fund. A portion of these funds will be applied to the deficit.
E-41

- - - - - - - S t a t e of Georfjia--------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
SAVANNAH STATE UNIVERSITY (Continued)
Finding Control Number 548-96-03 FUND BALANCE Deficit to be Funded from Subsequent Years' Operation
The corrective action taken was to apply the annual surplus balance of the Athletic Program to the deficit balance until it is paid in full. The Athletic Program realized a surplus of $68,549.02 as of June 30, 1997. This reduced the deficit to $139,102.93. It is projected that the Athletic Program will continue to realize a surplus balance of$25,000 to $60,000 at June 30, 1998. The University will continue to apply surplus balances until the deficit is eliminated. Increased external athletic fund raising efforts to assist with the deficit and overall operations of the Athletic Program will continue to be a top priority of the University.
Finding Control Number 548-96-05 INVENTORIES Inadequate Supply/Resale Inventory Records
On February 20 and 24, 1997, the University developed and implemented written policies and procedures to ensure that inventories are properly maintained for Concession, Bookstore and Plant Operations. However, policies and procedures were not properly implemented, resulting in an overstatement of the Bookstore inventory. It also resulted in Plant Operations inventory not being recorded in the accounting records for fiscal year 1996-97. This matter will be properly addressed with the appropriate personnel to ensure that all inventories are correct and properly recorded in the accounting records.
SOUTHERN POLYTECHNIC STATE UNIVERSITY
Finding Control Number 550-96-01 FUND EQUITIES Deficit Fund Balance
After careful review of the specific disbursements involved in this finding, it is determined that the best course of action is to transfer these disbursements to private sources. Pending the outcome of further investigation by the Assistant Vice President and the Internal Auditor, a revised corrective action plan will be developed and implemented.
Finding Control Number 550-96-02 REVENUES/RECEIVABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid
The University has implemented procedures to insure that only students meeting the specific criteria in Board of Regents Policy Manual, Section 704 are granted fee deferments. Further, the University is continuing collection efforts on all remaining balances.
E-42

- - - - - - - S t a t e of GeorfJia--------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesHoned Costs
For the f&al Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
VALDOSTA STATE UNIVERSITY
Finding Control Number 551-96-02 SPECIAL TESTS AND PROVISIONS Disbursement in Excess ofNeed
The University has formally requested repayment from the student involved. No reimbursement has been received to date. The University will continue collection efforts for the outstanding balance.
Finding Control Number 551-96-03 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
Valdosta State University has reassigned duties to achieve implementation in segregating duties relating to payroll and accounts payable. The University is working to better achieve separation of duties in the payroll set-up area in reassigning this duty to the personnel department.
Finding Control Number 551-96-04 ELIGIBILITY Deficiencies in Awarding/Disbursing Student Financial Aid
The University has formally requested repayment from the student involved. No reimbursement has been received to date. The University will continue in its efforts to collect the outstanding balance. Valdosta State University will correspond with the Pell program to attempt to correct the student records involved. Once the Pell program posts a corrected increased award to the students involved, the University will forward the funds to the students immediately.
ATLANTA METROPOLITAN COLLEGE
Finding Control Number 561-96-01 FUND EQUITIES Deficit Fund Balance
The College contacted the United States Department of Education in an effort to fund this fiscal year 1994 Pell Grant Program deficit by having the authorization amount for the fiscal year 1994 Pell Grant Program increased by $34,363.31. We explored all options available to us in this regard without success. The College has also contacted the Board of Regents regarding the funding of this deficit and will continue to explore all reasonable options available to the College to fund this deficit.
Finding Control Number 561-96-02 REPORTING Incorrect Student Payment Summary Report
The College contacted the United States Department of Education in an effort to fund this fiscal year 1995 Pell Grant Program deficit by having the authorization amount increased by $64,595.20. We explored all options available to us in this regard without success. The College has also contacted the Board of Regents regarding the funding of this deficit and will continue to explore all reasonable options available to the College to fund this deficit.
E-43

---------State of Geor5ia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsHoned Costs
For the Hscal Ycar Ended Jmc 30. I007
AUDITEE'S COMMENTS
ATLANTA METROPOLITAN COLLEGE (Continued)
Finding Control Number 561-96-04 REPORTING Incorrect Student Payment Summary Report
The College has certified the validity of the excess Federal Pell Grant expenditures and is awaiting an upward adjustment of the fiscal year 1996 authorization amount from the U.S. Department of Education.
Finding Control Number 561-96-05 SPECIAL TESTS AND PROVISIONS Overpayments to Federal Financial Aid Recipients
As indicated in the College's April 23, 1997 response to 1996 reported findings, letters were sent to students' number (I) and (3) informing them of their obligation to repay funds received in error totaling $432.00 (student number (1) $282.00, student number (3) $150.00). The academic records of these two students have been held and are unavailable to the students until payment is received. As of this date, payment has not been received by the students. The College will correspond again by certified mail with the two students not later than November 21, 1997. It should be noted that the total payment due from these two students is $432.00, not the $564.00 indicated in the 1996 Review Report.
FLOYD COLLEGE
Finding Control Number 573-96-01 REPORTING Incorrect Student Payment Summary Report
The Student Payment Summary for 1995-96 has been reviewed. A list of excess Pell Grant expenditures eligible for payment in the amount of $6,424.00 has been submitted to the U.S. Department of Education. An adjustment to the FY 1996 authorized amount has been requested. The College is presently awaiting a response from the Federal grantor agency regarding the authorization adjustment and delivery of excess funds.
MACON COLLEGE
Finding Control Number 581-96-01 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
The College has taken or will take the following corrective actions during fiscal year 1998:
Established procedures to insure timely reconciliation of the operating and payroll bank accounts.
Have incorporated the Sun Trust Nets computer program to track incoming wires that do not provide advanced notice.
Have incorporated the Paradox software program to download the check register, void check register and the general ledger cash account to spreadsheets that can be sorted in a more effective manner for reconciliation.
E-44

---------State of GeorfJia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
MACON COLLEGE (Continued)
Have developed new procedures for determining the accuracy of journal voucher postings; all journal vouchers will be attached to the computer output and check for correctiveness.
Have initiated training to reconcile the operating and payroll statements by two separate employees.
Finding Control Number 581-96-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequate Equipment Inventory Records
The College has taken or will take the following corrective actions during fiscal year 1998 to safeguard our fixed assets:
Develop a new computer program to assist to generate trackable records. Establish a procedure to monitor/control the movement (transfer) of all fixed assets. Establish a procedure to control the disposition of surplused fixed assets.
Disposition Date Surplus/Salvage/Donated/Transferred Perform a room-to-room inventory to establish accuracy of the existing inventory records. Establish procedures to add newly purchased assets to the inventory record. Location Value Acquisition Date Serial Number Description
Finding Control Number 581-96-03 SPECIAL REPORTING REQUIREMENTS Report Not Reconciled to Accounting Records
The College has implemented a new Accounting/Financial Aid/Student Records software program (Banner), which enables the Financial Aid Office to reconcile federal fund accounts in a more accurate and timely fashion. With the help of Computer Services, reports are being provided to reconcile financial aid awards with the actual disbursements in the Business Office. Since both the Financial Aid Office and the Business Office are connected to the same software program, there is increased flexibility in reconciling Accounting/Financial Aid expenditures on a monthly basis. Prior to the time the FISAP Report is due, the Financial Aid Director and the Director of the Business Office will work together to make sure that the expenditures reported on the FISAP are reconciled and accurate to the best of their knowledge. This will be implemented with the 1997-1998 academic year.
Finding Control Number 581-96-05 TYPES OF SERVICES Awards Not Based on Correct Enrollment Status
The College has implemented a new relational database (Banner), which will disburse Pell based on the number of hours that a student has registered. The financial aid module of Banner is set up to disburse other Federal funds accordingly. Built into Banner are the Federal rules governing the Federal programs. However, it is the responsibility of the financial aid office to monitor enrollment status to cancel aid and return Federal Stafford funds to their appropriate lender. There has been a change in the Refund Status Policy to allow students to drop/add classes without penalty up to the third day of the quarter. This drastic change from the old policy will allow the College's unique student population flexibility in adding
E45

- - - - - - - S t a t e of GeorfJkl-------
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the Hscal Ycar Ended Jlf\c 30. 1997
AUDITEE'S COMMENTS
MACON COLLEGE (Continued)
classes or dropping from one class to add another without penalty. At the end of registration, a report will be used to detennine who is not enrolled/dropped from one enrollment status to another/less than half-time. This new procedure will be implemented Fall Quarter of the I997-I 998 academic year.
Finding Control Number 581-96-06 SPECIAL TESTS AND PROVISIONS Refund Not Credited in a Timely Manner
The College has taken drastic steps to enforce the timeliness of refunds for financial aid recipients. Refunds for financial aid recipients will now be handled in the financial aid office. Actions have been taken with the Registrar's Office to make sure that total withdrawal fonns are submitted to the Director of Financial Aid. In the future, it is fmancial aid's recommendation to have students who are totally withdrawing from the College get approval from the Director of Financial Aid. This would ensure that refunds of institutional costs paid from Federal student fmancial aid funds are credited to Federal accounts within the required time frames. Until this recommendation is implemented, reports will be generated on a weekly basis providing names of students who have totally withdrew from the College. This report is to provide a back-up to receiving withdrawal fonns from the Registrar. The new procedures for refunds will be implemented Fall Quarter of the 1997-1998 academic year.
MIDDLE GEORGIA COLLEGE
Finding Control Number 584-91-006 ELIGIBILITY Aid Awarded to Student Not Meeting Satisfactory Academic Progress
This was a minor exception in the financial aid audit for the fiscal year ending June 30, 1990. The U.S. Department of Education was notified and we are awaiting a response from them.
Finding Control Number 584-96-01 REVENUESIRECEIV ABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid
Part of the identified finding are accounts that are several years old with the likelihood of collection becoming more and more remote. The College began requiring the completion of the promissory note prior to deferral of fees in fiscal year ended June 1997. Deferrals due to changes in fmancial aid awards due to a student dropping classes will be improved with the implementation of the new student infonnation system. This is an integrated system for fmancial aid, registration and fees implemented Summer Quarter I997.
SOUTH GEORGIA COLLEGE
Finding Control Number 587-96-01 FUND EQUITIES Deficit to be Funded from Subsequent Years' Operations
Changes have been made to the food services to minimize losses. The College believes that food services need to be offered due to on campus housing. Operations have been contracted out for food services and the College has no significant input into its operations.
E-46

---------State of GeorfJia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QucsHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS SOUTH GEORGIA COLLEGE (Continued)
On campus housing has been consolidated into a co-ed donn. Indirect cost for unused donn space is the main contributor to unprofitable operation ofhousing.
GEORGIA MILITARY COLLEGE
Finding Control Number 590-96-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System New inventory system is being prepared and will be in place during FY 98. Funds will not be available during FY 98 to obtain outside professional assistance to properly assess valuation of the older buildings owned by Georgia Military College. This initiative must be delayed until at least FY 99. Finding Control Number 590-96-05 REVENUESIRECEIV ABLES/RECEIPTS Deficiencies in Collection of Tuition and Fees Georgia Military College does not have to follow the University System of Georgia guidelines concerning collection of tuition and fees. The College has made a management decision to extend limited credit terms on a case-by-case basis.
Finding Control Number 590-96-06 FEDERAL FINANCIAL REPORTS Incorrect Student Summary Reports Federal Pell Grant Program (CFDA 84.063) A review of the $41,013.00 of 1996 Pell Grant Program expenditures spent in excess of the authorized amount revealed that $38,754.00 of the expenditures were valid.
SKIDAWAY INSTITUTE OF OCEANOGRAPHY
Finding Control Number 593-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties Skidaway Institute is a small operation with a total staff of only three employees in fiscal affairs office. This size staff makes it almost impossible to establish a logical work flow and satisfy the principle of separation of duties. Skidaway Institute will continue to review operations to determine if duties can be reassigned to achieve a higher degree of internal control with existing staff.
E-47

---------State of GeorfJia - - - - - - - - -
Auditce's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the Hscal Year Ended Jmc 30. 1997
AUDITEE'S COMMENTS
WEST GEORGIA TECHNICAL INSTITUTE
Finding Control Number 819-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
The Institute is implementing appropriate procedures to satisfy the separation of duties requirement. In the areas of expenditures, liabilities and cash disbursements and bank reconciliations, the Institute has evaluated job functions and reassigned staff persons in these areas. By the end of the current fiscal year, complete resolution of this fmding will be obtained.
Finding Control Number 819-96-02 CASH MANAGEMENT Excessive Cash Balances
The Institute implemented a corrective action plan, but did not correct the deficiency and the stated condition remains. Reorganization and the reassigning ofjob responsibilities in some areas will enable the Institute to resolve this finding and adequately forecast the cash needs of the program.
Finding Control Number 819-96-03 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
The Institute implemented a corrective action plan, but did not correct the deficiency and the stated condition remains. The monthly payroll bank statements were reconciled for each month by June 30. Numerous adjustments were necessary to reconcile the operating bank account and the federal bank account.
The Institute is implementing appropriate procedures and controls to ensure that all reconciling items are identified and corrected each month. All unresolved reconciling items from prior year audit will be addressed in the current year.
Finding Control Number 819-96-05 REPORTING Federal Cash Transactions Report Not Reconciled
The Institute implemented a corrective action plan, but did not correct the deficiency and the stated condition remains. The Institute notes that the resolution of the cash and cash equivalents administrative requirement fmding will aide in providing adequate detail for the reconciliation of this report.
ALBANY TECHNICAL INSTITUTE
Finding Control Number 820-96-01 INVENTORIES Inadequate Resale Inventory Records
Effective Spring Quarter 1997, Albany Technical Institute has implemented an average costing method of resale inventory. At this time all current inventory prices were updated to reflect an average cost calculation for all existing inventory and a spreadsheet devised to calculate new costs when items are purchased.
The Bookstore Coordinator will be responsible for completing the updates on costs for the resale inventory. The Accounting Manager verifies the price updates quarterly.
E-48

- - - - - - - - t)tate of Georaia - - - - - - - - -
Auditecs Response Summarv Schedule of Prior Year Fndng.s and Quc.sHoned Costs
For the FISCal Year Ended Jme 30, 1997
AUDITEE'S COMMENTS
ALBANY TECHNICAL INSTITUTE (Continued)
Finding Control Number 820-96-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequate Equipment Inventory Records
Additions are posted to the inventory records prior to each month's general accounting close and deletions are made on an as they occur basis. Capital leases are also now recorded in the equipment inventory records.
Finding Control Number 820-96-03 REPORTING Federal Cash Transaction Report Not Reconciled
The corrective action plan was implemented to correct the "cash on hand" through an adjustment of $12,265.00 which was made to the Winter Quarter 1997 Pell drawdown to balance the Federal Cash Transactions Report.
Voids of payments from prior fiscal years (FY 95) have caused the Federal Cash Transaction Report to again be out of balance. Albany Technical Institute will be soliciting assistance from both Department of Technical and Adult Education and our regional Department of Education office in Atlanta to resolve the prior year adjustments.
AUGUSTA TECHNICAL INSTITUTE
Finding Control Number 824-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
Measures have been taken to train personnel in the responsible department the importance of performing accurate inventory reviews and the importance of maintaining their inventory, as well as notifying the property clerk when changes occur. There are still some discrepancies in the inventory listing. Departments will complete a physical inventory in FY '98. Each supervisor will be responsible for the accuracy of the inventories.
Finding Control Number 824-96-02 REVENUESIRECEIV ABLES/RECEIPTS Inadequate Accounting Control Procedures
(I) Outstanding receivables are monitored throughout the year and attempts are made to collect monies owed to the Institute.
(2) Outstanding receivable for insufficient funds from prior years are pursued for collection. Every student with fees due is shown in our Banner student system and their accounts are placed on hold status, preventing them from all transactions until their fees are paid. In FY '93, procedures were developed, and remain as policy in FY '94, to remove students from classes if their check for fees is returned.
(3) For FY '93 Tuition Work Assistance outstanding receivables were established in exchange for the student working for the Institute, however, balances remaining in these accounts resulted from the student withdrawing from school before completing the hours required to work. Efforts are being made to collect these debts and holds have been placed on the student's account. In FY '94, with the implementation of the Hope Grant Program, the need for Tuition Work Assistance was eliminated.
E-49

---------State of Georffia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year fndngs and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30, 1997
AUDITEE'S COMMENTS
AUGUSTA TECHNICAL INSTITUTE (Continued)
(4) The Financial Aid Office eligibility determination has been improved upon through the utilization of the Banner Financial Aid System and the Electronic Data Exchange System software packages, allowing ineligibility to be detected sooner. Also a more intense screening before approval has been implemented. Attempts are made to collect the debt from the student and a hold is placed on the student's file.
CHATTAHOOCHEE TECHNICAL INSTITUTE
Finding Control Number 827-95-01 EMPLOYEE COMPENSATION Salary Overpayments
The Institution submitted and implemented a corrective action plan to eliminate further occurrence of this problem following the fiscal year 1994 audit. Subsequent audits have revealed no further problems with the controls that have been established. The former employee still owes the Institute a balance of$640.96 from the salary overpayment.
Finding Control Number 827-95-03 REPORTING Incorrect Student Payment Summary Report
The Institute has begun the procedures outlined in GEN-94-14 to receive credit for awards made by the Institution that were not previously recognized by the U.S. Department of Education. These procedures have subsequently been superseded by information contained in Dear Colleague letter P-97-2; therefore, additional work must be completed by the Institution before the expenditures for 1994-95 Pell Grant awards can be certified to the U.S. Department of Education. The anticipated date for completion of certification of payments following the procedures in P-97-2 is March 1998.
Finding Control Number 827-96-01 REPORTING Failure to Submit Institutional Payment Summary Report
The corrective action that was implemented in fiscal year 1996 did not correct the deficiency in reporting requirements. Additional procedures were implemented in August and September 1997 that will ensure that the Institutional Payment Summary Reports are submitted within the required reporting periods.
Finding Control Number 827-96-02 ADMINISTRATIVE REQUIREMENTS Lack of Administrative Capability
Corrective action has been taken by the Institution to correct deficiencies in the system of internal controls for the Pell Grant Program and to strengthen its overall process of administering Title IV funds. The Institute will continue to monitor these controls to ensure that the Pell Grant Program is in compliance with the applicable rules and regulations.
Finding Control Number 827-96-03 REPORTING Incorrect Student Payment Summary Report
The Institute has partially completed the corrective action required to resolve this fmding. Additional actions will be completed by March 1998, following the procedures in Dear Colleague letter P-97-2 to certify Pell Grant expenditures for the 1995-96 award year.
E-50

- - - - - - - S t a t e of GeorfJla-------
AuditeL's Response Summarv Schedule of Prior Year Fndilgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
CHATTAHOOCHEE TECHNICAL INSTITUTE (Continued)
Finding Control Number 827-96-04 ACTIVITIES ALLOWED OR UNALLOWED Award Not Properly Calculated
Procedures have been established by the Institution to ensure that the Pell Grant awards are properly calculated in accordance with Federal regulations. The Institution has taken action to secure reimbursement to the Pell Grant program in the amount of $484.00.
Finding Control Number 827-96-05 ELIGIBILITY Ineligible Student Receiving Student Aid
Procedures have been established by the Institution to properly monitor satisfactory academic progress for those students receiving Pell Grant awards and ensure that financial aid awards are made in accordance with appropriate Federal regulations. Reimbursement has not been received from the student for refund to the Pell Grant Program.
DEKALB TECHNICAL INSTITUTE
Finding Control Number 830-96-01 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
DeKalb Technical Institute will establish policies with appropriate control features to ensure prompt reconciliation of checks with accounting records and voiding of checks according to policy. Reconciliations will be traced to ledger balances by the Director of Finance. The deposits in transit which did not clear were written off against fund balance. Checks from FY95 will be voided on the accounting system. With state conversion, checks will be printed by D.O.A.S. sequentially.
Finding Control Number 830-96-03 GENERAL LEDGER Inadequate Accounting Procedures
DeKalb Technical Institute will implement procedures to ensure that an analysis of monthly general ledgers is performed for all accounting systems (MIPS, GIFS, and FACS). With conversion to state governance, the GIFS and FACS accounting systems will impose close dates on the user after the end of each accounting period. If close dates are not met, the systems are closed by the Department of Technical and Adult Education's Institutional Accounting Department. The local accounting system (MIPS) will be terminated during FY98.
E-51

---------State of Georaia - - - - - - - - -
Auditee'.s Response Summarv Schedule of Prior Year Fndngs and Que.sHoned Costs
For the Hscal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
MIDDLE GEORGIA TECHNICAL INSTITUTE
Finding Control Number 836-95-04 ALLOWABLE COSTS/COST PRINCIPLES Time and Attendance Records Not Utilized Job Training Partnership Act (CFDA No. 17.250) Vocational Education- Basic Grants to States (CFDA No. 84.048) Questioned Cost: $13,951.40
During the fiscal year, the Institute contacted the grantor agency regarding resolution of the fmding, however, an official resolution has not been received.
MOULTRIE AREA TECHNICAL INSTITUTE
Finding Control Number 837-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
Significant improvements were made in the performance of accounting functions with the addition of an accounting manager and implementation of procedures. However, the function of making and recording some deposits is not yet adequately separated. Procedures will be implemented in the subsequent period to separate the functions for those deposits.
Finding Control Number 837-96-03 REPORTING Federal Cash Transaction Report Not Reconciled
The Institute is in the process of reconciling the Federal Cash Transactions Report. The reconciling items have been identified and the Institute is in the process of documenting the reconciling items. The reconciling items include $20,739.00 in expenditures for fiscal year ended June 30, 1995 that were not funded by U.S. DOE. The Institute is seeking funding through the audit resolution process.
Finding Control Number 837-96-05 CASH MANAGEMENT Excessive Cash Balances
The Institute drew excess Pell cash by mistake in June 1996. The excess funds were returned in December 1996. Additionally, the Institute implemented procedures to ensure compliance subsequent to December 1996.
Finding Control Number 837-96-06 ELIGIBILITY Disbursements in Excess ofNeed
The Institute has contacted the grantor and is awaiting a response to resolve this fmding.
E-52

----------State of Georaia ----------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
NORTH METRO TECHNICAL INSTITUTE
Finding Control Number 839-96-01 GENERAL LEDGER Agency Fund Overpayments
During the fiscal year, the Institute implemented procedures to ensure that proper reconciliation takes place between the Georgia Student Finance Commission, the Institute's Financial Aid Office, and the Institute's Business Office. The Institute made the necessary corrections; however, an adjusting entry from the previous year had not been entered. Consequently, another entry will be needed to adjust for the omitted adjusting entry.
PICKENS TECHNICAL INSTITUTE
Finding Control Number 840-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
The lack of personnel in the Business Office precludes complete separation of duties. During 1997, a complete study of internal control affecting Expenditures/Liabilities/Disbursements for Pickens Technical Institute will be conducted, with the possibility of involving personnel from other departments to be investigated.
VALDOSTA TECHNICAL INSTITUTE
Finding Control Number 848-96-01 GENERAL LEDGER Accounting System Deficiency
Our Institution was directed by Institutional Support of the Georgia Department of Technical and Adult Education that Statewide Systems was responsible for the correction of the accounting system error.
JEKYLL ISLAND STATE PARK AUTHORITY
Finding Control Number 910-96-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
The Authority has implemented procedures to ensure that equipment inventory records include dates acquired and identifying numbers. Further, the Authority is taking steps to ensure that all additions and deletions to equipment records are adequately documented in the accounting office.
Finding Control Number 910-06-02 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
All accounting procedures are being reviewed to determine the best structure to achieve adequate segregation of duties. Outsourcing certain duties is being implemented to assist in obtaining the desired controls.
E-53

----~----State of Georffia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndngs and QuesNoned Costs
For the FISCal Year Ended Jme 30, 1007
AUDITEE'S COMMENTS
JEKYLL ISLAND STATE PARK AUTHORITY (Continued)
Finding Control Number 910-96-03 CASH AND CASH EQUIVALENTS Accounting/Internal Control Deficiencies
It is the Authority's policy to make deposits on a daily basis. The deposits will be monitored to ensure compliance.
Finding Control Number 910-96-04 INVENTORIES Inconsistencies in Accounting for Resale Inventory
Systems are now in place to facilitate recording the remaining inventory on the general ledger.
Finding Control Number 910-96-05 GENERAL LEDGER Detailed Listing of Salaries Not Reconciled
Reorganization of the payroll department will ensure more accurate reports.
Finding Control Number 910-96-06 EXPENDITURESILIABILITIES/DISBURSEMENTS Voucher Sample Exceptions/Improper Expenditures
Control procedures have been strengthened to ensure compliance with the Authority's policies.
Finding Control Number 910-96-07 EXPENDITURESILIABILITIES/DISBURSEMENTS Failure to Maintain Temporary Employee Retirement Subsidiary Ledger
Temporary Employee Retirement Program (TERP) was terminated and funds disbursed.
Finding Control Number 910-96-08 EMPLOYEE COMPENSATION Accounting/Internal Control Deficiencies
The Authority is working toward outsourcing part of the payroll procedures, which will significantly improve current controls. Plans are being developed to delay payment of payroll one week from completion of the payroll period. This will eliminate the need to submit a time sheet before the end of the payroll period.
Finding Control Number 910-96-09 REVENUESIRECEIV ABLES/RECEIPTS Accounting/Internal Control Deficiencies
Significant improvements have been made to this area. Equipment rentals at the Convention Center are now outsourced which will both improve the product and the documentation. Alcoholic beverage consumption sheets are now utilized by the Convention Center and variances are now monitored. In addition, the function of issuing cash receipts has been separated from all other accounting duties. These receipts are in duplicate and prenurnbered.
E-54

- - - - - - - S t a t e of GeorfJia-------
Auditee's Response Summarv Schedule of Prior Year Fndhgs and QuesHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS
GEORGIA STUDENT FINANCE AUTHORITY
Finding Control Number 917-96-01 FEDERAL FINANCIAL REPORTS Report Not in Agreement with Accounting Records
We concur with this recommendation.
Reports will be produced during Fiscal Year 1997 which enumerate differences that exist between the Form 799 and trial balances. These trial balances will then be reconciled to the general ledger. However, because Form 799 is a quarterly report, the reconciliation to the trial balance can be performed quarterly, not monthly.
Finding Control Number 917-96-02 MONITORING SUBRECIPIENTS Failure to Monitor Subrecipients
We concur with this recommendation.
However, beginning with the 1996-1997 award year, the State of Georgia stopped participating in the Federal State Student Incentive Grant (SIG) Program. The 1998-1999 award year may be the last year of the program. Since only renewal students are receiving SIG, we do not plan to increase our program review efforts.
GEORGIA HOUSING AND FINANCE AUTHORITY
Finding Control Number 923a-95-01 Organization and Management Policies
DCA recently completed its strategies for the entire department. With this piece completed, we are now working on developing an IT strategic plan for the department that supports and integrates with the department-wide strategic plan as well as the State of Georgia IT strategic plan.
Finding Control Number 923a-95-02 Organization and Management Policies
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures, including the area of computer security.
Finding Control Number 923a-95-03 Organization and Management Policies
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures, including end user computing policies. The Department has also adopted end user policies covering the specific topics of electronic mail and use of the Internet.
Finding Control Number 923a-95-04 Organization and Management Policies
The information technology function has been placed within the Planning, Information and Management Division whose director provides oversight and review of all MIS functions. In addition, the Department currently has a Computer Users
E-55

---------State of Georgia---------
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsHoned Costs
For the FISCal Year Ended Jmc 30. 1997
AUDITEE'S COMMENTS
GEORGIA HOUSING AND FINANCE AUTHORITY (Continued)
Group and AOD users Group in place. These two groups are comprised of staff and management that provide direction to the department on various information technology issues. These two groups help ensure that MIS actions and decisions are not conducted in a vacuum and consider the needs of the technology users.
Finding Control Number 923a-9S-OS Organization and Management Policies
DCA has implemented an AOD Users Group made up of staff from each of the different divisions that use the AOD system. This group meets monthly to discuss issues of common concern surrounding the AOD software. Through these meetings, DCA also ensures that staff are aware of how the functioning of their module affects others in different modules and that lines of communication are kept open.
Finding Control Number 923a-9S-06 Segregation of Duties
DCA has increased the number of positions within MIS and assigned backup duties to specific staff members.
Finding Control Number 923a-9S-07 Segregation of Duties
DCA has recently finished construction on a training center on-site. With this facility completed, we have begun planning for providing computer training to meet staff needs. As we define training needs for MIS staff, we will development formal training plans.
Finding Control Number 923a-9S-08 Logical Access Controls
MIS has procedures in place to safeguard access to AOD data and programs; however, there is still a need for these procedures to be fully documented. The Department will continue to work on this documentation.
Finding Control Number 923a-95-09 Physical Access Controls
DCA no longer has loaner MAC equipment.
Finding Control Number 923a-9S-10 Business Continuity and Computer Operations
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures, including disaster recovery policies.
Finding Control Number 923a-9S-11 Business Continuity and Computer Operations
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures, including disaster recovery policies.
E-56

- - - - - - - S t a t e of GeorfJkt-------
Auditee's Response Summarv Schedule of Prior Year Fndngs and QucsHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
GEORGIA HOUSING AND FINANCE AUTHORITY (Continued)
Finding Control Number 923a-95-12 Business Continuity and Computer Operations
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures.
Finding Control Number 923a-95-13 Business Continuity and Computer Operations
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures, including disaster recovery policies. Once these policies and procedures are developed and documented, staff will be thoroughly briefed and assigned specific responsibilities in the event of special emergencies.
Finding Control Number 923a-95-14 Business Continuity and Computer Operations
DCA has entered into a contract with a consultant to assist in the development and documentation of information system policies and procedures, including the important areas specified within this finding.
GEORGIA AGRICULTURAL EXPOSITION AUTHORITY
Finding Control Number 926-96-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
The Management of the Georgia Agricultural Exposition Authority recognizes the importance of the proper segregation of duties as they relate to various financial functions. Our on going objective is to maintain a system of internal accounting controls which would include organizational arrangements that would provide an appropriate division of responsibilities. This system would then provide reasonable assurances that transactions of the Authority are executed in accordance with management's general or specific authorizations, that the financial records fairly reflect, in reasonable detail, the transactions of the Authority, and that the Authority's assets are properly safeguarded. However, due to limitations in personnel, whereby all accounting functions are performed by only two individuals, obviates the Authority from attaining the optimum level of separation of responsibilities. Furthermore, the addition of staff solely to merit an enhanced level of organizational effectiveness, i.e., to allow an improvement in the separation of duties and responsibilities, would not be cost effective nor cost justified, especially during a time of government streamlining, downsizing and redirection. The Authority will continue to objectively evaluate internal control issues as they relate to the separation of duties, and strive to strengthen areas where deficiencies are found to exist.
PEACE OFFICERS' ANNUITY AND BENEFIT FUND OF GEORGIA
Finding Control Number 947-96-01 EXPENDITURES/LIABILITIES/DISBURSEMENTS Retirement Benefit Overpayments
The remaining outstanding balance of$1,704.18 is being recovered through deductions from the monthly benefits paid to those individuals involved.
E-57

_______._____ State of GeorfJki---------
Auditee's Response Summarv Schedule of Prior Year Fndngs and QuesNoned Costs
For the Fl'5Cal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS
GEORGIA FIREMEN'S PENSION FUND
Finding Control Number 950-96-01 EXPENDITURESILIABILITIES/DISBURSEMENTS Retirement Benefit Overpayments
Concerning the outstanding balance, based on the recommendation from legal counsel, the Board of Trustees is of the opinion that the cost of further action would outweigh the benefits received; therefore, collection efforts will not be pursued.
GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION
Finding Control Number 977-96-04 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
Based on the findings for the FY96 audit of General Fixed Assets/Property Management the following controls were implemented:
With the exception of three items under SCOA 643-016 and one item under SCOA 643-019, all items purchased in FY97 were entered into the PROPS system. Most corrections for equipment purchased in FY96 and loaded in FY97 are complete.
The FY96 equipment purchases are not completely loaded. A review of the reconciliation reveals that several items were incorrectly entered or not entered at all. The outstanding FY96 issues will be resolved with the completion of the physical inventory. A complete inventory of all equipment in GPB's field offices has been completed. However, the relocation of GPB headquarter offices have delayed the completion of the physical inventory. The outstanding FY96 issues, the physical inventory and the close out of the Stewart Avenue facility are expected to be completed by December 31, 1997.
The Commission has established records for all items removed from inventory. This process will be on going.
NORTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8504-93-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Agency has decided not to pursue the recording of general fixed assets on the financial statements.
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8524-93-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
It is not cost effective for North Georgia Regional Educational Service Agency to implement the General Fixed Assets Account Group within its general ledger. North Georgia RESA's Board of Control does not require this account to be maintained at this time.
E-58

- - - - - - - - t:)tate of beoraia - - - - - - - - -
Auditcc's Response Summarv Schedule of Prior Ycar Fndhgs and QucsHoncd Costs
For the FISCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY (Continued)
Finding Control Number 8524-96-01 CASH AND CASH EQUIVALENTS Uncollateralized Deposits
During the year under review, an agreement was entered into between North Georgia Regional Educational Service Agency and Regions Bank to provide for collateralization of bank balances to ensure compliance with State laws. The under collateralization of deposits at Gilmer County Bank was unknown to Agency personnel until pointed out by current year auditors. In the future, North Georgia Regional Educational Service Agency will transfer, on a monthly basis, amounts in excess of $100,000.00 from Gilmer County Bank and deposit to Regions Bank.
Finding Control Number 8524-96-02 CASH MANAGEMENT Excessive Cash Balances
Due to the timing of the Fiscal Year 1996 audit, the corrective action plan was not implemented until Fiscal Year 1998.
PIONEER REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8544-93-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
Due to budgetary restraints the Board is unable to hire additional staff required to clear this finding.
Finding Control Number 8544-93-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
Due to current staffing limitations and budgetary consideration prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of fixed assets on the fmancial statements.
METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8564-93-02 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
Due to budgetary constraints in fiscal year 1997, the Agency was unable to hire the additional staff required to clear this fmding. In fiscal year 1998 an additional staff member was hired as we anticipate this fmding to be resolved.
Finding Control Number 8564-93-03 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
Due to budget constraints we were not able to resolve this fmding in fiscal year 1997. An additional staff member was hired and we anticipate this fmding to be resolved in the next reporting period.
E-59

---------State of Geor5ia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QucsHoned Costs
For the FLSCal Year Ended Jme 30. 1997
AUDITEE'S COMMENTS
METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY (Continued)
Finding Control Number 8564-96-01 TYPES OF SERVICES ALLOWED/UNALLOWED Failure to Obtain Budget Approval
The equipment was purchased for instructional use by students with disabilities, therefore the $2,882.40 was an approvable expense. In fiscal year 1997 and 1998 training regarding prior approval of equipment was enhanced and we anticipate this finding to resolve in fiscal year 1997.
NORTHEAST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8584-93-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the fmancial statements.
WEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8604-93-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
The West Georgia Regional Educational Service Agency has not been provided sufficient guidance from the Georgia Department of Education, nor has the Agency been provided sufficient funds, to address this issue. The Agency will continue to search for measures to resolve this deficiency.
GRIFFIN REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8624-96-01 CASH MANAGEMENT Excessive Cash Balances
Griffin RESA will analyze this account to forecast expenditures more closely. Drawdown requests will match only those expenditures for which there are purchase orders or outstanding invoices. Griffm RESA will request reimbursement for expenditures rather than request drawdowns in anticipation of program expenditures.
MIDDLE GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8644-93-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
This finding cannot be resolved because our financial accounting needs do not require a second bookkeeper. Currently, we have a system in place to protect the integrity of funds. The accounting duties, as separated by employee, are specified below:
E-60

---------State of GeorfJia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndi1gs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997

AUDITEE'S COMMENTS

MIDDLE GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY (Continued)

Sharon Jones, Bookkeeper

Keeps general ledger Prints Checks

Connie Walton, Secretary

Reconciles bank statements

Marilyn McKinnie, Clerk

Records incoming monies

Jackie Stinchcomb, Director

Approves purchase requests Approves Purchase Orders Signs Checks Verifies bank statement reconciliation

OCONEE REGIONAL EDUCATIONAL SERVICE AGENCY

Finding Control Number 8664-93-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties

Management continually analyzes the accounting procedures seeking the best possible means to separate duties using a small staff. All previous plans for resolving this finding have failed because of the limited number of staff members. The beginning of each fiscal year has always been the projected date of completion of this finding.

Finding Control Number 8664-93-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group

The management of a General Fixed Assets Account Group is not an accessible accounting procedure at the present time due to this function being inoperative in our accounting system that is provided by the State Department. With future upgrades to our system this should be a feasible accounting function that would bring our accounting procedures into conformity with Generally Accepted Accounting Principles. Date of implementation: Upon receipt of new GDOE accounting software.

Finding Control Number 8664-96-01 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditure

At the present time, the legal services of Harben and Hartley Law Firm have been procured to assist with legal procedures necessary to quickly reach a solution on this issue. All available avenues are being explored to receive reimbursement of these funds. Implementation: Presently being pursued.

E-61

---------State of Georaia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndngs and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS
CHATTAHOOCHEE-FLINT REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8724-93-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
The management at Chattahoochee-Flint RESA will continue to periodically review staff to determine if employee duties can be reassigned to achieve a higher degree of internal controls.
Finding Control Number 8724-93-02 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
At the present time no efforts are being made to establish a General Fixed Assets Account Group. It is our belief that it is not cost beneficial to do so.
HEART OF GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8764-93-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has decided not to pursue the recording of general fixed assets on the fmancial statements.
Finding Control Number 8764-95-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
Additional staff is available to assist in the accounting function. The Board feels it has provided for the most appropriate assignment of duties with the number of personnel available to perform the accounting functions, due to budget limitations.
Finding Control Number 8764-96-01 GENERAL LEDGER ADMINISTRATIVE REQUIREMENTS Inadequate Accounting Procedures
Steps were taken in FY 97 to clear all questionable entries. An additional staff person is available beginning in FY 98 to perform the JTPA accounting functions.
FIRST DISTRICT REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8804-93-03 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
At present, Georgia Department of Education has not implemented a General Fixed Assets Account Group in our accounting system.
E-62

---------State of Georaia - - - - - - - - -
Auditee's Response Summarv Schedule of Prior Year Fndilgs and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997
AUDITEE'S COMMENTS SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8844-95-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Procedures have been put into place to separate employee duties in the performance of accounting functions and related procedures for all funds in the following year. These procedures are outlined in the employee handbook including additional administrative staff made responsible for accounting functions. Finding Control Number 8844-96-01 EMPLOYEE COMPENSATION Salary Overpayment The Southwest Georgia RESA has not received reimbursement of this salary overpayment but procedures are in place to avoid a repeat occurrence.
OKEFENOKEE REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number 8884-93-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group During the fiscal year 1997, Okefenokee RESA implemented a procedure to correct the deficiencies noted in the prior audit report. We studied the most appropriate way to accomplish this task. We have always maintained an inventory of our equipment that includes a description of the item, date acquired, cost and location with records of additions and deletions. Our new procedure is to provide the Department of Audits an actual total value of these assets from year to year starting in FY 98. Adopting this procedure should eliminate the remaining deficiencies indicated in audit fmding number 8884-93-01.
E-63

(This page iltentionallv letl blank)

Section~
~indlnas and Questioned Costs

- - - Summar! of .r\.uditor's ~ufts - - -

(This page ntentionallv left blanR)

---------State of Georgia---------
Summarv of Auditor's Resu~s For the Hscal Ycar Ended Jmc 30. 1997

Financial Statements

Type of auditor's report issued:

Qualified

Internal control over fmancial reporting:

Reportable Condition identified?

Yes

Reportable Conditions identified considered to

be material weaknesses?

Yes

Noncompliance material to fmancial statements noted?

Yes

Federal Awards

Internal control over major programs:

Reportable Condition identified?

Yes

Reportable Conditions identified considered to

be material weaknesses?

Yes

Type of auditor's report issued on compliance for major programs: Qualified

Any audit findings disclosed that are required to be reported in

accordance with Circular A-133, Section .5IO(a)?

Yes

Identification of major programs:

CFDA Numbers 10.550
10.557 14.228
17.207 17.225 17.246 17.250 20.205 66.458 83.516 84.010 84.027
84.048 84.126 93.268 93.558 93.560 93.563 93.575 93.585 93.596 93.658

Name of Federal Program or Cluster Food Distribution Food Stamp Cluster Nutrition Cluster Special Supplemental Food Program for Women, Infants, and Children Community Development Block Grants/State's Program Section 8 Cluster Employment Services Unemployment Insurance Employment and Training Assistance- Dislocated Workers Job Training Partnership Act Highway Planning and Construction Capitalization Grants for State Revolving Funds Disaster Assistance Title I Grants to Local Educational Agencies Special Education - Grants to States Student Financial Aid Cluster Vocational Education - Basic Grants to States Rehabilitation Services - Vocational Rehabilitation Grants to States Childhood Immunization Grants Temporary Assistance for Needy Families Family Support Payments to States - Assistance Payments Child Support Enforcement Child Care and Development Block Grant Empowerment Zones Program Child Care Mandatory and Matching Funds of the Child Care and Development Fund Foster Care- Title IV-E
F-5

---------State of GeorfJia - - - - - - - - -
Summarv of Auditor's Results For the FISCal Year Ended Jme 30. 1997

CFDA Numbers 93.667
93.959 96.001

Name ofFedera1 Program or Cluster Social Services Block Grant Medicaid Cluster Block Grants for Prevention and Treatment of Substance Abuse Social Security - Disability Insurance Research and Development Cluster

Dollar threshold used to distinguish between Type A and Type B programs-$ 18,848,815.00

Auditee Qualified as low-risk auditee

No

F-6

ScfteduCe of g;imfings and - - - Questioned Costs

(This page ntmtionallv ldl blank)

---------State of GeortJ1a---------

Fndi1gs and Qucsnoncd Costs Toole of Contents
For the Fiscal Ycar Ended Jmc 30. 1997

ENTITY CODE

ORGANIZATIONAL UNIT

PAGE NUMBERS

40 I 40la 411 414 415 419 422 427 440 467 470 472 474 476 484 484a 489
503 509 509a 518 521 524 527 528 533 539 548 550 551 554 569 573 581 584 587 590 593
817 819 820 824 826 827 828 830 836 837 838

Administrative Services, Department of..................................................................................... F-11 Administrative Services, Department of- Computer Services Division ..................................... F-16 Defense, Department of............................................................................................................... F-19 Education, Department of ......................................................................................................... F-20 Technical and Adult Education, Department of ......................................................................... F-29 Medical Assistance, Department of ............................................................................................ F-32 Governor, Office of the ............................................................................................................... F-34 Human Resources, Department of............................................................................................... F-36 Labor, Department of.................................................................................................................. F-40 Corrections, Department of......................................................................................................... F-43 Public Service Commission ......................................................................................................... F-45 Regents of the University System of Georgia, Board of............................................................. F-47 Revenue, Department of.............................................................................................................. F-52 Student Finance Commission, Georgia ....................................................................................... F-60 Transportation, Department of .................................................................................................... F-61 Transportation, Department of- Information Systems Controls Review .................................... F-63 Subsequent Injury Trust Fund ..................................................................................................... F-73 Colleges and Universities
Georgia Institute of Technology .......................................................................................... F-74 Georgia State University ...................................................................................................... F-89 Georgia State University- Information Systems Controls Review ...................................... F-90 University of Georgia........................................................................................................... F-94 Albany State University ....................................................................................................... F-98 Armstrong Atlantic State University .................................................................................... F-1 00 Augusta State University...................................................................................................... F-102 Clayton College and State University .................................................................................. F-103 Fort Valley State University ................................................................................................. F-107 Georgia Southern University................................................................................................ F-114 Savannah State University ................................................................................................... F-115 Southern Polytechnic State University ................................................................................. F-116 Valdosta State University ..................................................................................................... F-118 State University of West Georgia......................................................................................... F-120 Dalton College ..................................................................................................................... F-126 Floyd College ....................................................................................................................... F-127 Macon College ..................................................................................................................... F-130 Middle Georgia College ....................................................................................................... F-132 South Georgia College ......................................................................................................... F-133 Georgia Military College ..................................................................................................... F-134 Skidaway Institute of Oceanography ................................................................................... F-136 State Technical Institutes Sandersville Technical Institute ........................................................................................... F-137 West Georgia Technical Institute ......................................................................................... F-138 Albany Technical Institute ................................................................................................... F-139 Augusta Technical Institute .................................................................................................. F-142 Carroll Technical Institute .................................................................................................... F-145 Chattahoochee Technical Institute ....................................................................................... F-148 Columbus Technical Institute............................................................................................... F-154 DeKalb Technical Institute................................................................................................... F-155 Middle Georgia Technical Institute...................................................................................... F-157 Moultrie Area Technical Institute ........................................................................................ F-158 North Georgia Technical Institute ........................................................................................ F-160

F-9

- - - - - - - - - S t a t e of Georf)ia - - - - - - - - -

Fndilgs and Quc.sHoned Costs
Toole of Contents For the FISCal Year Ended Jme 30. 1997

ENTITY CODE

ORGANIZATIONAL UNIT

PAGE NUMBERS

840 846 848 910 913 917 918 926 940 958 977
8504 8524 8544 8564 8584 8604 8664 8724 8764 8804 8844 8884

State Technical Institutes (continued) Pickens Technical Institute................................................................................................... F-162 Thomas Technical Institute .................................................................................................. F-163 Valdosta Technical Institute ................................................................................................. F-164
Jekyll Island State Park Authority ............................................................................................... F-165 Lake Lanier Islands Development Authority .............................................................................. F-170 Student Finance Authority, Georgia............................................................................................ F-171 Higher Education Assistance Corporation, Georgia.................................................................... F-172 Agricultural Exposition Authority, Georgia............................................................................... F-174 Agrirama Development Authority, Georgia................................................................................ F-175 Golf Hall of Fame, Georgia......................................................................................................... F-176 Public Telecommunications Commission, Georgia .................................................................... F-177 Regional Educational Service Agencies
Northwest Georgia Regional Educational Service Agency.................................................. F-179 North Georgia Regional Educational Service Agency ......................................................... F-180 Pioneer Regional Educational Service Agency .................................................................... F-181 Metropolitan Regional Educational Service Agency ........................................................... F-182 Northeast Georgia Regional Educational Service Agency................................................... F-183 West Georgia Regional Educational Service Agency .......................................................... F-184 Oconee Regional Educational Service Agency .................................................................... F-185 Chattahoochee-Flint Regional Educational Service Agency ............................................... F-186 Heart of Georgia Regional Educational Service Agency ..................................................... F-187 First District Regional Educational Service Agency ............................................................ F-188 Southwest Georgia Regional Educational Service Agency.................................................. F-189 Okefenokee Regional Educational Service Agency ............................................................. F-190

F-10

---------State of GeorfJkl---------
Fndhgs and Quesnoned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequacies in Bank Reconciliation Procedures Finding Control Number FS-401-97-01
For the year under review, the Department of Administrative Services' accounting procedures were not sufficient to provide for adequate control over the bank reconciliation process. Audit procedures and interviews with personnel of the Department revealed that bank reconciliations of the General Operating, Payroll and Conference bank accounts were not reconciled in a timely manner. Also, the General Operating bank account reconciliation contained unreconciled differences of $4,790.80 between the amount recorded on the general ledger and the bank statement.
The Department should establish the necessary procedures to ensure that bank reconciliations are timely reconciled on a monthly basis. The Department should take action to identify the unreconciled differences and make adjustments to the accounting records where appropriate.
Management Response
We concur with this finding. The Department has taken action to identify the unreconciled differences by preparing a manual list of outstanding checks. The manual listing of checks is then compared against the bank statement for checks that have cleared and is used in balancing the bank statement to the General Ledger. Any differences are researched and are made to the accounting records as necessary.
The Department has reorganized functionally to ensure adequate controls are in place for the timely completion and review of bank reconciliations. The Controller's Office has reallocated a position in the Budget and Rate Section who will be reporting to the Budget Administrator and will have primary responsibilities for ensuring all actions are taken for the preparation and timely completion of bank reconciliations.
In order to provide checks and balances for the bank reconciliation process, a "cash proor procedures has been implemented which compares bank debits and credits to the Department's General Ledger debits and credits and reconciles any differences. At month-end the Daily Cash Log is further reconciled to all deposits and adjustments shown on the bank statement. Each bank reconciliation will be reviewed by both the Budget Administrator and the General Accounting Manager.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-401-97-02
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Administrative Services in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
(1) Equipment additions and deletions were not reconciled to the general ledger expenditure accounts.
(2) Computer equipment deletions could not be documented.
In addition, four-hundred-fourteen (414) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $2,902,528.77 out of a population of $148,773,675.46 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(I) Sixty-two (62) items could not be located.
F-11

---------State of Georaia - - - - - - - - -
Fndilgs and Quesnoned Costs For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
(2) Two (2) items were found in locations other than the location indicated in the equipment inventory records.
(3) Three (3) items did not have decal numbers attached. Items were identified by serial numbers or descriptions.
Also, during the physical inspection testing, thirty-three (33) items of equipment were located which were not included in the equipment inventory records.
The Department is required to maintain equipment inventories in accordance with provisiOns of the State Property Management System Manual. The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls and implement procedures to ensure the equipment inventory records are maintained in accordance with the State Property Management System Manual.
Management Response
We concur with this finding. The Department will establish written procedures and internal controls which comply with the State Property Management System Manual. The Department hired a firm to conduct a statewide physical inventory of desktop and LAN-related computer equipment which was completed in March 1998. A copy of the inventory is available for review. Ordering and receipt of this type of equipment for the Department has been centralized within Internal Business Systems to provide closer coordination of the order/inventory/surplus process.
The Department is working with a firm to redesign its business process aimed at better utilization of resources and streamlined procedures for equipment inventory management. Implementation of these new processes and supporting software applications is scheduled to begin in July 1998. As part of this implementation, old inventory systems will be reviewed and considered for potential placement.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequacies in Operation of the Workers' Compensation Fund Finding Control Number FS-401-97-03
For the year under review, our examination included a review of the internal accounting controls used by the Department in administering its Workers' Compensation Fund. Our examination noted that refunds totaling $201,018.28 were received by the Workers' Compensation Fund due to overpayment or duplication of claim settlements. These refunds were voluntary on the part of recipients and were not discovered through normal edit procedures. During the claim processing, edits should be in place to "flag" duplicate or overpayments before settlement checks are issued. Because the known refunds may represent only a portion of the total duplicates and overpayments occurring, the loss due to the same cannot be estimated.
The Department of Administrative Services should install edits in the process procedures to prevent duplicate and overpayments.
Management Response
We concur with this finding. Two system changes have been developed which will serve as edits in the process procedures. A duplicate alert system was installed last year which will detect potential duplicate payments to claimants and/or vendors. The Department is also in the testing stage of implementing an automated payables enhancement program to the existing payment process. This program validates all coding data against a master file, which will eliminate the possibility of data entry errors by clerical staff. Accurate data entry will ensure that the duplicate alert system identifies all entries which could
F-12

- - - - - - - - - S t a t e of Georfjia - - - - - - - - -
fndilgs and QuesNoncd Costs
For the Hscal Ycar Ended Jmc 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
result in overpayments or duplicate payments during the bill approval process. The automated payables should be fully implemented by mid April 1998.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Overbillings of Communication Services Questioned Cost: $1,000,000.00 Finding Control Number FA-401-97-01
The Department of Administrative Services furnishes and bills customer organizations for a variety of services. As a matter of practice, the Department of Administrative Services does not account for these services as internal service funds in accordance with generally accepted accounting principles. Operating balances, if any, are not carried over to the subsequent fiscal year. Funds remaining in these accounts are returned to the State's treasury as surplus.
Operating balances which may remain at the end of a fiscal year are generally a result of overbilling customer organizations. Overbillings occurred in Communication Services for fiscal years 1994, 1995, and 1996. Since such billings include Federal participation, the Federal Government is entitled to be reimbursed for its equitable portion of the overbillings.
The Department of Administrative Services has been involved in on-going negotiations with the U.S. Department of Health and Human Services regarding overbillings for fiscal years 1994 and 1995. Subsequent to June 30, 1997, the Department of Administrative Services reimbursed the Federal government $652,971.00 for disallowances occurring during fiscal years 1994 and 1995. This amount was recorded as a liability at June 30, 1997. In anticipation of additional Federal disallowances, a reserved fund balance of $1,000,000.00 was established as of June 30, 1997 for overbillings in Communication Services which occurred during fiscal year 1996.
The Department of Administrative Services should establish internal service funds in accordance with generally accepted accounting principles for its billed services to ensure compliance with Federal regulations. Accordingly, overbillings occurring in the future would be used to reduce subsequent charges to customer organizations.
Management Response
DOAS operates closer to a "businesslike" organization than any state agency. While under statutory authority of a state agency, DOAS receives 80% of its revenues from billed services. No other state agency receives direct revenue from its customers, similar to DOAS, and is still considered a "state agency." Most other quasi-state organizations which charge for their services are chartered in state law as "state authorities" and do not comply with the same restrictive accounting, budgeting and financial system rules and regulations of a state agency.
Therefore, in compliance with the accounting principles under which DOAS is obligated to operate, a Budget Fund (Governmental Fund Type), DOAS must purchase all infrastructure-related equipment and expense the full amount of each and every purchase during the same fiscal year in which the purchase is completed. For example, if a computer processor is purchased for $250,000 with an expected useful life of five years, DOAS expenses the entire amount of $250,000 against current funds. If DOAS was operating as a Proprietary Fund Type - Internal Service Fund, being allowed to account on an accrual basis, then (assuming straight line depreciation) DOAS would expense only $50,000 per year for a five-year depreciation period.
DOAS must comply with Office of Management and Budget Circular A-87 to accommodate federal funds within customer agencies. This federal guideline requires the recognition of asset cost through depreciation over the useful life of the asset. Therefore, it appears to the Federal government that DOAS is "overbilling" its customers by charging enough in its rates to collect the $250,000 in the year of purchase instead of charging enough to recover the first year's expense of $50,000.
F-13

---------State of GeorfJia - - - - - - - - -
Fmfng.s md QuesHoncd Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
DOAS has negotiated a refund of $652,971 to the Federal government for FY94 and FY95 for this "overbilling" in FY 96. DOAS concurs with the finding that these "overbillings" occurred according to OMB Circular A-87 defmitions, and further, DOAS will be refunding the Federal Department of Health and Human Services some undetermined amount for FY96 "overbillings."
We concur with the recommendation of establishing DOAS as an Internal Service Fund. In FY95, the Department of Administrative Services engaged the Department of Audits in a study to determine the feasibility of establishing an Internal Service Fund within DOAS for Telecommunications and Computer Services. The conclusion of this report was that DOAS would have to address four issues: (I) the need for statutory authority to establish an Internal Service Fund; (2) the need for an accounting system which is GAAP compliant; (3) the need to correct deficiencies with equipment inventories; and (4) the need to document rate methodology for billed services. As of this date, DOAS has not requested legislation from the Georgia General Assembly for an Internal Service Fund. DOAS is in the process of making improvement to its equipment inventories as well as its rate methodology. The state has just recently begun a replacement of accounting/fmancial systems which will allow all state agencies to become GAAP compliant by July I, 1999 (estimated date ofthis time).
With these pending changes, DOAS will request legislation to implement an Internal Service Fund during the 1999 Legislative Session. With this statutory authority, with the implementation of GAAP compliant accounting systems by July I, 1999, and with the equipment inventory improvements during FY98 and FY99, DOAS should be able to establish and operate an Internal Service Fund by July I, 1999.
ALLOWABLE COSTS/COST PRINCIPLES Federal Disallowance of Indirect Cost Recoveries Questioned Cost: $385,800.00 Finding Control Number FA-401-97-02
The Department of Administrative Services (DOAS) is an organizational unit of the State of Georgia and is included as a part of the State of Georgia Single Audit Report. Audit reports of prior years have noted on going problems with the Department's failure to comply with required Federal property management standards.
Based on a review of the statewide Single Audit for fiscal year 1995, the U. S. Department of Health and Human Services (USDHHS) has determined that the failure of DOAS to comply with the property management standards of OMB Circular A-1 02 meant the depreciation and/or use allowance costs that the State of Georgia has recovered through indirect cost, via the Statewide Cost Allocation Plan, have not been adequately supported, and thus are not recoverable costs. The USDHHS, as a result, requested that the State of Georgia establish the dollar amount of depreciation and/or use allowance costs which were inappropriately charged to federal programs during fiscal years 1993 through 1996.
In response to this request, the Georgia Department of Audits calculated a dollar amount which represents the costs the State of Georgia has recovered from the Federal government through indirect costs based on unsupported equipment inventories at the Department of Administrative Services for fiscal years 1993 through 1996. Based on our calculation, the State of Georgia collected $385,800.00 from the Federal government through indirect costs based on DOAS's unsupported equipment inventories.
As of the date of this report, a final settlement has not been reached regarding this matter.
Management Response
We concur with this finding. The corrective action plan for DOAS inventories can be found in the response to "Inadequacies in Operation of Property Management System", FS-401-97-02. According to OMB Circular A-87, any fmding below a threshold of $500,000 does not require a cash refund payment to the Federal government. Since the amount of disallowance
F-14

----------State of GeorfJia - - - - - - - - - -
Fndi1gs and Quesnoned Costs For the Hscal Ycar Ended Jmc 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS for Fiscal Year 1993 through Fiscal Year 1996 is less than $500,000 no payment will be made; but future Statewide Cost Allocation Plans will be adjusted to account for the variance.
F-15

- - - - - - - - - S t a t e of G e o r g i a - - - - - - - - -
Fndilgs and QuesHoncd Costs For the Ft.scal Year Ended Jme 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES - COMPUTER SERVICES DIVISION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL CONTROLS
Lack of Integrity of Data in Database Finding Control Number 401a-97-0l
Risk Management has an IBM AS/400 mid-range computer for processing state workers' compensation, property and liability claims. During the annual financial audit of the Risk Management area in December 1996, the state's financial auditors were unable to reconcile the accounting data in FACS to the data on the AS/400. The Risk Management AS/400 uses software provided by the vendor, Corporate Systems. Attempts were made to use normal AS/400 utility programs to extract and sort the database data in an effort to support account balances. These attempts were unsuccessful and did not provide assurance data was accurate and complete. An independent contract programmer was hired to write COBOL code to effectively "clean up" the data for balancing. We were eventually able to reconcile AS/400 detail data and account balances.
We noted problems as follows:
Database had incorrectly defined data intermingled with valid data (i.e., numeric data in date fields, numeric data in character data fields).
Database contained vendor test data (under account number 93331) that had not been known to exist. Certain account fund group amounts are kept in the database as positive when they are considered negative for
balancing.
Recommendation:
We recommend the management of Risk Management require Corporate Systems to "clean up" the database and provide adequate system data edits to prevent the contamination of the database from processing anything other than valid State of Georgia risk management data.
Management Response
DOAS concurs with the finding. The Corporate Systems application is a mainframe legacy system migrated to the Risk Management AS400 in 1991. The system is older technology that does not lend itself to quick and easy reporting except with a query product that cannot interpret the incorrectly defmed data. Some of the incorrectly defined data with a result of the vendor trying to adapt to programming change requests from Risk Management. Corporate Systems has already provided a program that wiii identify all corrupted fields in their databases. Risk Management will now work to change the fields manually. Also, regular cobol programs can interpret all the data on all Corporate Systems databases. The programmer assigned to RMS has been a contract position with high turnover since March of 1996. A contract programmer with a higher skill set has now been acquired to do report programming. A Structured Query Language (SQL) program is currently being purchased to aid in data collection from Corporate Systems databases.
A separate test database has already been created and is currently in use by DOAS programming personnel. The 93331 account number is no longer being used.
As for the fund group amounts, while the files show the data as positive the Corporate Systems cobol programs manipulate the data correctly as to whether they should be positive or negative. Reports produced from these programs shows correct balancing.
F-16

---------State of Georgia---------
Fndngs and Quesnoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
DEPARTMENT OF ADMINISTRATIVE SERVICES - COMPUTER SERVICES DIVISION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Lack of Application Documentation Finding Control Number 401a-97-02 The software vendor, Corporate Systems, has not supplied Risk Management personnel with application design or other basic program documentation. The Risk Management data processing manager was the only person familiar with the overall use and operation of the application which he had acquired from experience.
Recommendation: We recommend Risk Management obtain appropriate application documentation from Corporate Systems. The vendor should provide design and program documentation to assist for basic understanding. Management Response DOAS concurs with this finding. The current source code for DOAS is being held in escrow by Corporate Systems, a common practice with vendor supplied systems. Corporate Systems has agreed, verbally, to supplying DOAS with the program source code if we upgrade to the next version. That version is currently available today. Since Risk Management is assessing its information processes and systems, we may not upgrade to the latest Corporate Systems software. With any new software obtained, we will require that documentation be provided and source code place in escrow with an option of purchasing source code to the programs if we desire. RMS has a target date of January 1, 1999 to implement a new claims management system.
Internal Business Services has also added a new Image Systems Administrator to the staff and has budget approval to add a new employee programmer position to programming support staff. Both of these persons will be responsible for learning about Corporate Systems.
AS/400 System Security Finding Control Number 401 a-97-03
We reviewed AS/400 general security system value controls with DOAS to ensure the system is adequately protected from unauthorized access. The parameter QAUDLVL determines what security related events are logged. The value was set to "none", which indicates that security events are not recorded or reviewed. Recommendation: We recommend selection of an option other than "none" to log security violations for review by management.
Management Response DOAS concurs with this finding. This was an oversight on our part. The security control value has already been reset to
*AUDITFAIL, which logs all security violations. The logs are being monitored daily by the Systems Administrator.
F-17

- - - - - - - - - S t a t e of G e o r g i a - - - - - - - - -
Fndhgs and QuesNoned Costs For the FLSCal Year Ended Jme 30. IW7
DEPARTMENT OF ADMINISTRATIVE SERVICES - COMPUTER SERVICES DIVISION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS APPLICATION CONTROLS Lack of Control over Medical Only Workers' Compensation Claims Finding Control Number 401 a-97-04 All first reports of injury documents processed by Risk Management are imaged on the imaging system. Invoices for "medical only" claims are further processed by the outside vendor, Corporate Systems. After "medical only" invoices are reviewed on the image system, they are printed, boxed, and sent by Federal Express to Corporate Systems. Corporate Systems re-keys the data into their system for fee scheduling to determine reimbursement amounts for medical invoices. Corporate Systems downloads data to the Risk Management system. Checks for medical invoices are then issued by the Risk Management System. Controls are not in place to determine what has been sent to Corporate Systems, what has been processed, or what has been returned via the download. Completeness and accuracy controls for invoices processed by Corporate Systems are needed. Recommendation: We recommend that Corporate Systems provide an on-line report of data entered into the Corporate Systems database compared to "medical only" claim data on the Risk Management System. Any data exceptions should be listed. Management Response DOAS concurs with this finding. Programs were put in place comparing the image invoices to the payment file sent by Corporate Systems. This provides a listing and percentages of "medical only" invoices that are paid within the required sixty days. Adjusters now use these as audit trails to track their payments. These programs will be modified, by the new programmer, to provide payments not made which will be an easier audit trail to follow. Adjusters will then follow up, with Corporate Systems, on payments not made within a certain time period. This programming change should be made by early I998. When Risk Management implements a new claims management and payment system, we will require more extensive audit trails to track payments whether the process is maintained in-house or provided by a outside vendor. RMS has a target date of January I, I 999, to implement a new claims management system and payment system.
F-18

---------State of GeorfJia - - - - - - - - -
Fndilg.s and Questioned Costs
For the Hscal Year Ended Jme 30, 1997
DEPARTMENT OF DEFENSE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS BUDGET PREPARATIONIEXECUTION Overexpenditure of Budget Unit Object Class Finding Control Number FS-411-97-01 The total approved budget for the Department of Defense provided for expenditures totaling $27,229,349.00. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicates that the object class Per Diem, Fees and Contracts was overspent in the amount of$1,718.75. The overexpenditure identified above is in violation of Section 58 of the Amended Appropriations Act of 1996-1997. This overexpenditure was caused by the Department's failure to monitor the expenditure of funds against the budgeted expenditures by object class. The Department of Defense should review its internal control procedures over budget operations, design procedures which would prohibit the expenditure of funds in excess of budget approval and implement those procedures to strengthen the internal controls over the budget function. Management Response The Georgia Department of Defense concurs with this finding. The expenditure in question involved federal funds that fall into the Fed. Fiscal Year I October 1996 to 30 September 1997. Beginning this fiscal year the state books will be closed on June 15 through 30 June for the acceptance of expenditures that overlap state fiscal years. This will enable the budget office adequate time to insure that all necessary funds can be amended into the agencies Annual Operating Budget prior to the closing of the fiscal year. In addition closer monitoring of expenditures to budget will be enforced.
F-19

---------State of Georgia---------
Fndilgs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997

DEPARTMENT OF EDUCATION

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATIONIEXECUTION Overexpenditure of Budget Unit Object Classes Finding Control Number FS-414-97-01

The total approved budget for the Department of Education- "A" Budget unit and "B" Budget unit provided for expenditures totaling $4,775,794,076.00 and $348,481,780.00, respectively. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicates that the following object classes were overspent by the amounts identified below:

"A" Department of Education Equipment (In excess of 102% of budget authorized by the Appropriations Act.) Other Categorical Grants: Sparsity Grants Non-QBE Grants: School Lunch (State)

$ 45,717.21 $ 30,000.00 $ 139,345.00

"B" Lottery for Education Computers in the Classroom

$ 6,660.00

The overexpenditures identified above are in violation of Section 58 of the Amended Appropriations Act of 1996-1997. These overexpenditures were caused by the Department's failure to monitor the expenditure of funds against the budgeted expenditures by object class.

The Department of Education should review its internal control procedures over budget operations, design procedures which would prohibit the expenditure of funds in excess of budget approval, and implement those procedures to strengthen the internal controls over the budget function.

Management Response

We concur with this recommendation. Corrective action has been taken by the department to prevent future budget overexpenditures. An explanation of each of the overexpenditures follows:

The equipment overexpenditure of $45,717.21 resulted from state auditors transferring equipment charges for lease-purchase agreements from an inventory clearing account (185.200) to equipment purchases (643.1). We were not aware that the auditors were making the transfers, so funds were not budgeted to cover the transfer.

The overexpenditure in the other Categorical Grants: Sparsity Grants of $30,000.00 resulted from funds being transferred from this object class to other object classes in error. The transfer should have been from K-3 grant funds. When the error was caught, it was too late in the year to correct the transfer.

The overexpenditure of$139,345.00 in Non-QBE Grants: School lunch funds resulted from incorrect meal count information being used to determine the amount to include in the FY 97 budget request. The error was caught, but it was too late to amend the amount requested.

The overexpenditure of $6,600.00 in Lottery Funds - Computers in the Classroom resulted from personnel in the Instructional Technology unit making an error in allocating funds to schools. The unit failed to request an additional amount to cover the error.

F-20

---------State of GeorfJia - - - - - - - - -
Fndi1gs and Questioned Costs For the FLSCal Ycar Ended Jmc 30. 1997
DEPARTMENT OF EDUCATION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Procedures have been put into place to detect these type problems earlier so that corrections can be made to prevent overexpenditure of funds. Procedures have also been revised to ensure that correct information is used in requesting and allotting grant funds.
CASH AND CASH EQUIVALENTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Agency Funds - Deficiencies in Accounting Procedures Finding Control Number FS-414-97-02
For the year under review, our examination included a review of the accounting procedures utilized by the Department of Education in maintaining their agency fund cash accounts. The following are deficiencies in accounting procedures and internal control which are in need of corrective action:
(I) Certain disbursements were not supported by adequate documentation. All disbursements should be supported by adequate documentation to demonstrate proper disbursement and accounting of funds.
(2) Certain disbursements did not appear to be in compliance with the intent of the fund. Steps should be taken to ensure that records of a fund include documentation stating specific disbursements which are allowable for the fund. Custodians should ensure that disbursements are made in accordance with the documentation concerning the intent of the fund.
(3) Checks issued from the Excellence Recognition, International Exchange Program Fund, and School Improvement Workshop included checks made payable to and endorsed by the custodian of the account. The Department should ensure that checks are made payable to vendors and not to the custodians of individual funds.
(4) Checks issued from the Georgia School for the Deaf Accounts, Athletic Account and Miscellaneous Account were made payable to cash. Also, one check issued from the Vocational Account, Georgia Association of Future Homemakers of America was made payable to cash. This practice is not in accordance with the Department's policy and procedures for agency funds. Measures should be taken to prevent this practice.
(5) Certain disbursements were not signed by the custodian of the account. The Vocational Education Account, Georgia Association of Vocational Industrial Clubs of America and the Georgia Association of Distributive Education Clubs of America had checks for the first half of the fiscal year which were not signed by the custodian or an authorized signer. During the fiscal year, these two agency accounts began having the proper custodian or an authorized signer sign the checks. One check was not signed by anyone in the Vocational Occupation Clubs of America account. Measures should be taken to ensure that all checks are signed by authorized signers.
(6) Certain disbursements included payments for sales tax. According to the Department's policy and procedures for agency funds, sales tax should not be paid on an invoice total. Custodians should ensure that sales tax is paid in accordance with Departmental policy.
Although the accounting department has sent instructions to the custodians of the agency funds, deficiencies continue to exist. The Department should continue efforts to ensure that proper accounting procedures are utilized in maintaining agency funds.
F-21

- - - - - - - - - - S t a t e of Georgia----------
Fndi1gs and Questioned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF EDUCATION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Management Response
We concur with parts of this recommendation. The deficiencies in the management of trust fund accounts involved the Vocational Education Club Accounts and the three state schools. Information was requested from vocational education and state schools staff, so that Accounting Services personnel could determine the appropriate corrective action. A follow-up letter was sent to management level personnel outlining the corrective action needed. Conversations were also held with these individuals to go over the deficiencies.
Some of the deficiencies involving the Vocational Education Club Accounts were questionable. A number of accounts were cited for expenditures that were not within the intent of the funds. All of the expenditures were reviewed and determined to be appropriate. The club accounts have a very broad range of activities that requires many different types of expenditures. Some expenditures from trust accounts at the Georgia School for the Deaf did not appear to be within the intent of the fund. The school has been instructed to review the justifications that were used in establishing the accounts. They were, also, instructed to be sure that expenditures from the accounts are for the purposes the accounts were established.
Some of the accounts were also cited for inadequate supporting documentation for payment of services. The supporting documentation for services provided by speakers, photographers, and other individuals often consisted of a single page invoice. Most of the individuals are one person companies and have simple billing and accounting procedures. They do not use multi-page preprinted invoices. Other times, cash register receipts are the only documentation received by custodians or others purchasing items for the clubs. There were, however, instances where proper supporting documentation was not maintained and in these instances the custodians were requested to keep proper supporting documentation on expenditure of funds from trust accounts.
The finding involving checks signed by individuals other than the custodians of the accounts has been discussed with the Director of the Vocational Education section to reemphasize the requirement that only state employees may be custodians and sign checks. There were procedures in place that would have prevented the fmding, but Vocational Education personnel did not follow them.
The finding concerning sales tax is also questionable. Many of the purchases made for the club account involve stores that are not use to exempting purchases from sales tax, such as restaurants, discount stores, grocery stores, etc. The fact that purchases are also made by individuals paying with a check or cash, instead of by a field purchase order (FPO), causes difficulty getting the sales tax exemption. Since the custodians and other individuals purchasing items for the clubs encounter difficulty in getting the sales tax exemption, the procedures established to provide guidance in managing the trust fund accounts are being changed to no longer require sales tax be deducted from purchases. The procedures will only recommend that individuals making purchases for the clubs try to obtain exemption from sales tax when it is possible and practical to do so, such as hotel charges, large purchases, etc.
There were several instances of checks being written to custodians. There are procedures in place that state that checks should not be written to custodians. There are cases, however, when it is impractical for a custodian to have another individual purchase an item(s) so that a custodian is not writing himself or herself a check. While this practice should be discouraged and held to a minimum, we should allow custodians, with proper supporting documentation and justification, to write checks to themselves for expenditures they incurred for the trust account.
There were instances of checks being made payable to cash. There are also procedures in place that state that checks should never be made payable to cash. There is no reason a check should ever be made payable to cash. The letter going to trust fund custodians discussing the audit finding will re-emphasize that checks are not be made payable to cash.
F-22

--------State of Georgta - - - - - - - -
Fndilgs and QuesHoncd Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF EDUCATION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-414-97-03
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Education in maintaining their State Property System and also testing the system for compliance with State laws and regulations. A number of conditions relating to inappropriate accounting practices were found to exist and have been identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-414-97-01.
The Department is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
Management Response
We concur with this recommendation. See the agency's response to audit control number FA-414-97-01
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FA-414-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Education in maintaining their property management system. This review also included testing the system for compliance with Federal laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
(I) Equipment additions were not reconciled to the general ledger expenditure accounts.
(2) Equipment inventory records for additions were updated incorrectly. Testing of current year additions revealed twenty-four (24) additions that had been updated onto the equipment inventory records incorrectly by the amount of$230,525.50 (net).
(3) Equipment inventory records were deleted from the inventory system without adequate supporting documentation or proper authorization. Testing of current year deletions revealed eight (8) items that had been deleted from the inventory records incorrectly by the amount of$57,382.15. Four (4) ofthese eight (8) items were located during the physical inspection.
(4) Equipment inventory records were deleted for Federally purchased items with a current fair market value of $5,000.00 or more without supporting documentation. Testing of current year items revealed two (2) items had been deleted from the inventory records for which the Department did not receive proper reimbursement for the Federal portion of sale proceeds. This resulted from the Department's failure to indicate that these items were Federally funded on the Department of Administrative Services form for disposal of surplus property.
F-23

----------State of Georgia----------
Fndhgs and QuesHoncd Costs For the fiscal Year Ended Jme 30. 1997
DEPARTMENT OF EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
(5) Six (6) equipment items acquired through installment purchases were included on the equipment inventory records at an incorrect amount. The difference in the acquisition cost and the amount recorded on the inventory records amounted to $4,297.16 (net).
In addition, four-hundred-ninety (490) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $1,804,354.73 out of a population of $41,550,524.57 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(I) Forty-four (44) items totaling $117,683.87 could not be located.
(2) Twelve (12) items were found in locations other than the location indicated in the equipment inventory records.
Also, during the physical inspection testing, five (5) items of equipment were located which were not included in the equipment inventory records.
The Department is required to maintain equipment inventories in accordance with provisions of paragraph 32 of OMB's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Rule). The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of OMB's Common Rule.
Major Federal Programs/Awards Affected:
U.S. Department of Education Special Education - Grants to States - CFDA No. 84.027 Vocational Education- Basic Grants to States- CFDA No. 84.048
Federal Agencies With Other Affected Programs:
U.S. Department of Agriculture U.S. Department of Education
Management Response
We concur with this recommendation. The following is the FY 1997 audit fmdings in Equipment and Real Property Management for this department:
(I) Equipment additions were not reconciled to the general ledger expenditure accounts.
(2) Equipment inventory records for additions were updated incorrectly. Testing of current year additions revealed twenty-four (24) additions that had been updated onto the equipment inventory records incorrectly by the amount of $230,525.50 (net).
(5) Six (6) equipment items acquired through installment purchases were included on the equipment inventory records at an incorrect amount. The differences in the acquisition cost and the amount recorded on the inventory records amounted to $4,297.16 (net).
F-24

- - - - - - - - - - S t a t e of Georgia----------
Fndilgs and QuesNoned Costs
For the Fiscal Year Ended Jme 30. 1997
DEPARTMENT OF EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
(1) "In prior years, the Prompt Payment Act prevented receiving reports from coming through Property Control on its way to Accounting Service for payment. This procedure was requested by the Agency Property Officer for fiscal years 1994 through 1996 but was rejected by the management of Internal Support. This procedure would have provided Property Control with corrected invoices resulting in the same amounts being processed by both Property Control and Accounting Services which would have provided an accurate reconciling of equipment additions to the general ledger expenditure accounts.
On September I, 1996, the manager of Internal Support retired from state service allowing the new procedure to be approved by the gaining manager. The adopting of this procedure by Property Control and Accounting Services should have eliminated the noted deficiencies above but some FPO Receiving Reports were not routed through Property Control and thus not captured into the DOE Property System.
The process of reconciling PROP to FACS (GIFS) is a problem within DOE as there is $1,070,318.40 of outstanding inventory and $494,473.41 of inventory that has been received and paid but not in the DOE Property System because of DE Form 0513, Receipt of Equipment form not being received from the unit ordering the equipment. This, along with FPOs bypassing Property Control either initially or by the Receiving Report, can cause problems in balancing.
Property Control for FY 1998 is using PROP Report 8140, Reference Numbers Paid in FACS (GIFS), to reconcile the amounts in the report to the actual reference number (FPO) in the DOE Property System. All discrepancies are corrected through Accounting Services to ensure that FACS/GIFS and PROP show the same amount for each reference number (FPO). Any errors found will be sent by memorandum to Accounting Services, the unit who issued the field purchase order, and to Budget Services for property accountability of monies."
(2) "All FPOs are examined for correct SCOAs when processed through Property Control. Those that are found with incorrect SCOAs are changed prior to being received by Accounting Services. If the Receiving Report indicates that the item has been reduced to be classified into another SCOA then a memorandum is issued to Accounting Services, the initiating unit, and Budget Services for proper accountability of monies. This was the case in $130,937.50 (net) where Accounting Services failed to change the SCOA in FACS. There were some FPOs that had changes after issuance which resulted in the issuing ofFPO corrections but not changed in FACS by Accounting Services to the amount of$47,328.00 (net). There were three FPOs where equipment was not received until FY 1998 resulting in the amount of $34,115.00 (net). Professional Practices Commission had reported three computers where only two were ordered resulting in an overage of $1,549.00. Two Receiving Reports bypassed Property Control resulting in a difference of $498.00 between PROP and FACS. All these total to $230,525.50 (net)."
(5) "All entries to Lease/Purchases or Installment Purchases were computed by the actual amount being multiplied by the number of months in the purchase. The Receiving Reports were not seen in Property Control to correct these differences on PROP."
(3) Equipment inventory records were deleted from the inventory system without adequate supporting documentation or proper authorization. Testing current year deletions revealed eight (8) deletions that had been deleted from the inventory records incorrectly by the amount of$57,382.15. Four (4) ofthese eight (8) items were located during physical inspection.
(3) "The annual physical inventory that is conducted by this agency each year is adequate supporting documentation. This report is signed by the unit head for each unit stating that they certify that this inventory listing is correct as of the date indicated. When an item is identified on this listing as missing, it is the unit's responsibility to do an internal investigation as to when the missing equipment was last seen,
F-25

----------State of GeorfJia - - - - - - - - - -
Fndilgs and Quc.sHoned Costs
For the Ftscal Ycar Ended Jmc 30. IW7
DEPARTMENT OF EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
and to do random inspections as necessary. A DE Form 0082, Report of Lost, Damaged, Destroyed or Stolen Property, must be completed by the unit reporting the equipment as missing. This procedure is identified in the agency's Personal Property Procedures, dated July 1996 (page 5, section X.), and every unit has been sent a copy every year from FY 1994 onward. Per DOAS PROP Procedures, June 1992, Detail of Responsibilities: The audit trail needed in the authorization for the deletions field would be: Missing: Supporting documentation and listed as missing for two years in the system (page 1-D-7, 1-D-9). The supporting documentation is the agency's annual physical inventory and the historical transaction register in the DOE Property System. All procedures were followed per the agency's Personal Property Procedures and the DOAS-PROP Procedures for the equipment to be deleted from this agency's property system."
(4) Equipment inventory records were deleted for Federally purchased items with a current fair market value of $5,000.00 or more without supporting documentation. Testing of current year items revealed two (2) deletions that had been deleted from the inventory records for which the Department did not receive proper reimbursement for the Federal portion of sale proceeds. This resulted from the Department's failure to indicate that these items were Federally funded on the Department of Administrative Services form for disposal of surplus property.
(4) "My instructions from DOAS-Surplus and Supply, Mr. Alvin Mitchell, on surplusing Federal funded equipment with a fair market value of $5,000.00 or greater, was to indicate "DOE" in the Funding Information column of the DOAS Transfer Form and Invoice. The equipment was removed officially from the DOE Property System with the use ofthe appropriate AR numbers as assigned by DOAS-Surplus and Supply. This office does not engage in checking to see if DOAS processes the Transfer Form and Invoice correctly. This office assumes that DOAS processes funds from the sale of Federal equipment as regulated by the Georgia Legislature and the Governor. I called DOAS when the DOA Auditor questioned me on these funds and spoke to Mr. Marty Taylor who referred my to Ms. Phyllis A. Reid. A memorandum from Ms. Reid to Mr. Emeka Anene, DOAS-Intemal Administration, Accounts Payable, referring to property sold on auction and indicated the agency was never reimbursed for their property. An email was also sent to Mr. Grant Rowe, Accounting Services, referencing the reimbursement of the Federal property from DOAS to this department."
In addition, four hundred ninety (490) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $1,804,354.73 out of a population of $41,550,524.57 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(I) Forty-four (44) items totaling $117,683.87 could not be located.
(2) Twelve (12) items were located other than the location indicated in the equipment inventory records.
Also, during the physical inspection testing, five (5) items were located which were not included in the equipment inventory records.
(I) "Actually, thirty-eight (38) items totaling $91,828.22 could not be located. The other six (6) items missing were in the Office of School Readiness which is not maintained by DOE Property Control.
The following is a breakdown of the thirty-eight items that were reported missing by the Auditor:
F-26

- - - - - - - - - S t a t e of GeorfJia - - - - - - - - -
Fndhgs and QuesHoned Costs
For the Fiscal Year Ended Jme 30. 1997
DEPARTMENT OF EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
Location E 13-100 Deputy Superintendent
A total of seven (7) items were reported missing by the Auditor:
Four (4) were reported missing initially by the unit in FY 1997. One (1) had been reported missing in a prior year by the unit and in FY 1997. Two (2) had not been reported missing by the unit in FY 1997.
Location E25-1 00 Exceptional Students
A total of twelve (12) items were reported missing by the Auditor:
Three (3) were reported missing initially by the unit in FY 1997. Four (4) had been reported missing in a prior year by the unit and in FY 1997. Five (5) had not been reported missing by the unit in FY 1997.
Location E33-200 School & Community Services - USDA
A total of four (4) items were reported missing by the Auditor:
One (1) were reported missing initially by the unit in FY 1997. One ( 1) had been reported missing in a prior year by the unit and in FY 1997. One (1) had not been reported missing by the unit in FY 1997. One (1) item, 0-8461 HP Laserjet II Printer was identified in the DOE Property System as being located in Warehouse #4 (Whs#4) but Property Control was not contacted by the Auditor that this item was on his list.
Location E53-1 00 Georgia School for the Deaf
A total of fifteen (15) items were reported missing by the Auditor:
Thirteen (13) had not been reported missing by the unit. Two (2) items had been stored in a holding area at GSD for destruction but was not located by GSD personnel when the Auditor was there. These items were identified by the DOE Property System after a recent Affidavit of Destruction on January 6, 1998."
(2) "The items that were not located within the units at the Twin Towers were most likely moved by Technology Service and not communicated to Property Control. Technology Services has been instructed to identify all equipment movements to Property Control but as of this date, none are being communicated."
"The five (5) items that were located but were not in the equipment inventory records have been reconstructed by using official PROP reports from the beginning of FY 1997 as to provide accurate reconstruction of data."
SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period Finding Control Number FA-414-97-02
As part of our examination for the year under review, we examined tracking documents used by the Department of Education to determine the status of subrecipient audit reports for the year ended June 30, 1996. Of the 445 subrecipients identified on the tracking documents, 220 had not submitted their audits within the thirteen month period as required by OMB Circulars A-128 and A-133. This noncompliance is due to subrecipient audits not being performed in a timely manner.
F-27

- - - - - - - - - S t a t e of Georf}ia - - - - - - - - -
Fndilgs and QuesHoned Costs For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
A subsequent review of the status of the 220 audits not submitted by the due date, indicated that 160 of the reports had been submitted by December 23, 1997. Of the 60 remaining audits not submitted, 59 of those audits are the responsibility of the Office of School Readiness which is administratively attached to the Department of Education. It was noted during our examination that the Department of Education utilized a program review staff for interim compliance reviews of all subrecipients in accordance with the foregoing provisions ofOMB Circulars A-128 and A-133.
Major Federal Programs/Awards Affected:
U. S. Department of Agriculture Food Distribution - CFDA No. 10.550 School Breakfast Program- CFDA No. 10.553 National School Lunch Program- CFDA No. 10.555 Child and Adult Care Food Program - CFDA No. 10.558 U.S. Department of Education Title I- Grants to Local Educational Agencies- CFDA No. 84.010 Special Education- Grants to States- CFDA No. 84.027 Vocational Education- Basic Grants to States- CFDA No. 84.048
Federal Agencies With Other Affected Programs:
U. S. Department of Agriculture Corporation for National and Community Service U. S. Department of Education U.S. Department of Health and Human Services
Management Response
We concur with this recommendation. Although the Department of Education is responsible for tracking and reviewing the audits on local units of administration (LUAs) the Department of Audits is required by state law to audit the LUAs, because LUAs receive the majority of their funding from the state. In addition to the LUA audits, the Department of Audits has the responsibility to audit all state agencies, commissions, etc. The LUAs are audited after the state agencies, commissions, etc. Because the LUAs are audited last and the large number of LUAs to be audited, the Department of Audits cannot complete the audits in the time period required by OMB Circular A-133. The U.S. Department of Education is aware ofthe problem, and realizes there is not currently a viable solution to the fmding. The LUA audits are normally completed within a 15-18 month time period. The department has a six-month resolution period to resolve fmdings in the LUA audits after being received from the Department of Audits.
The Department of Audits has proposed an alternative approach for providing federal audit coverage of local school systems that should eliminate receiving state audits after the required time period. The one remaining school system is an FY 96 audit being performed by a private CPA firm. Numerous requests have been made to the local school system to have the CPA firm finalize the FY 96 audit and provide a copy to the department. The 59 audits of USDA child care food program sponsors are the responsibility of the Office of School Readiness. A copy of this fmding was sent to them to propose a response and initiate any necessary corrective action.
F-28

----------State of Georgia-----------
Fndilgs and QuesHoncd Costs
For the Hscal Ycar Ended Jmc 30. 1997
DEPARTMENT OF TECHNICAL AND ADULT EDUCATION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS Failure to Comply with the "Fair and Open Grants Act of 1993" Finding Control Number FS-415-97-01
Our examination of the Department of Technical and Adult Education's compliance with requirements for the "Fair and Open Grants Act of 1993" disclosed the following deficiencies:
(1) The grant program description required to be submitted to the Secretary of State prior to the granting of public funds was not submitted until October 7, 1996. The Department of Technical and Adult Education began making grant awards in July 1996.
(2) The annual list of grants awarded and disbursed in the prior fiscal year required to be submitted to the Secretary of State by December 31, 1996 was not submitted until September 16, 1997.
These deficiencies occurred because management failed to ensure timely submission of these documents. Appropriate procedures should be implemented by the Department to ensure that these documents are submitted by the required dates.
Management Response
We concur with this finding. The Director of Budget, Laura Boalch, has developed procedures implemented on October 1, 1997, to assure that the documents required to be filed under the Fair and Open Grants Act of 1993, will be submitte-d in a timely manner so that this problem will not occur again.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Travel Reimbursements Finding Control Number FS-415-97-02
For the year under review, testing of the Department's operating expenditures disclosed several deficiencies related to improper travel reimbursements to employees which are identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-415-97-01.
Management Response
See entity's response for finding control number FA-415-97-0 I.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-415-97-03
A review of the internal accounting controls utilized by the Department of Technical and Adult Education in maintaining their State Property System disclosed that a number of conditions relating to inappropriate accounting practices were found to exist and have been identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA415-97-02.
Management Response
See entity's response for finding control number FA-415-97-02.
F-29

----------State of Georgia----------
Fndilgs and Quesnoned Costs
For the Hscal Year Ended Jme 30. 1997
DEPARTMENT OF TECHNICAL AND ADULT EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ALLOWABLE COSTS/COST PRINCIPLES Improper Travel Reimbursements Vocational Education- Basic Grants to States (CFDA 84.048) Questioned Costs: $384.90 Finding Control Number FA-415-97-01
For the year under review, an examination of the Department's operating expenditures was performed to test these transactions for validity, accuracy, and for compliance with State and Federal regulations. The items tested contained an aggregate value of $49,300.38 out of a population of $2,098,755.67. The following deficiencies relating to improper travel reimbursements to employees were disclosed:
(1) Meal reimbursements totaling $384.90 in excess of allowable limits were paid to two employees. No explanation of these excess charges was given on the expense statements. These reimbursements were funded with fifty percent State funds and fifty percent Federal funds.
(2) Meal expenses associated with travel to high cost areas by two employees were not approved by the Department prior to the trip.
The Department is required to comply with prov1s1ons of the State of Georgia - Statewide Travel Regulations and Attachment A of Federal OMB Circular A-87. The exceptions identified were caused by the Department's failure to follow guidelines for the reimbursement of employee travel expenditures.
The Department should establish the necessary internal controls to ensure that all employees' travel reimbursements are made in compliance with State and Federal regulations. Reimbursement of$384.90 should be secured with $192.45 returned to the Vocational Education program and $192.45 returned to the Budget Fund.
Management Response
We concur with this finding. In October 1997, the Department issued a memo to all state staff outlining the specific meal reimbursement limits allowed both within and outside the State of Georgia. Procedures for approval of "high cost areas" were established and outlined in this same memo to ensure compliance with the State of Georgia - Statewide Travel Regulations. The accounting staff has been retrained in the auditing oftravel reimbursement statements. The two employees receiving reimbursement in excess of established limits as cited in the management report have been notified. Reimbursement of $384.90 will be secured and returned to the appropriate funds. The contact person is Bonnie Bean, Director of Accounting.
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FA-415-97-02
Our examination included a review of the internal accounting controls utilized by the Department of Technical and Adult Education in maintaining their property management system. This review included testing the system for compliance with State and Federal laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
{I) Seven (7) equipment items deleted from the equipment inventory records during the year under review had no authorization for the deletion.
(2) Four (4) equipment items totaling $206,208.04 acquired through capital leases were not included on the equipment inventory records.
F-30

----------State of Georgia-----------
Fif\dngs and Questioned Costs For the FISCal Ycar Ended Jmc 30. 1997
DEPARTMENT OF TECHNICAL AND ADULT EDUCATION
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS In addition, thirty (30) equipment items were selected to test the accuracy of the Department's property management records. These items contained an aggregate value of$131,993.86 out of a population of$6,385,224.18 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(I) Ten (10) items totaling $24,723.92 could not be located. (2) One (I) item with a cost of$5,500.00 was disposed of but was not removed from the inventory records. (3) One (I) item with a cost of$19,794.00 was traded-in but was not removed from the inventory records. Also, during the physical inspection testing, fourteen (14) items of equipment were located which were not included in the equipment inventory records. The Department is required to maintain equipment inventories in accordance with proviSions of the State Property Management System Manual and paragraph 32 of OMB's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Rule). The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories. The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with State and Federal regulations.
Federal Programs Affected: U.S. Department of Education Adult Education - State Administered Basic Grant Program (CFDA 84.002) Vocational Education - Basic Grants to States (CFDA 84.048)
Management Response We concur with this finding. During Fiscal Year I998, the Department has reviewed existing procedures and internal controls to ensure compliance with State and Federal laws and regulations. Procedures have been implemented to assure:
Items deleted from the equipment inventory records have been authorized and properly deleted from the inventory listing.
A physical inventory can be located and is being evaluated to determine that all items on the inventory listing can be located and, consequently, that all items located are included on the equipment inventory listing.
Capital leases will be included on the equipment inventory records. These procedures are scheduled to be completed by May 3 I, 1998. The contact person is Bonnie Bean, Director of Accounting.
F-31

----------State of Georgia----------
Fndings and Quesnoned Costs
For the FISCal Year Ended Jme 30. lc.'f.J7
DEPARTMENT OF MEDICAL ASSISTANCE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-419-97-0 1
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Medical Assistance in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. A number of conditions relating to inappropriate accounting practices were found to exist and have been identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-419-97-01.
The Department is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
Management Response
The management's response is identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-419-97-0 1.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Medical Assistance Program (CFDA No. 93.778) Finding Control Number FA-419-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Medical Assistance in maintaining their property management system. This review also included testing the system for compliance with Federal laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
(1) Equipment deletions were not properly updated on the inventory system.
In addition, seventy-three (73) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $338,307.85 out of a population of $2,457,906.63 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(1) Sixteen (16) items totaling $39,984.30 could not be located.
(2) Two (2) items totaling $4,946.00 were surplused or traded-in, but were not removed from the equipment inventory records.
(3) One (1) item totaling $3,915.00 was stolen, but was not identified as stolen on the equipment inventory records.
(4) Eighteen (18) items were found in locations other than the location indicated in the equipment inventory records.
F-32

----------State of Georgia-----------
Fndings and Questioned Costs
For the FISCal Year Ended Jllfle 30. 1997 DEPARTMENT OF MEDICAL ASSISTANCE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS The Department is required to maintain equipment inventories in accordance with provisions of paragraph 32 of OMB's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Rule). The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories. The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of OMB's Common Rule. Management Response We concur with this finding. The Department previously hired a person to fill the position responsible for properly maintaining equipment inventory records. Although this person has left the Department and the position has not been filled, equipment additions were properly updated on the inventory system. There are problems with equipment deletions and locating equipment. The Division of General Administration is in the process of hiring its new person responsible for maintaining an accurate equipment inventory so that this problem will not be repeated.
F-33

----------State of Georgia-----------
Fndings and Quesnoned Costs For the Fiscal Ycar Ended Jmc 30. 1997
OFFICE OF THE GOVERNOR
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-422-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by the Office of the Governor in maintaining their State Property System and testing the system for compliance with State laws and regulations. Sixty-four (64) equipment items were selected to test the accuracy of the Office of the Governor's property management records. These items contained a value of $295,203.94 out of a population of $3,144,666.88 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted at the Georgia Emergency Management Agency, which is administratively attached to the Office of the Governor:
(I) Two (2) items totaling $2, I06.00 could not be located.
(2) One (I) item in the amount of$2,724.80 was surplused, but was not removed from the inventory records.
The Office of the Governor is required to maintain equipment inventories in accordance with provisions of the State Property Management Svstem Manual. The discrepancies identified were caused by the Office of the Governor's failure to follow guidelines for maintaining equipment inventories.
The Office of the Governor's management should periodically review established internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
Management Response
The agency concurs with the finding.
The financial director has assumed responsibility for property management and has issued agency wide guidelines requiring notification when property is placed in surplus or traded-in. The value of items included in inventory records has been increased to $I ,000.00. Georgia Emergency Management Agency will be required to attend property management training classes to assure that policies and procedures are understood by those involved and that the information is disseminated throughout the agency. Personnel resources assigned to property management have been increased, increased efforts to ensure that appropriate individuals have access to the State Property Management System Manual and quarterly status reviews of inventory records with the Office ofthe Governor are scheduled.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Reporting and Budgeting of Expenditures Finding Control Number FS-422-97-02
In the year under review, the Office of the Governor expended $25,726,21I.O 1 under the Object Class - Per Diem, Fees and Contracts for contracts. Funds budgeted for contracts under Object Class - Per Diem, Fees and Contracts normally contemplate that goods and/or services will be received by the State Agency. However, a random sample of 10 contracts revealed that the Office of the Governor simply provided funds to various parties and received no goods or services in return. The related expenditures totaling $350,551.8I for the I0 items tested should have been charged to a grants object class instead of Per Diem, Fees and Contracts.
The Office of the Governor should ensure that grants are correctly budgeted and recorded in the accounting records.
F-34

----------State of Georaia - - - - - - - - - -
Fndir1gs and Questioned Costs
For the FISCal Year Ended Jme 30. 1997 OFFICE OF THE GOVERNOR
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Management Response The agency concurs with the finding. Beginning with Fiscal Year 1998 these expenditures are being charged to a newly created "grants" object class. The majority of items identified in the finding are administered by the Criminal Justice Coordinating Council and are funds from subgrants of the U. S. Department of Justice. Objectives of these funds are various ranging from improvements to information systems, crime victims's assistance and numerous programs for State and Local Law Enforcement agencies. Other agreements in various units of the Office are reviewed on a case by case basis by the Director of Administration to detem1ine that the proper object class is being used.
F-35

---------State of GeorfJia - - - - - - - - -
Fndilgs and Questioned Costs For the Hscal Ycar Ended Jmc 30. Ic:!J7
DEPARTMENT OF HUMAN RESOURCES
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-427-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Human Resources in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. A number of conditions relating to inappropriate accounting practices were found to exist and have been identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-427-97-01.
The Department is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
Management Response
We concur with this finding. See the agency's response to finding control number FA-427-97-01
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FA-427-97-0 I
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Human Resources in maintaining their property management system and also included testing the system for compliance with Federal laws and regulations. This examination included a sample of 375 items at certain locations for testing the accuracy of the Department's general fixed asset records. The sample items contained a value of $5,094,540.03 out of a population of $32,600,400.78 at the tested locations and were selected for the purpose of locating the equipment. Total general fixed assets of the Department amounted to $142,866,166.07. The following deficiencies were noted:
1. Thirty-five (35) items totaling $88,479.15 could not be located.
2. Twelve (12) items totaling $56,460.00 were surplused, but were not removed from the equipment inventory records.
3. Six (6) items were found in locations other than the location indicated in the equipment inventory records.
4. Thirty (30) items did not have decal numbers attached. Items were identified by serial numbers or descriptions.
5. Four (4) items were located with the wrong decal attached.
6. Sixteen (16) items totaling $46,991.71 were documented as missing or stolen, but were not included in the missing or stolen category on the equipment inventory records.
The Department is required to maintain equipment inventories in accordance with provisions of paragraph 32 of OMB's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common
F-36

----------State of Georgia----------
Fif\dings and Quesnoned Costs
For the Fiscal Year Ended Jme 30. 1997
DEPARTMENT OF HUMAN RESOURCES
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
Rule) and the State Property Management System Manual. The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of OMB's Common Rule and the State Property Management System Manual.
Major Federal Programs/Awards Affected:
U.S. Department of Agriculture Food Stamps- CFDA 10.551/561 Special Supplemental Nutrition Program for Women, Infants and Children- CFDA 10.557
U.S. Department of Education Rehabilitation Services- Vocational Rehabilitation Grants to States- CFDA 84.126
U.S. Department of Health and Human Services Childhood Immunization Grants- CFDA 93.268 Temporary Assistance for Needy Families- CFDA 93.558 Family Support Payments to States- Assistance Payments- CFDA 93.560 Child Support Enforcement- CFDA 93.563 Payments to States for Child Care Assistance- CFDA 93.575 Child Care and Development Fund- CFDA 93.596 Foster Care- Title IV-E- CFDA 93.658 Social Services Block Grant- CFDA 93.667 Block Grants for Prevention and Treatment of Substance Abuse - CFDA 93.959
Social Security Administration Social Security - Disability Insurance - CFDA 96.001
Management Response
We concur with this finding. The Department of Human Resources (DHR) is committed to strengthening internal controls and personal accountability in the area of equipment and real property management. One way we intend to accomplish this goal is by dedicating at least one day per fiscal year to the physical verification of all DHR inventory statewide reported on the system.
Organizationally, the proper recording of inventory and equipment is being made an extremely high priority. One of the changes in the near future is the establishment of a management position in our Office of Technology and Support. The individual selected will be responsible for training key DHR personnel on proper inventory control and will serve as a resource to assist all of DHR to better track its equipment and inventory.
Lastly, but perhaps most importantly, we intend to hold DHR employees accountable for ensuring that equipment purchases, transfers and surpluses are recorded properly. This will be made a key component of performance evaluations at the individual employee level. The contact person is Kate Pfirman, Director of Financial Services.
F-37

----------State of Georgia----------
Fndilgs and QuesHoned Costs
For the Hscal Year Ended JLJ\e 30. 1997
DEPARTMENT OF HUMAN RESOURCES
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Improper Benefit Payments Temporary Assistance to Needy Families (CFDA 93.558) Family Support Payments to States (CFDA 93.560) Questioned Cost: $4,143.00 Finding Control Number FA-427-97-02
For the year under review, a sample of two-hundred-fifty (250} client case files was selected from a sample population of 50, 121 case files for the Temporary Assistance to Needy Families and Family Support Payments to States Programs. The sample items were selected from certain county Department of Family and Children Services (DFACS) offices to determine if benefit payments were made within program guidelines. Our examination revealed that five client folders could not be located which resulted in $4, 143.00 of known questioned costs. A projection of these errors to the total population resulted in likely questioned costs in excess of $10,000.00. These errors were caused by DFACS management's failure to ensure that client files were properly maintained at the county Department of Family and Children Services offices.
Failure to properly maintain client files results in undocumented expenditures which can result in direct material effects on the financial statements.
The Department of Human Resources should ensure that procedures are in place to provide for proper maintenance of client files.
Management Response
Cases that were missing were all cited in large urban counties which have high turnover. DeKalb has instituted a new case record tracking and filing system which should assist in their ability to locate files. The two other counties mentioned will be monitored by DFCS' Evaluation and Reporting Section to assure that proper corrective action is taken.
ELIGIBILITY Improper Benefit Payments Foster Care Title IV-E (CFDA 93.658) Questioned Cost: $620.00 Finding Control Number FA-427-97-03
For the year under review, a sample of one-hundred-ninety-one (191) benefit transactions was selected from the Foster Care Title IV-E Program at certain county Department of Family and Children Services (DFACS) offices to determine if benefit payments were made within program guidelines. These items contained a value of $446,402.79 out of a sample population of $16,077,744.40. Our examination revealed that one client did not meet program requirements which resulted in $620.00 of known questioned costs. A projection of this error to the total population resulted in likely questioned costs in excess of $10,000.00. This error was caused by DFACS management's failure to properly monitor clients eligibility status.
Failure to carefully monitor client files can result in direct material effects on the financial statements.
The Department of Human Resources should ensure that policies are followed to provide for proper monitoring of client eligibility.
Management Response
The Foster Care error occurred because of a change in the child's custody status, which the worker failed to reflect in the record. DFCS will continue to emphasize the importance of proper documentation in its training.
F-38

----------State of Georgia----------
Fndilgs and QuesHoned Costs For the: Hscal Year Ended Jmc: 30. 1997
DEPARTMENT OF HUMAN RESOURCES
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS ELIGIBILITY Improper Benefit Payments Child Care and Development Block Grant (CFDA 93.575) Questioned Cost: $659.00 Finding Control Number FA-427-97-04 For the year under review, a sample of two-hundred-thirty-two (232) benefit transactions was selected from the Child Care and Development Block Grant Program at certain county Department of Family and Children Services (OFACS) offices to determine if benefit payments were made within program guidelines. These items contained a value of $263,210.80 out of a sample population of $40,822,510.33. Our examination revealed that four payments did not meet program requirements which resulted in $659.00 of known questioned costs. A projection of these errors to the total population resulted in likely questioned costs in excess of $10,000.00. These errors were caused by DFACS management's failure to ensure that required documents were included and maintained in client files at the county Department of Family and Children Services offices. Failure to properly maintain client files can result in direct material effects on the financial statements. The Department of Human Resources should ensure that procedures are in place to provide for proper maintenance of client files and that all required data for eligibility determination is included in the file. Management Response The Economic Support section of DFCS has recently finished a statewide training of staff on procedures for child care expenditures. This should ensure that staff follow policy appropriately as relates to the information cited in error. The Evaluation and Reporting section assists with the monitoring of case files and their availability. Our staff also has been doing site visits to review staff and monitoring of case file availability.
F-39

----------State of Georgia-----------
Fndhgs and QuesNoned Costs
For the FLSCal Year Ended June 30, 1997
DEPARTMENT OF LABOR
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Class Finding Control Number FS-440-97-01
The total approved budget for the Department of Labor provided for expenditures totaling $170,935,947.00. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicated that the "common object class", Computer Charges, exceeded the authorized expenditure level of 102% of the budgeted amount for that common object class by $1 ,301,788.51.
The overexpenditure identified above is in violation of Section 58 of the Amended Appropriations Act of 1996-1997. This overexpenditure was caused by the Department's failure to monitor the expenditure of funds against the budgeted expenditures by object class.
The Department of Labor should review its internal control procedures over budget operations, design procedures which would prohibit the expenditure of funds in excess of budget approval, and implement those procedures to strengthen the internal controls over the budget function.
Management Response
We concur with this recommendation. The common object class, Computer Charges, overexpenditure resulted from the shifting of federal funds to fund a new statewide PC network needed to accommodate the new initiatives from the federal government in employment services, training programs and one stop shopping for recipients of our services. These federal funds became available after the deadline for budget amendments for federal funds to the state budget had expired. The department has established controls to ensure that budget operations are maintained in accordance with section 58 of the Amended Appropriations Act.
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-440-97-02
For the year under review, the accounting procedures for the Georgia Department of Labor were inadequate to provide for adequate internal control over bank reconciliations for the payroll account. Bank reconciliations were not prepared in a timely manner for fiscal year 1997. A review of bank reconciliations indicated a delay of 9 months between the month end and reconciliation dates. This delay was caused by the Department's failure to adequately monitor the bank reconciliation process.
The Department of Labor should establish the necessary internal controls to ensure that the bank reconciliation process is being performed in a timely manner.
Management Response
We concur with this finding. The account has since been reconciled, and there were no required adjustments to any accounting records. The Assistant Commissioner for Finance and Budgets, has taken steps to ensure that all bank accounts are reconciled in a timely manner so that this will not occur again.
F-40

----------State of Georgia-----------
Fif\dings and Que.sNoned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF LABOR
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Documentation of Manual Journal Entries Finding Control Number: FS-440-97-03
For the year under review, a monetary precision sample was utilized to test the accuracy and validity ofjournal entries for the period. Our examination disclosed that three manual journal entry packages could not be located. This situation occurred because of the Department's failure to properly account for documentation concerning journal entries.
The Department should develop procedures to ensure that all manual journal entry transactions are supported by proper documentation to provide a clear audit trail.
Management Response
We concur with this finding. Procedures have been changed and all manual entries are now maintained in a locked cabinet and each journal entry must be signed out from a designated accounting employee. Only this employee and her supervisor will have access to the manual entries.
GENERAL LEDGER Expendable Trust Fund Inadequate Accounting Procedures Finding Control Number FS-440-97-04
A review of the Department's policies and procedures regarding the processing, accounting and collection of Unemployment Insurance (UI) tax assessments revealed certain control deficiencies. The Department utilizes separate data processing systems to process and account for UI taxes. Audit procedures applied to the input and output data of these systems revealed the following internal control deficiencies:
(1) Electronic scanning of employer input documents was not functioning properly creating posting and recording errors.
(2) Assessment and payment posting errors prevented adequate and timely updates of affected individual employer accounts.
(3) Procedures were not evident to detect and correct the errors noted above in a timely manner.
These deficiencies reduce the accuracy of the amount of taxes assessed and the financial transactions/data recorded in the individual tax accounts. This condition occurred because of management's failure to establish and maintain an adequate system of internal controls over the processing and recording of UI tax assessments. Procedures should be developed and implemented to ensure that UI tax assessments are accounted for properly and accurately.
Management Response
The Department fully acknowledges the internal control deficiencies cited in the findings. These deficiencies were directly linked to the implementation of an image based tax processing system. The Department deployed this system in July 1997, thus the second quarter, 1997, was the initial procession period utilizing this system. With respect to findings that: individual accounts were not adequately updated; errors in scanning documents; and recording errors were detected and corrected timely, three specific system errors are associated with these deficiencies.
F-41

----------State of Georgia----------
Fndi1gs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997 DEPARTMENT OF LABOR
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS 1. This system relies on a unique document numbering sequence to maintain document integrity and control. This number
is assigned and sprayed on each document on the scanning platform. The duplication of document locator numbers occurred in scan batches of greater than 20 documents. This allowed for multiple occurrences of mismatched tax reports and checks. This problem was detected on Friday August 29, 1997, and corrected the following week. 2. Tax accounts (transactions) were uploaded to the tax account transactions file that were out of balance. Certain documents processed through the data entry phase were keyed incorrectly but the transaction balancing edits did not reject the unbalanced documents as expected. This problem was confirmed in late August 1997 and the program application correction was modified shortly thereafter. 3. A small volume of checks sent through a re-work application were passed through this application and presented for upload without having the check amount verified. Once these problems were detected, the system contractor together with the Department launched data queries and document reviews to isolate accounts that encountered these problems. Data recovery/correction initiatives began in late August, 1997 and will continue until we are satisfied that all data integrity issues are resolved. Quality Controls have been re-visited. Controls on the data capture aspect of this system occur on a daily basis. System applications that contributed to these deficiencies have been modified. We are confident that our efforts will resolve the system deficiencies outlined in the Findings cited.
F-42

----------State of Georgia----------
Fndngs and Questioned Costs
For the FISCal Ycar Ended Jmc 30. 1997
DEPARTMENT OF CORRECTIONS
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Improperly Classified Employees Finding Control Number FS-467-97-01
The Internal Revenue Service has performed an employment tax examination of the Department of Corrections. The examination of calendar year 1995 employment classifications disclosed that certain employees were improperly classified as consultants, resulting in a claim against the Department of Corrections for delinquent Social Security taxes, Medicare taxes and penalties.
The Department of Corrections has reached a settlement agreement regarding this matter with the Internal Revenue Service. The settlement agreement calls for the Department of Corrections to treat certain categories of workers as employees for employment tax purposes. Further, the Department of Corrections has agree to pay $235,639.97 in delinquent taxes and $11,838.69 in penalties pursuant to the settlement agreement. The total settlement of $247,478.66 is reflected as an expenditure.
Management Response
We concur with this finding. The Department has moved all the improperly classified employees. Also, the Department paid the Internal Revenue Service $247,478.66 for delinquent taxes and penalties.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-467-97-02
Our examination included a review of the accounting system utilized by the Department of Corrections in maintaining their State Property System and tests of the system for compliance with State laws and regulations. The following condition related to inappropriate accounting practices was noted:
Equipment inventory records were not updated for all additions. Testing of current year additions revealed four (4) current year equipment purchases totaling $8,124.00 that had not been entered onto the equipment inventory records at June 30, 1997.
In addition, one-hundred-fifty (150) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $1,445,432.89 out of a population of $78,033,127.11 and were selected for the purpose of locating the equipment as recorded in the inventory records. Thirty-three (33) items totaling $97,222.29 could not be located.
The Department is required to maintain equipment inventories in accordance with proviSions of the State Property Management System Manual. The discrepancies identified above were caused by the Department's failure to follow established guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls and implement procedures to ensure the equipment inventory records are maintained in accordance with the State Property Management System Manual.
F-43

________......__State of Georaia - - - - - - - - - -
Fndngs and Quesnoncd Costs For the FISCal Year Ended Jme 30. lc:/J7
DEPARTMENT OF CORRECTIONS
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Management Response We concur with this recommendation. The Department should maintain equipment inventories in accordance with provisions of the State Property Manual. The Department's policy has changed concerning accountability for its inventory. The Department adopted revised operating procedures for property control. The Department's new procedure is that each unit that receives new equipment is responsible to see that this equipment is put on inventory when it is received. Periodically, Central Office Property will audit each of the units for compliance. We will continue to insist that these units comply with the standards set forth.
F-44

----------State of Georgia----------
Fndings and Quesnoned Costs
For the FISCal Year Ended June 30. 1997
PUBLIC SERVICE COMMISSION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Accounting Procedures and Records - Agency Fund Finding Control Number FS-470-97-01
The Public Service Commission was directed by the Official Code of Georgia Annotated (O.C.G.A.) Section 46-5-167 to create a Universal Access Fund (UA Fund) to assure the provision of reasonably priced access to basic local exchange services throughout Georgia. The Commission is acting in an agent capacity, and as such, the UA Fund should be accounted for as a Fiduciary Fund Type, Agency Fund. The Commission's accounting records for the UA Fund were not maintained in accordance with the Accounting Procedures and Instructions manual as prescribed and issued by the State Auditor in accordance with O.C.G.A. 50-6-7. The following deficiencies were noted:
I) The Commission failed to establish written internal accounting policies and procedures for the UA Fund.
2) The Commission failed to maintain a general ledger for the UA Fund.
3) Bank and investment statements for the UA Fund were not reconciled with the accounting records as of the date of this report.
Extensive procedures were used to produce an agency fund general ledger for fiscal year ended June 30, 1997, utilizing source documentation available. These above deficiencies occurred because the Commission failed to establish accounting policies and procedures for the UA Fund. Appropriate accounting policies and procedures should be established and implemented by the Commission to provide for the maintenance of the UA Fund as an agency fund within the Commission's accounting records in accordance with the Accounting Procedures and Instructions manual.
Management Response
Background:
The Georgia Public Service Commission (PSC) created the Telecommunications Universal Access Fund (UAF) in response to the requirements of O.C.G.A. 46-5-160 et. seq. and O.C.G.A. 46-5-167. The Commission created this fund in 1996 in close coordination with the Georgia Office of Treasury and Fiscal Services and the state Attorney General's Office.
Internal controls for the movement and disbursement of UAF funds were established by the PSC in the documents that created the UAF lockbox account with SouthTrust Bank and the UAF account in the Local Government Investment Pool (Georgia Fund 1). Documents which are germane in this regard are the Master Agreement for Treasury Management Accounts and Services (PSC/SouthTrust), State Agency Signature Card and Depository Agreement (from PSC to SouthTrust and Office of Treasury and Fiscal Services) and State Agency Local Government Investment Pool Account Application (PSC/Local Government Investment Pool). It is the opinion of the Commission staff that the use of these procedures has provided adequate safekeeping ofUAF monies.
The Commission staff, with the authorization and support of the Commission, planned to have the UAF audited by an external auditor from its inception to ensure that the administration of the funds and all associated documentation was consistent with generally accepted accounting principles and requirements. In this regard the Commission retained the Georgetown Consulting Group to perform an audit of the UAF. Shortly after commencing this engagement, in the fall of 1996, Georgetown personnel suggested that a complete set of policies, procedures, responsibilities and internal controls would need to be developed and applied before the UAF could be audited. Accordingly, the consultant was directed by the Commission staff to assist the staff in the accomplishment of this task. However, in 1997 it was discovered that this consulting firm had a conflict of interest on an unrelated matter and all of their contracts with the Commission were terminated. The work Georgetown had undertaken on the UAF was not completed.
F-45

- - - - - - - - - - S t a t e of Georgia----------
Fuldings and Questioned Costs
For the Fiscal Year Ended Jme 30. 1997
PUBLIC SERVICE COMMISSION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS In the meantime, the Commission had engaged another consultant, Henderson Ridge Consulting, to perform an audit of the UAF as soon as the Georgetown Consulting Group had completed their work on the policies, procedures, responsibilities and internal controls. The termination of Georgetown resulted in the necessity to redirect the efforts of Henderson Ridge Consulting toward the present UAF task. On November 7, 1997, the Commission staff approved the Henderson Ridge Consulting workplan regarding assistance in the development of policies, procedures, responsibilities and internal controls for the UAF. This work is to be completed not later than March 31, 1998. Statement of Concurrence or Nonconcurrence:
1. We concur that a written internal accounting policies and procedures manual for the Universal Access Fund needs to be established. The creation of such a document in an appropriate form has been a goal of the Commission staff since the fall of 1996.
2. We concur that a general ledger for the Universal Access Fund should be established and maintained. 3. We concur that bank lockbox account and Georgia Fund 1 statements should be promptly reconciled. Corrective Action: The Commission is working with the Department of Audits and Henderson Ridge Consulting to establish more comprehensive written policies and procedures, to establish and maintain a general ledger for the Universal Access Fund and to reconcile all bank lockbox account and General Fund I statements for the Universal Access Fund. These efforts shall be accomplished not later than March 31, 1998.
F-46

- - - - - - - - - - - S t a t e of GeorBia - - - - - - - - - - -
Fndings and Quesnoned Costs
For the FISCal Year Ended Jme 30. 1997
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Finding Control Number FS-472-97-01
For the year under review, the Administrative Central Office could not provide complete equipment inventory records by location. As a result of this deficiency, we were unable to test the accuracy and validity of the equipment inventory records.
The Administrative Central Office should establish appropriate procedures to strengthen internal accounting controls over the property management system to ensure that all equipment inventory is accurately recorded on the property management records by location and that these records accurately support the balances reported in the general ledger.
A1anagement Response
We concur with the finding.
An inventory control staff personal began reviewing processes and procedures in Spring 1997. A number of initiatives were implemented in October 1997 to address the equipment tracking issues. Additional on-line access was provided to the Master Inventory Database so changes to locations could be made in real time. Equipment decals specifically created to remain fixed on high technology equipment have been procured and a new, more expeditious process has been implemented to track off-site equipment. The inventory list is now current and random tests will be conducted monthly to ensure accuracy and compliance with this initiative. (Compliance Date: Done)
BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Class Regents Central Office and Other Organized Activities, "B" Budget Finding Control Number FS-472-97-02
The total approved budget for the Regents Central Office and Other Organized Activities, "B" Budget, of the Board of Regents of the University System of Georgia, provided for expenditures totaling $670,614,049.00. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicates that the object class Advanced Technology Development Center was overspent by $59,688.53. This overexpenditure is a violation of Section 58 ofthe Amended Appropriations Act of 1996-1997.
This overexpenditure was the result of the Administrative Central Office's failure to submit budget amendments to the Office of Planning and Budget. The Administrative Central Office should closely monitor its internal control procedures over budget operations to prevent the expenditure of funds in excess of budget approval.
Management Response
We concur with this finding.
Regents Central Administrative Office has contacted Georgia Institute of Technology on the overexpenditure of $59,688.33 which was due to not filing a timely budget amendment. Georgia Institute of Technology has put in place new procedures to prevent such an oversight in future years. Georgia Institute of Technology has implemented additional budget procedures as well as central oversight and coordination to avoid future ATDC budget overdrafts and to assure timely completion of budget amendments. Specifically, this will include campus Budget and Planning Office staff review and authorization of department initiated budget amendments as well as oversight of departmental expenditures versus authorized budget. (Compliance by April 1998)
F-47

----------State of Georgia----------
Fndilgs and Quesnoned Costs
For the FISCal Ycar Ended Jmc 30. 1997

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATIONIEXECUTION Overexpenditure of Budget Unit Object Class Lottery for Education, "D" Budget Finding Control Number FS-472-97-03

The total approved budget for the Lottery for Education, "D" Budget, of the Board of Regents of the University System of Georgia, provided for expenditures totaling $78,504,000.00. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicates that the following object classes were overspent by the amounts identified below:

Georgia Research Alliance

$ 234,105.23

Capital Outlay - Albany State College

$ 565,440.40

Agricultural Experiment Stations- Capital Outlay

$ 1,500,000.00

These overexpenditures are a violation of Section 58 of the Amended Appropriations Act of 1996-1997.

These overexpenditures were the result of the Administrative Central Office's failure to submit budget amendments to the Office of Planning and Budget. The Administrative Central Office should closely monitor its internal control procedures over budget operations to prevent the expenditure of funds in excess of budget approval.

Management Response

We concur with this finding.

The problem, related to overexpenditures in GRA, Albany State College or Agricultural Experiment Status Lottery Funds, appears to be the lack of a proper budget category under Lottery funds for carry forward balances. We have requested that Office of Planning and Budget create an "Other Funds" source within the Unit "D" Lottery budget so that the identity of lottery funds is maintained. (Compliance by July 1998)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

PROGRAM INCOME ALLOWABLE COSTS/COST PRINCIPLES PROCUREMENT, SUSPENSION AND DEBARMENT ACTIVITIES ALLOWED OR UNALLOWED REPORTING SPECIAL TESTS AND PROVISIONS Inadequate Internal Controls and Compliance Deficiencies Disaster Assistance (CFDA 83.516) Finding Control Number FA-472-97-01

For the year under review, internal control and compliance testing procedures performed on the Federal Disaster Assistance program revealed deficiencies in the following control categories:

F-48

----------State of Georgia-----------
Fndings and Questioned Costs
For the Hscal Ycar Ended Jmc 30. 1997

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

1) Program Income

Controls were not in place to ensure that interest income earned on advances was returned to the grantor agency in a timely manner. Federal regulations require interest earned on advances to be returned at least quarterly.

Compliance testing revealed that from February 1997 to June 1997, $754,219.86 was earned on advances from the Georgia Emergency Management Agency (GEMA). As of the date of our audit, no funds have been returned to GEMA.

2) Allowable Costs/Cost Principles Activities Allowed or Unallowed

Controls were not in place to ensure that all personnel responsible for monitoring, administering and accounting for Federal programs were aware of cost principle requirements. Federal regulations mandate that expenditures can only be made for allowable costs as defined in OMB Circular A-87 and the Code of Federal Regulations 44 CFR Subpart CPost Award Financial Administration Requirements.

3) Suspension and Debarment

There were no controls in place to determine if any contractor paid from Federal funds had been debarred, suspended or otherwise excluded from participation in Federal assistance programs.

Compliance testing performed on construction contracts revealed that no suspension or debarment certifications were required from contractors.

4) Reporting

There were no controls in place that would allow the tracing of expenditures by program/project to the accounting records. Financial reports submitted by the Central Office to GEMA were not compiled from the central office accounting records. This information was gathered from the project manager's records.

Compliance tests, performed on program expenditures and monthly financial reports submitted to GEMA, revealed that there were no reconciliations from the project manager's records to the Central Office's accounting records. Federal regulations require that control procedures must be in place to "permit the tracing of funds to a level of expenditures adequate to establish that such funds have not been used in violation ofthe restrictions and prohibitions of applicable statutes".

F-49

----------State of Georgia----------
Fndings and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997

BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

5) Special Tests and Provisions

There were no controls in place that identified the application of Federal Disaster funds by Damage Survey Reports (DSR). The FEMA Grantee-Subgrantee agreement between GEMA and the Administrative Central Office required DSR's to be completed for each project. It also required that the Administrative Central Office maintain adequately documented accounting records that identified the source and application of Federal and/or State Disaster Assistance funds.

In performing compliance tests on expenditures, we noted that expenditures were not identified by DSR, nor were they identified by source of funds (State, Federal or Other).

Management should familiarize themselves with Federal regulations dealing with Disaster Assistance funds in order to develop an adequate internal control structure consisting of procedures designed to provide for the achievement of compliance objectives. The Administrative Central Office should contact the grantor agency in regard to the return of interest income earned on advances.

Management Response

I) Program Income We concur with this finding.

In accepting funding advances from GEMA/FEMA on the Albany Flood Recovery it was assumed that interest income on the funds would-be repaid to GEMA. However, no schedule was set up at that time. The Administrative Central Office has contacted GEMA in order to set an appropriate schedule for payback of interest income funds. (Compliance by Apri11998)

2) Allowable Costs/Cost Prices We concur with this finding.

All personnel with the Office of Facilities, Budget Office and Business Office involved with the Albany Flood Recovery Project will be familiarized with OMB Circular A-87 and Code of Federal Regulation 44 CFR (Subpart C-Post Award Financial Administration Requirements). A financial manager is being hired to carry out the close-out of this project and assure compliance with these requirements as appropriate. (Compliance by May 1998)

3) Suspension and Debarment We concur with this finding.

The contract program manager for the Albany Flood Recovery Project will be required to provide certifications as to all contractors and subcontractors' debarment, suppression or other exclusion from federal assistance program participation. (Compliance by April 1998)

4) Reporting We concur in part with this finding.

The financial records are generated in the first instance by the program manager contracted to manage the entire flood recovery project. Expenditures have been recorded in the Central Office accounts, but we concur that additional reconciliation to tie expenditures to revenue sources and projects is needed. This process is already underway. Again, a financial manager is being hired to steer this overall process. Additionally, the Central Office will now seek reimbursement from GSFIC for State bonds sold for the recovery as well as reimbursement from Albany State University for a federal grant
F-50

----------State of Georgia----------
F~r~dings and Questioned Costs
For the FISCal Year Er~ded Jme 30. 1997 BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS under U.S. Department of Commerce Economic Development Administration Financial Assistance Award which covers a portion of the overall project. (Compliance by June 1998) 5) Special Tests and Provisions We concur in part with this finding. FEMA originally authorized DSRs for the Albany Flood Recovery and initial funds from FEMA combined with insurance, state bond and lottery funds, other state and federal funds were identified to complete the project budget. As the project proceeded, concerns about cash flow prompted negotiation with GEMA/FEMA. GEMA/FEMA decided to advance complete funding to the Board of Regents so the rebuilding of the campus could proceed quickly. The expectation was that the project would proceed apace using advanced funds. Since that time, (November 1996), the DSRs have not been updated by FEMA but the scope of the project was agreed to in the letter conveyed by GEMA with the advance of funds. The program manager and Central Office project coordinator have requested FEMA updates on DSRs over the past year. We are now working with the FEMA/GEMA, the State Auditor and the program manager to resolve this apparent dilemma due to the unique funding arrangement. Discussions are underway and should be complete within the fiscal year. (Compliance: Varies depending on outcome of discussions with appropriate parties.) The contact person is Bill Bowes, Associate Vice Chancellor of Fiscal Affairs.
F-51

----------State of Georaia - - - - - - - - - -
Fndilgs and QuesHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-474-97-01
For the year under review, our examination included a review of the internal accounting controls and accounting procedures utilized by the Department of Revenue (Department) to provide for adequate internal control over cash assets of the Department. The following deficiencies and inappropriate accounting practices were found to exist:
I) The Department did not provide for adequate separation of employee duties in the performance of maintaining and reconciling thirteen (13) bank accounts.
2) The June 1997 bank reconciliation for the payroll account, as presented for examination, did not agree with the general ledger. Extensive procedures were required to reconcile the account to the general ledger.
3) Cash journals were not maintained for eight (8) bank accounts. In addition, no bank reconciliations were performed for five (5) of these bank accounts.
4) Bank reconciliations for six (6) of forty-four bank accounts were not prepared in a timely manner. A review of bank reconciliations indicates a delay of up to 262 days between month-end and reconciliation date.
5) Reconciling items identified during the bank reconciliation process were not corrected in a timely manner. A review of the bank reconciliations indicates that there are $4,084,436.16 in reconciling items that have not been corrected as of June 30, 1997 dating from March, 1994.
6) Outstanding checks totaling $8,210,811.06 were outstanding in excess of six (6) months at June 30, 1997.
7) The cash receipts journal for the Peace Officers and Prosecutors Training Fund, as presented for examination, was incomplete and contained errors totaling $1,435,757.25. Adjusting entries were made to correct these errors.
These deficiencies were a result of the Department's failure to adequately manage cash assets of the Department.
The Department should examine the necessity of each bank account to reduce the number of bank accounts. The Department should establish internal controls to ensure that employees' duties are adequately segregated, monthly bank statements are reconciled with the accounting records on a timely basis, and cash journals are maintained for all bank accounts.
A1anagementResponse
We concur with this finding. The Department is in the process of increasing the resources available in its accounting sections. These resources will be used to better separate employees' duties of maintaining and reconciling bank accounts and should be in place prior to the end of the fiscal year. The Accounting Director is taking steps to assure the bank accounts are maintained and reconciled on a timely basis. Following is a list of planned and completed corrective actions for the 7 deficiencies cited in the finding. They are numbered according to the deficiency to which they apply.
I. Bank reconciliation duties are being reviewed and reassigned to provide for adequate separation of duties. 2. The payroll account is being reconciled to the General Ledger monthly. 3. Cash journals have been completed on 3 of the 8 accounts. We are in the process of completing cash
journals on the remaining 5 accounts that have full reconciliations done by the banks. We plan to have this completed by the end of the fiscal year.
F-52

----------State of Georgia----------
Fndilgs and QuesNoned Costs For the Hscal Ycar Ended Jmc 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
4. The bank reconciliations are being monitored monthly to determine their status. All accounts should be current and completed on a monthly basis prior to the end of the fiscal year.
5. We are working with the banks to identify and correct reconciling items. 6. The Individual Income Tax Refunds account for the majority of the outstanding checks. The banks will be
instructed to void any checks over 180 days old monthly. 7. This discrepancy has been corrected.
In addition, the Department of Revenue plans to conduct a comprehensive study of the Central Accounting Unit in to ensure that the operations of the unit are being conducted in accordance with sound accounting principles as well as to modernize the Unit's operations where feasible. The plan and schedule for this study is being developed now and will be finalized prior to June 30, I 998.
REVENUESIRECEIV ABLES/RECEIPTS Deficiencies in the State Revenue Collections Fund (Overall) Finding Control Number FS-474-97-02
For the year under review, our examination included a review of the internal accounting controls and accounting procedures utilized by the Department of Revenue (Department) in maintaining their State Revenue Collections Fund. Our examination included procedures to provide reasonable assurance that revenue collections received by the Department through either the Mail Cash System (manual deposits by the Department) or the Electronic Funds Transfer Maintenance Unit (electronic fund transfers from taxpayers) were adequately accounted for by the Department's general ledger system maintained by the Central Accounting Unit and were properly recorded in the subsidiary ledgers and associated records maintained by the Divisions and individual tax units. Our procedures also included a reconciliation of the revenue collections received and subsequently transferred by the Department to the Office of Treasury and Fiscal Services (OTFS), which acts as the State treasury. The following deficiencies and inappropriate accounting practices were found to exist:
I) The general ledger system consists of the "Revenue Ledger" and the "Refund Ledger". These ledgers do not provide for dual-entry accounting for the purpose of recognizing receipts and disbursements. Dualentry bookkeeping is the cornerstone of any accounting system and provides a mechanism to ensure the proper balancing of a general ledger accounting system. Failure to provide for dual-entry accounting inhibits the Department from producing a "balanced" general ledger for audit.
The general ledger system should be redesigned to provide dual-entry accounting for the purpose of recognizing receipts and disbursements.
2) The general ledger system did not include separate accounts to identify each type of revenue reported to and recorded by OTFS; nor did the system contain unique identifying numbers (transmittal numbers/deposit numbers) for all revenue amounts recorded within the general ledger system. These deficiencies result in extensive time and effort being required to reconcile the financial activity between the Department and OTFS.
The general ledger system should be updated to contain the transmittal number and deposit number for each receipt transmitted to and refund requisitioned from OTFS. In addition, the chart of accounts should be expanded to contain a separate account for each revenue type reported to OTFS.
3) The Central Accounting Unit does not have adequate procedures in place to ensure that necessary corrections to the general ledger resulting from electronic fund transfers, NSF checks and returned refund checks are reported in a timely manner to the Divisions and individual tax units. The failure to fully
F-53

---------State of Georgia---------
Fif\dings and QuesHoned Costs For the: FISCal Yc:ar Ended Jmc: 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
communicate known adjustments in a timely manner to responsible persons within the Department can result in inaccurate financial records and possible financial loss to the State.
The Central Accounting Unit should develop and implement procedures to ensure that all adjustments are communicated to the Divisions and individual tax unit responsible for maintaining applicable subsidiary ledgers and associated records.
4) The Department does not have adequate controls over unprocessed documents relating to tax returns and various registration applications, and the checks associated with these documents. Unprocessed documents occur when certain missing or incorrect information is discovered in the Mail Cash System. At that time, the documents and attached checks are physically removed from the Mail Cash System and transferred to the appropriate Division for investigation. The tracking procedures for these unprocessed documents are inadequate. Without adequate control procedures, the unprocessed documents and attachments could be lost or misplaced without knowledge of the Department and result in monetary loss to the State.
The Department should develop and implement procedures to ensure that all documents are logged when leaving or returning from the Mail Cash System and the Divisions and individual tax units. This log should be monitored and periodically reconciled by someone independent of the individuals maintaining the log and any differences should be investigated and resolved in a timely manner.
5) The Department has not established an internal control system whereby the subsidiary ledgers and associated records properly "roll-up" into the general ledger. As a result, the general ledger system and the subsidiary ledger system operate independently of each other and are not reconciled periodically. In addition, there are no consistent cut-off dates established between the two sets of records. A well designed accounting system provides for general ledger control over subsidiary ledgers and records and provides for a linkage between the general and subsidiary records. The lack of controls, which ensure a prompt reconciliation of the general ledger and subsidiary records, has resulted in the Department's accounting records in the Divisions and individual tax units being inconsistent, and in certain instances unreconcilable with the general ledger.
The Department should establish policies and procedures that will establish managerial control for the Central Accounting Unit over the subsidiary ledger and associated records through use of an integrated general and subsidiary ledger system. In addition, consistent cut-off dates should be established between the two systems and all subsidiary ledgers and associated records should be reconciled to the general ledger on a monthly basis.
6) The Department has not established an internal control system which requires cash receipts and disbursements to be posted to "Revenue Ledger" and the "Refund Ledger" in the accounting period in which they occur, allowing discretionary shifting of cash receipts and disbursements between accounting periods. This "shifting of funds" is inconsistent with the Cash Receipts and Disbursements basis of accounting and compounds the problems associated with reconciling the general ledger system and the subsidiary ledgers and associated records maintained by the Divisions.
State Revenue Collections Funds are maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations of the State of Georgia. The Department should develop and implement procedures to ensure that cash receipts and disbursements are recorded in the "Revenue Ledger" and the "Refund Ledger" at the time of occurrence, as required by the Cash Receipts and Disbursements basis of accounting. In addition, the Department should develop and implement procedures to ensure that posting dates in the "Revenue Ledger" and the "Refund Ledger" are consistent with posting dates in the subsidiary ledgers and associated records.
F-54

----------State of Georgia----------
Fndilgs and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
7) Our examination of the revenue collection and refund procedures disclosed that the Department of Revenue does not submit, to the Office of Treasury and Fiscal Services, a formal request for funds to be used for refunds in all circumstances, but instead withholds monies from the current days collections to provide for refunds due. The Constitution of the State of Georgia, Article VII, Section III, Paragraph II(a) states in part "all revenue collected from taxes, fees, and assessments for state purposes, as authorized by revenue measures enacted by the General Assembly, shall be paid into the general fund of the state treasury". The failure to remit state revenue collections to the Office of Treasury and Fiscal Services results in a loss of investment income to the State of Georgia.
The Department should establish policies and procedures that will ensure that all collected funds are immediately transmitted to the Office of Treasury and Fiscal Services and that refunds are made only from funds requisitioned from the Office of Treasury and Fiscal Services for that specific purpose.
The deficiencies noted above are a result of the Department's failure to provide for a comprehensive, modem accounting system coupled with strong, clear lines of authority and internal controls. The Department should carefully evaluate each of these deficiencies and take appropriate action to resolve these matters.
Management Response
We agree with this finding. Corrective actions for each of the deficiencies of the finding are discussed as follows:
In response to deficiencies I & 5, the Department is reviewing a list of companies that may offer software that will meet our accounting needs and will be acceptable to the Audit Department. We plan to select and have in place an appropriate product within six months.
In response to deficiencies 2 & 3, procedures to notify all responsible Division personnel of known adjustments in a timely manner has been put in place.
In response to deficiency 4, the Department has established a Loose Check Section to track and process any check that is not attached to the applicable document. Any checks that cannot be identified will be placed in a "suspense account" and deposited by Central Accounting. The section will also maintain a copy of the checks and track their fmal disposition. In addition, the Internal Administration Division will set up procedures whereby documents with checks that prematurely leave the processing flow will be logged and the log will be monitored. Finally, the entire process will be reviewed periodically by our Internal Audit/Operations Analysis Unit.
In response to deficiency 6, the Department recognizes and agrees that generally accepted accounting principles are not followed in this instance, however, more research is needed in this area to adopt a feasible, and agreeable resolution to the problem.
In response to deficiency 7 procedures are in place to assure that all refunds are requisitioned from the Office of Treasury and Fiscal Services in accordance with state regulations. In addition, written procedures will be developed by March 31, 1998.
In addition, the Department of Revenue plans to conduct a comprehensive study of the Central Accounting Unit to ensure that the operations of that unit are being conducted in accordance with sound accounting principles as well as to modernize the Unit's operations where feasible. The plan and schedule for this study is being developed now and will be finalized prior to June 30, 1998.
F-55

- - - - - - - - - S t a t e of Georgia---------
Fndi1gs and Questioned Costs
For the Fiscal Year Ended Jme 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS Deficiencies in the Income Tax Division Subsidiary Records Finding Control Number FS-474-97-03
For the year under review, our examination included a review of the internal accounting controls and accounting procedures utilized by the Income Tax Division (Division) of the Department of Revenue (Department) for maintaining subsidiary ledgers and associated records. This review revealed the following deficiencies in the maintenance of subsidiary records by the Division as follows:
I) The Division does not adequately track data received from both companies and individuals concerning taxpayer wages, income tax withholdings or estimated payments of Georgia income tax. Only limited work in regard to individual confirmation of Form W-2 information is performed by the Department.
As a result of this deficiency, the Division cannot ensure, in all cases, that the withholding amount claimed by the taxpayer on the annual tax return is accurate or that known taxable income is reported as income. This condition resulted due to the Department's failure to design and implement needed procedures, programs or systems.
The Department should design and implement a system that will provide for the systematic reconciliation of income and withholding data received from employers and individuals with Form W-2 and other documents filed with year-end individual tax returns.
2) Tax examiners of the Individual Income Tax Unit and the Withholding Unit of the Division are responsible for amending tax returns when errors and processing problems are identified as returns are being processed by the Division. Amendment of the returns involves the tax examiner submitting adjustments for such items as taxes due and assessment or abatement of interest and penalty amounts. The Division does not have the necessary systematic controls in place to ensure that all adjustments are processed in a timely manner.
The failure to process adjustments in a timely manner could lead to inaccurate financial records. The lack of timely processing is the result of the Department not having automated system controls to age the amended returns in process.
The Department should implement enhancements to the computer system to produce an automated aging report of all returns in process and provide for regular management review of the report to assure that adjustments are made timely.
3) The Department uses a batch system to identify and categorize taxes received as the various tax documents flow through the Division. The Withholding Unit of the Division relies on a manual log book to ensure that all batches are accounted for within the processing cycle. The accuracy of controlling this voluminous activity relies only on a manual review of this log book by the Division's management. Also, when the Withholding Unit computer system's capacity reaches more than 90%, a "purge" program is run. The report that is generated by the purge program is used by the Withholding Unit to manually identify batches that have not completed the processing cycle and to initiate a purge of all completed batches. Within 180 days, if a batch is not acknowledged as either complete or incomplete, the batch may be purged whether it is complete or not. An adequate system of accounting controls would utilize automated procedures to ensure that all batches are processed by the system prior to purging.
F-56

--------State of Georgia--------
Fndi1gs and QuesNoncd Costs For the Fiscal Year Ended Jme 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Due to the voluminous activity of the Withholding Unit, the manual process of identifying incomplete batches is tedious and subject to possible error. Without systematic controls of the batches, there is a risk that batches will not be processed by the system or batches may be inadvertently purged before being
processed resulting in erroneous financial records and a misstatement of income. This condition resulted due to the Department's failure to design and implement needed automated procedures.
The Department should modify the Withholding Unit's computer system to ensure that all batches are accounted for and processed. The system controls should be improved to automatically identify any unprocessed batches. In addition, periodic reports should be produced and reviewed to identify any outstanding or missing batches and ensure they are properly processed.
Management Response
It is true that the Department does not receive W-2 statements from employers and reconcile them back to the employee's reported withheld amount. Employers are now required to submit employee withholding information annually. With the passage of this requirement and the modifications to the current system, the Department will initiate a plan to revise the withholding processing system to systematically assist the Unit personnel in identifying inconsistencies in the reported withheld amounts. Department has decided not to make changes to the current system, but plans to enhance the redesign system to include compliance programs.
Also, the Department agrees that the federal adjusted income amount claimed on the Georgia Return should be reconciled to the federal return. This can be accomplished by developing a program to compare the federal income tax master file tape to the Georgia returns file. The Department will include this feature in redesigned individual income tax system. Within the next 18 months, the Department will develop a plan that will include the time frames for the development of this new system. In addition, the Department has decided not to make changes to the existing individual income tax system to automate the amended return process. The amended return process will be automated as part of the system redesign.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Deficiencies in the Sales Tax Division Subsidiary Records Finding Control Number FS-474-97-04
For the year under review, our examination included a review of the internal accounting controls and accounting procedures utilized by the Sales Tax Division (Division) of the Department of Revenue (Department) for maintaining subsidiary ledgers and associated sales tax records. This review revealed deficiencies in internal accounting controls and accounting procedures as follows:
1) Substantive tests were performed on the "balancing files" created by the Department of Revenue. These files were created to facilitate balancing of monthly sales tax receipts processed by the Division to monies distributed monthly to State and local governments. We were not able to reconcile the total amounts received for a given period to the amounts distributed to State and local governments.
The inability to balance these files can be attributed to the lack of a common identifying reference to associate data in the distribution reports with the time period in which collection was originally made and contributes to the Department's failure to balance its subsidiary records to the general ledger.
2) Substantive tests were also performed on the Central Taxpayer Assistance (CTA) Miscellaneous Transactions File, representing Sales Tax adjustments, penalties and interest. We were not able to trace amounts contained in this file to the amounts distributed to State and local governments.
F-57

- - - - - - - - - S t a t e of G e o r g i a - - - - - - - - -
Fndi1gs and QucsNoned Costs For the Hscal Year Ended Jme 30. lrf.J7
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
The causes of this deficiency can be attributed to the lack of a meaningful link or posting reference attached to each transaction which would allow the matching of the transaction to the daily summary of CTA postings in the "General Ledger" maintained by Central Accounting.
The Department should implement policies and procedures that will establish managerial control for the Sales Tax Unit over the subsidiary ledger and associated records through use of an integrated general and subsidiary ledger system, which would provide for the reconciliation between funds received for Sales Tax and payments of their respective portions of the collections to local entities.
Management Response
This finding has been resolved with the implementation of the new sales tax return system effective July I, I997. In addition, KPMG is in the process of preparing procedures to reconcile the sales tax system with the Central Accounting ledgers. Procedures are currently being tested for accuracy. Also, the comprehensive review of the Central Accounting Unit will address the issues concerning the general and subsidiary ledgers.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-474-97-05
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Revenue in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
I) Equipment acquired through an installment purchase agreement in the amount of $2,276,747.77 was not included in the property inventory listing at June 30, I997.
2) Equipment purchases totaling $700,767.09 were not promptly added to the property inventory system and were not included in the property inventory listing at June 30, I997.
In addition, fifty three (53) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $2,820,888.3I out of a population of $10,935,160.64 and were selected for the purpose of locating the equipment as recorded in the inventory records. Six (6) items totaling $I1,616.38 could not be located.
The Department is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
As a result of the discrepancies identified above, we were unable to determine the validity of the total equipment inventory valuation contained in the inventory records, which comprises the General Fixed Assets Account Group.
The Department should establish the necessary internal controls and implement procedures to ensure the equipment inventory records are maintained in accordance with the State Property Management System Manual.
Management Response
The Property & Supply Supervisor, working with the IA/OA Unit, will locate and identify all equipment purchased through the installment purchase agreement. We expect this to take approximately three months from the d.ate the Property & Supply Supervisor is hired.
F-58

- - - - - - - - - S t a t e of Georgia---------
Fndi1gs and Questioned Costs
For the FISCal Ycar Ended Jmc 30. 1997
DEPARTMENT OF REVENUE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
The Property & Supply Supervisor working with divisional Property Coordinators will decal and enter all outstanding equipment into the Property System. This is expected to take approximately one month from the date the Property & Supply Supervisor is hired. Cost of the equipment not previously decaled has already decreased from $700,767.09 to $383,664.28.
In addition, the Procurement & Services Officer is in the process of resolving these discrepancies. Some progress has been made in finding and decaling equipment purchased through the installment agreement, but much remains to be accomplished. The dollar value of items not timely decaled and entered into the property system has been significantly reduced.
GENERAL LEDGER Differences Between Reimbursement Requests and Subsidiary Ledgers Finding Control Number FS-474-97-06
The reimbursement requests completed by the Department of Revenue (Department) to claim Federal reimbursement for expenditures on the Highway Planning and Construction grant and Motor Carrier Safety Assistance grant did not agree with the subsidiary ledgers (fund source trial balances) for these programs. A comparison of the reimbursement requests to the fund source trial balances revealed that the reimbursement requests were understated by $24,332.42. A subsequent reconciliation of the reimbursement requests to the fund source trial balances was performed by the Department and revealed allowable expenditures for the programs charged to incorrect fund source trial balances. After adjustment for these additional allowable expenditures, allowable expenditures exceeded reimbursement requests for these programs by $1,295.18.
This problem was caused by the failure of the Department to adequately monitor the expenditures associated with these programs, the failure to timely identify posting errors made to the individual fund source trial balances for these two programs and by identified errors never being corrected on previously filed reports.
The Department should closely monitor all expenditures associated with Federal grants. Those individuals responsible for the administration of the programs and the completion of the reimbursement requests should ensure that these requests are completed using information that is reconcilable with the accounting records.
Management Response
In order to adequately monitor the expenditures for the federal grant programs administered by the MFT Administrator, the Motor Fuel Unit is now doing a full monthly reconciliation rather than on a semi-annual or annual basis. This will allow them to monitor, more closely, the activities within each grant and to reconcile the Department's monthly expenditure report.
Also, the Administrator of the MFT Unit, has taken the necessary precautions to insure that every dollar is accounted for and properly charged against each grant. The $1,295.18 that was under-billed to the Federal Government will be included in the next billing cycle to insure that all eligible funds expended under the grant are properly reimbursed.
F-59

- - - - - - - - - - S t a t e of Georgia----------
Ffldings and Quesnoncd Costs
For the FISCal Ycar Ended Jmc 30. 1997

GEORGIA STUDENT FINANCE COMMISSION

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Classes Finding Control Number FS 476-97-01

The total approved budget for the Georgia Student Finance Commission provided for expenditures of $32,769,308.00 in Budget Unit "A", and $161,118,161.00 in Budget Unit "B". A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicated that the Budget Unit "A" object class, Guaranteed Educational Loans, was overspent by $4.00.

In addition, the following Budget Unit "B" object classes were overspent by the amounts identified below:

Hope Financial Aid - Tuition Hope Financial Aid - Books Hope Financial Aid- Fees

$2,188,920.91 $ 5,142,669.82 $ 2,786,599.66

The overexpenditures identified above are in violation of Section 58 of the Amended Appropriations Act of 1996-1997. These overexpenditures were caused by the Commission's failure to monitor the expenditure of funds against the budgeted expenditures by object class.

The Georgia Student Finance Commission should review its internal control procedures over budget operations, design procedures which would prohibit the expenditure of funds in excess of budget approval, and implement those procedures to strengthen the internal controls over the budget function.

Management Response

We concur with this finding. The following procedures have been implemented to ensure that similar overexpenditures will not occur in the future:

Unit A expenditures will be monitored by the chief accountant to ensure that overexpenditures do not occur.

A budget amendment request will be submitted for Unit B to properly allocate reserve funds established at the end of the previous fiscal year to the applicable current fiscal year object classes.

F-60

----------State of Georgia----------
Fif\dings and Questioned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF TRANSPORTATION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Bank Reconciliation Procedures Finding Control Number FS-484-97-01
For the year under review, the Department of Transportation's accounting procedures were not sufficient to provide for adequate control over the bank reconciliation process. Audit procedures and interviews with personnel of the Department revealed that the June 1997 bank reconciliation of the Payroll Account was performed during the month ofNovember 1997. As a result, our examination ofthe Payroll Account identified an unreconciled difference of$1,741.96 between the amount recorded on the general ledger and the bank statement at June 30, 1997.
The Department should establish the necessary procedures to ensure that bank reconciliations for the Payroll Account are reconciled on a monthly basis. The Department should take action to identify the unreconciled difference and make adjustments to the accounting records where appropriate.
A1anagement Response
We concur with this finding. The account has since been reconciled and there were no required adjustments to the accounting records. The Office of General Accounting has taken steps to assure all bank accounts are reconciled in a timely manner so that this problem will not occur again.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-484-97-02
For the year under review, our examination included a review of the internal accounting controls utilized by the Department of Transportation in maintaining their State Property System and also included testing the system for compliance with State Jaws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
(I) Testing of current year additions revealed one (1) item totaling $215,800.00 which could not be supported by a purchase order or invoice.
(2) One (1) item totaling $989,500.00 was traded-in on another equipment item but was not deleted from the inventory records. An adjustment was made by the Agency to correct this condition in the subsequent fiscal year.
In addition, four-hundred-ninety-nine (499) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $1,660,9 I7.05 out of a population of $33,631,358.07 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
(1) Five (5) items totaling$ I 1, I91.29 could not be located.
(2) Two (2) items were found in locations other than the location indicated in the equipment inventory records.
The Department is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
F-61

----------State of Georgia-----------
Fif\dings and Questioned Costs
For the FISCal Ycar Ended June 30. 1997 DEPARTMENT OF TRANSPORTATION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Management Response We concur with this finding. The Department does have procedures in place for the maintenance of property inventory and each major unit has a property control coordinator identified to carry out that task. The Department will conduct internal audits to insure that the property inventory procedures are carried out correctly in the future and inventory coordinators will be required to verify their inventory periodically. It should be noted that the items identified in the finding have been corrected and are correctly inventoried.
F-62

- - - - - - - - - - S t a t e of GeorBia - - - - - - - - - -
Findings and Questioned Costs
For the FISCal Ycar Ended Jmc 30, 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL CONTROLS
General controls provide necessary and cost/effective organizational, management and operational regimentation over use, maintenance and performance of department systems and related activities. Certain of these controls are usually communicated to personnel in policies and procedures. They provide guidelines and standards for personnel to follow. They are the basis from which system effectiveness is measured by those managing the systems and by systems auditors. The first four findings in this report indicate a lack of general controls in major systems management areas. These general controls must be put in place by the Office of Systems Development (OSD) to successfully accomplish the continued distribution of network and computing capability to user areas as envisioned in the Department of Transportation's strategic plan. The next two findings relate to planning for the year 2000 and disaster recovery. To accomplish these requires executive management endorsement and significant funding.
Lack of Systems Development Methodology Finding Control Number 484a-97-0 1
There are no standards defining the procedures and responsibilities for systems development and acqUisitiOn, and the oversight of major information systems initiatives. Although it is expected that major planned initiatives will be let out to consultants for development, the responsibility for the success of these initiatives will remain in the Georgia Department of Transportation (GDOT). The GDOT is proceeding with the implementation of significant upgrades to its Information Technology infrastructure, and has plans to proceed with numerous major systems projects to add to, upgrade and replace existing applications. The large number and size of these projects, their projected costs, and the expected time required have significant associated risks. Failure, or partial successes in these initiatives may result in the loss of millions of dollars and years of lost opportunity. Such projects should only be undertaken within the context of adequate, clearly defined management controls. Standards for system design, acquisition, testing, implementation, and project oversight are vital to control the risk and best assure the success of such projects.
Recommendation:
In order to best assure quality and success in all the GDOT's systems initiatives, a set of standards for conducting the major phases of such projects should be defined and strictly followed. Such standards should include the processes and deliverables associated with:
Defining functional requirements, Developing detail design specifications, Developing user procedures, Training of user management and staff, Establishing testing procedures, Acceptance criteria, Implementation procedures, and Providing on-going senior management oversight and formal approval at key milestones throughout the project.
Management Response
The Department concurs with the recommendation that standards and procedures to guide the development and management of the major information system initiatives proposed for fiscal year 1998 is most desirable. To this end, the Department has been and is continuing to participate in an Information Technology Policy Council Subcommittee on Development Methodology. This committee has developed and released an FRI to solicit documentation from several vendors for evaluation and ultimately selection of a development methodology that can be used, at some level, by all state agencies to plan and manage information system initiatives. The Subcommittee's time table is the evaluation of vendors and the
F-63

-----------State of Georgia-----------
Fndings and Quesnoned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
selection of a methodology by late spring 1997 with implementation to begin in July 1997. The Department is actively considering being one of the pilot agencies utilizing the selected methodology. It is this methodology that will be used to plan and manage the information systems proposed for initiation in FY-98.
Lack of Standards for Operation and Support of GDOT Applications Finding Control Number 484a-97-02
There are no documented standards describing procedures or minimum requirements for many of the functions associated with supporting and operating the information systems of the GDOT. Functions lacking standards and procedures include adequate separation of duties, programming and problem management, application program changes and testing, job scheduling and application documentation. In many cases, GDOT departments have been given, or have assumed, the roles of acquiring and supporting the information systems used in their offices. However, users have not been given appropriate definition of the responsibilities and minimum requirements that are fundamental to assuring that systems are adequately managed.
Recommendation:
In order to have confidence that all systems are being administered and managed at an adequate level, management's intent regarding standards of operation must be documented and communicated throughout the GDOT. The GDOT should develop standard operating procedures for the support and operation of all systems. These procedures should include functions and responsibilities associated with:
Adequate separation of duties, Programming and problem management ofGDOT application systems, Testing and approval of changes to application programs, Assuring that all required application processing is successfully scheduled and executed, and Maintaining technical and user documentation at a current level.
Management Response
The Department concurs that there is a need for documented standards and procedures for the operation and support of Department applications. The existing informal approach to standards and procedures will not be effective as larger and more complex applications are developed and brought on line over the next several years. The implementation of a methodology framework in July of 1997 will provide a foundation and facilitate development of formal standards and procedures.
Lack of Performance and Management Reporting Finding Control Number 484a-97-03
Within the Office of Systems Development (OSD), there is no on-going reporting of OSD projects or key indicators of the overall performance of the DECNAX computer system network which OSD supports for GDOT.
Measurement and reporting of performance indicators provide management with early indications of negative trends in the quality of service and allow timely corrective action. In addition, such reporting is necessary for evaluating system requirements and organization of staff resources.
F-64

----------State of Georgia----------
Fuldings and Questioned Costs
For the Fiscal Year Ended Jme 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Recommendation:
OSD should begin tracking and regularly reporting the status ofOSD projects and appropriate indicators of performance.
These performance indicators should include:
system utilization and availability, program failures, reported and outstanding problems, system outages, and the status of significant OSD projects (i.e., equipment upgrades, disaster recovery planning, etc.)
Management Response
The Department concurs that there is not a formal reporting of key indicators of overall system performance. However, there is consistent informal reporting of the system performance and network availability. The connection of all computing devices to the local and wide area network allows customers immediate feedback on problems with the central servers and/or the network. A more formal, routine reporting of operational performance criteria will be developed as work begins to implement the Department's strategic plan for developing a comprehensive transportation information system.
Inadequate Tape Backup Procedures Finding Control Number 484a-97-04
The current off-site backup tapes are not adequate to assure a timely recovery of all systems and applications in the event of a catastrophe in the data center.
The GDOT's Office of Systems Development (OSD) creates copies of its data and programs on a daily and a staggered, weekly schedule. Approximately 32 "weekly" backups are created at various times throughout the week. All the current week's backups are sent off-site on Friday morning, and remain off-site for two weeks. It is common that one or more of the prior week's backup tapes are prematurely returned from the off-site vault to the data center, in order to retrieve one or more files.
Recovery of data center systems from an incident occurring in the mid- or latter part of the week, would require several days of information be recreated or recaptured from source documents. For any files which had been prematurely returned to the data center, the recovery could require two weeks of re-creation or possibly not be available.
Recommendation:
The integrity of the off-site backups would be absolutely essential to the recovery from a major catastrophic incident involving the data center. OSD should improve procedures over the administration of off-site backups to assure that adequate copies are maintained at the off-site location. Procedures should be established to assure that off-site copies are not returned to the data center until scheduled or until replaced by a valid, more current version.
In addition, the OSD should transfer the "weekly" backups to the off-site vault each day, and consider rotating the daily "incremental" backups in order to better assure the successful recovery of its systems.
F-65

- - - - - - - - - - S t a t e of GeorBia - - - - - - - - - -
Fndings and Questioned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Management Response
In November of 1996, Systems Support changed the method used to accomplish the daily (incremental) and weekly backups. Instead of using the older technology tape drives, the backup was implemented on new 4GB tapes that are using the TL812 Tape Library System that was purchased in 1996. The weekly backups are now all accomplished on Saturday and Sunday and a duplicate tape is created that is then taken to off-site storage on Monday. This allows the Department to maintain a copy on site for self-inflicted data loss as well as a copy off-site for potential disaster recovery. This has worked well for about three weeks and is expected that it will for the foreseeable future. This modification of procedures and technology addresses the issue with the weekly (image) backups. These procedures will be similar on new NT systems and UNIX systems that the GDOT operates.
The daily backups will require additional work and new procedures. This will be addressed in the late spring or summer of 1997. The most probable technique to solve this problem will be to create two tapes for the incremental backup, one that is sent off-site daily and one that is kept at the General Office.
Lack of Planning for Year 2000 Finding Control Number 484a-97-05
The GDOT has not performed an assessment of the impact that the century change will have on existing systems and applications. Organizations such as the GDOT, with older, internally developed systems, are at increased risk and face greater difficulty in making the changes to accommodate the year 2000. Most of the existing systems and applications are expected to be in operation in the year 2000.
Recommendation:
The GDOT should begin immediately to assess the impact of the coming century upon existing systems. The GDOT should establish projects and a schedule for accomplishing the upgrade or replacement of any system or application determined not to be compliant with the new century. These projects are likely to require a significant effort over several years, and should be given serious management attention.
Management Response
The Department concurs that the coming century change has the potential to create significant difficulty and the initial planning steps have been taken. As an element of our efforts to assess the potential impact on the Department of the year 2000, we are participating in an Information Technology Policy Council Subcommittee to solicit consultants interested and capable of assessing the impact on State Agencies of the century change. The current time table is to have a consultant selected and working by March 10, 1997. The Agency assessments are to be completed by June 30, 1997. A second RFP will then be used to select consultants to actually do the necessary software conversions. The goal is to have conversions completed by December 31, 1998. In addition, all senior managers have been notified of this issue and discussions are on going with the American Association of State Highway and Transportation Officials, from whom the Department licenses a mission critical application, regarding what steps their contractor is taking to insure the application will be able to function as we approach and pass the century change. As new projects are being considered, a review for Year 2000 issues will take place.
Lack of Disaster/Contingency Plan for GDOTs Data Center Finding Control Number 484a-97-06
There is no documented plan to recover the operation of the GDOT data center or the systems operating there. In the event of a major disruption (i.e., fire) in the GDOT data center, it is unlikely that a timely recovery ofthe operation of the data
F-66

----------State of Georgia----------
Fndings and QucsHoncd Costs
For the FISCal Year Ended June 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
center and the resident systems could be accomplished. Applications such as BAMS and Permits and Enforcement are essential to much of the daily operation of the GDOT. A major failure or outage involving these applications would greatly reduce the GDOT's ability to effectively operate.
Recommendation:
The DOT should begin immediately to develop a disaster recovery plan for the mission critical systems operating in the GDOT's data center. Once developed, the plan should be regularly tested to assure that the plan and its execution are adequate to achieve the intended results. This plan should define the recovery criteria and objectives (i.e., recovery elapsed time, transaction volumes, etc.) of each of the systems and the technology and personnel resources required. The plan should provide for replacement equipment and alternate site operation of computers and related equipment. Additionally, the responsibilities should also be defined for developing and maintaining the plan.
Management Response
The Department has not maintained a formal disaster recovery plan, however, the Department has maintained off-site storage of back-up data tapes that would enable the return to operation with a minimum of lost data. Recent data integrity planning has included the off-site storage of both the full disk (image) backups and the daily incremental backups. We currently only store the weekly image backups off-site. These tapes are produced for all enterprise server disks.
The Department will begin the development of a formal "Disaster Recovery Plan" given the increasing dependence on computers for project design, letting and the issuing of truck weight permits. An RFP will be developed to obtain a qualified consultant with the goal of having a plan by the end of 1997 providing funding is available.
ACCESS AND PHYSICAL SECURITY
General controls also include physical security over system hardware and security over data, programs and other software such as system utilities. Effective access security and logical security are necessary to safeguard the information of the department from unauthorized additions, deletions or modifications. In a distributed environment where users are accessing centralized files and data through PC's, it is essential security policies and procedures are properly established, communicated and enforced. The following findings indicate security controls weaknesses.
Lack of System Access Security Finding Control Number 484a-97-07
The procedures for controlling access to GDOT systems are not formally established and are not consistent with recognized good practice. Adequate controls should be in place to assure that only authorized access and use of information is allowed. Current conditions do not provide effective access controls. For example:
Users are allowed to share logon accounts and passwords when accessing GDOT systems, thereby reducing individual user accountability.
Procedures are not in place to assure the immediate deletion or reassignment of terminated or transferred personnel user-IDs.
There is no threshold beyond which repeated failed logon attempts will cause the user account to be suspended, thereby preventing attempted unauthorized access.
No one routinely reviews audit logs of the VAX cluster to detect and act upon possible attempts to circumvent or violate the authorized use of the systems.
F-67

----------State of Georgia----------
Fndings and Questioned Costs
For the Hscal Year Ended Jme 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
There are no GDOT policies and procedures establishing the roles and responsibilities of users and system administrators in maintaining the safety and integrity of the GDOT systems, including remote access and telecommunications.
Recommendations:
The GDOT should establish, and communicate to all personnel, policies and procedures to assure that the GDOT information resources are adequately protected from unauthorized use. These policies and procedures should include the following:
Require that all users of DGOT systems must have their own, unique user-ID or account, and a secret password which is regularly changed.
Require that all users abide by the GDOT's requirements regarding the protection of information resources from unauthorized access.
Instruct users on the importance of the unique user account and secret password in the GDOT's ability to maintain personal accountability, and direct all GDOT users to protect the secrecy of their passwords.
Establish the responsibility for administering security over all GDOT networks, computer systems and applications.
Define minimum standards for establishing users, granting user access to information, and monitoring the systems for indications that the access controls may be under attack or have been compromised.
The current use of shared user accounts and/or user-IDs should be discontinued.
The user accounts of all transferred or terminated personnel should be deleted.
Management Response
The Department concurs that it has not in the past had formal procedures for controlling access to its systems. It has however, had consistent informal procedures within the Office of Systems Development's Systems Support Section to govern the granting of access. Requests for accounts and additional access must come from Office Heads or District Engineers or their Assistants. The shared login accounts and passwords are a carry-over from earlier days that are being eliminated as resources allow. There is a threshold within the VMS operating system to suspend login after 5 failed attempts. Audit logs have been reviewed on a periodic basis and there is no history of attempts to circumvent authorized use of the system. All users are greeted with a statement regarding user responsibility each time they login. The formalization of a security policies and procedures has been discussed and will be pursued during the coming year as additional resources are brought onboard. These policies and procedures will be posted on the Department's Intranet providing easy access Department wide.
Inadequate Physical Controls over Data Center Finding Control Number 484a-97-08
There are no systems to detect and respond to fire, smoke, water, and extreme temperatures in the GDOT data center. GDOT personnel normally leave the data center by 6:00 PM and the facility is unoccupied during weekday evenings and on weekends. A fire or plumbing leak could potentially destroy equipment and data center facilities with no warning. Extreme temperatures, resulting from a malfunction of heating and air conditioning equipment, could also result in significant damage to equipment. The resulting loss in availability of systems could be costly, both in terms of replacement costs and the impact on the operation ofthe GDOT.
F-68

- - - - - - - - - - S t a t e of GeorBia - - - - - - - - - -
Findings and QucsNoned Costs
For the FISCal Year Ended Jme 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Recommendation:
The GDOT should take steps to better reduce the risk of damage to the data center from smoke, fire, water, extreme temperatures, etc. Automated sensing and alarm systems(s) and procedures should be implemented to detect and respond to indications of fire, water, and extreme temperatures in the data center.
Management Response
The Department concurs that there is now a need for enhanced fire, water, smoke, and extreme temperature detection and an appropriate response procedure in the Data Center. This was not the case until the spring of 1996. Until then, a person was working in the Data Center five days per week 24 hours per day. There was also a staff member in the Data Center approximately 12 hours per day on both Saturday and Sunday. Now that the work schedule has been changed there are extended periods of time when no one is in the Data Center and enhanced detection of fire, smoke, water, and extreme temperatures is critical. In order to address this need the Georgia Building Authority is assisting in obtaining the necessary detection systems. GBA personnel have made a site visit to review the needs and at this time plan to do a supplemental agreement to their contract for replacement of the Fire Alarm System in the DOT Building to provide additional detection capability in the Data Center. These systems will automatically alert GBA personnel as to the type of problem. GBA will then respond appropriately. If work can proceed as currently planned detection capabilities should be in place in the Data Center by June 30, 1997. APPLICATION CONTROLS
Application controls are manual and automated controls that help assure completeness and accuracy of an application's data input, processing and output. They include procedures effecting an application's operating efficiency and the integrity of the application's data. Application controls are found in programming, operations and user areas.
Lack of Application Documentation Finding Control Number 484a-97-09
We reviewed application controls for the several key applications within the GDOT. Included were the permits and citations applications and the applications used by the Offices of Planning and Programming. In both cases current, reliable application documentation was nonexistent. In the cases of permits and citations, we interviewed the one programmer/analyst that understands and maintains the applications and reviewed COBOL program source code to establish a basic understanding of the applications and verify they were operating as intended. These applications are maintained by personnel in DOAS's Computer Services Division (CSD).
Transaction flow and application information was obtained from interviews with personnel in the Offices of Planning and Programming to develop sufficient understanding to assure the application supporting these functions was operating as intended. This application is maintained by the users in DOT's Offices of Planning and Programming.
In both cases the lack of current application documentation and as noted in the general controls findings, the lack of policies and procedures to maintain current documentation: most likely increases the time and costs of maintaining these applications. increases the risk that, if necessary, other programmers could not easily be trained to maintain the applications or
apply emergency fixes. increases the risk that erroneous or unauthorized program code could be inserted.
F-69

----------State of Georgia----------
Fndings and Questioned Costs
For the Hscal Ycar Ended Jmc 30. ICJ7
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Recommendation:
We recommend that GDOTs Office of Systems Development require all applications operating in the GDOT (regardless of who maintains the application) are adequately documented. Application software is an asset of GDOT and should be safeguarded. A minimum safeguard is documentation that is written according to appropriate standards and maintained as the applications are updated or as changes or enhancements are applied.
Management Response
The Department concurs that more formal and rigorous documentation is necessary for critical applications. To this end, the Office of Systems Development will begin the development of a standard, for application documentation. This standard should become a part of the overall Application Development Methodology as recommended in Finding Control Number 484a-97-02. This standard will also be posted to the Department's Intranet site for easy access. We will have a draft standard by early May I997 and a final standard by early September I997.
Lack of Program Change Controls - Permits and Citations Applications Finding Control Number 484a-97- I0
We reviewed program change controls for the permits and citations applications. The applications are maintained by DOAS's Computer Services Division (CSD). We noted there were no program change controls in place to assure changes were applied correctly to test versions of programs and migrated to production. The programmer was not maintaining documentation of changes made. Users were not documenting change requirements. Consequently, billing charges to the user department for program maintenance for fiscal year 1996 which were three times the amount budgeted, could not be substantiated by CSD. Recommendation:
We recommend that GDOT's Office of Systems Development (OSD) develop and implement written change control procedures to ensure that the program changes are properly made in a test environment and migrated to production. Changes should be documented to provide evidence of compliance with the user's specifications. Documentation of changes should also be sufficient to substantiate billings and provide enough information to keep application documentation current.
Management Response
The Department concurs that more rigorous change control and documentation procedures need to be implemented regarding not only the Permits and Enforcement application but also all applications requiring change by an outside entity that incurs cost to the Department. The Office of Systems Development will work with the Office of Permits and Enforcement to develop and implement change control procedures that ensure application changes are properly tested and documented prior to placement into production. Draft procedures should be completed by June 30, 1997.
OPERATIONAL INEFFICIENCIES- Permits and Citations Applications
Management of the Office of Permits and Enforcement (P&E) indicated several problems they as users have regarding the operation of the permits and citations applications. These items represent basic inefficiencies. In some cases the inefficiencies are resulting in increased costs, lost time and the need for additional staff. The next five findings identify operational inefficiencies.
F-70

----------State of Georgia----------
Fif\dirlgs and Questioned Costs
For the FISCal Ycar Ended Jmc 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Lack of PC Support - Permits and Citations Applications Finding Control Number 484a-97- I 1
To reduce dependency on the central VAX system and to reduce the risk of the inability to issue citations due to power outage and system down time, there is a need to provide the ability to issue citations on PC's at the weigh stations. This requires installation ofPC's, PC software and emulation software. The target date for implementation of the PC software for citations is January 1, 1997. Management of the Permits and Enforcement Office indicated they have experienced delays with getting PC's and emulation software installed because technical support personnel in the district offices already have full schedules.
Recommendation:
Permits and Enforcement needs PC software and hardware to issue citations and permits when the VAX system may not be available. We recommend installation of this software as soon as possible. We also recommend OSD be advised of support needs to coordinate additional technical support personnel when needed.
Management Response
The Department concurs that there are operational advantages in the migration of the Permits and Enforcement application from its current central server/terminal architecture to a PC client/server style architecture. The first phase of this longer range effort has been under way for approximately a year. This effort will convert a portion of the application to run on a local PC client. Data will be up-loaded and downloaded from the central server several times per day. This application is to be completed in first quarter of 1997. Testing of the new application will begin as soon as it is ready with a pilot project implementation in late spring at one or two Weigh Stations. If the pilot goes smoothly the remaining Weigh Stations will be brought on line by the end of the summer. Work on a true client/server graphical user interface application could begin as early as January 1998 with implementation targeted for after the tum of the century.
Lack of Direct Fax Capability- Permits and Citations Applications Finding Control Number 484a-97-12
Ninety-eight percent of all permits issued, and I00 percent of single trip permits are faxed to carriers when issued. Although the permits are issued on the VAX cluster computers, there is no direct fax capability from the VAX. Consequently the Office of Permits and Enforcement must print the permits and then manually fax each document to the carrier. Likewise, billing statements containing detail of the prior month's citations issued to each individual carrier are usually faxed at the request of the carrier. Billing statements can average over a hundred pages per carrier making the process time-consuming.
Recommendation:
We recommend OSD provide direct fax capability from the VAX cluster to carriers. This would save time and eliminate the need to print over 1,000 permits per day, as well as many ofthe monthly bills.
Management Response
The Department concurs that direct fax capability would enhance the efficiency of Permits and Enforcement's permit issuing operation. The Office of Systems Development will work with the Office of Permits and Enforcement to determine the cost and resources necessary to implement this capability with a goal of production by the end of 1997.
F-71

----------State of Georgia----------
Fndi1gs and Questioned Costs
For the FISCal Ycar Ended Jrnc 30. 1997
DEPARTMENT OF TRANSPORTATION- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Automated Permits - Permits Application Finding Control Number 484a-97-13 The department issues a large number of redundant permits to the same carriers each day. Currently the permits are data-entered into the permits application, printed and faxed to the carrier. Recommendation: We recommend OSD research the feasibility of allowing external carriers limited access to the permits application to automatically generate permits. This could be accomplished by providing carriers with secured access to limited input screens to issue their own permits and routing information. This would greatly reduce the DOT overhead associated with issuance of permits. Management Response The Department concurs that there are potential improvements in operational efficiencies in providing carriers with secured access to limited input screens to issue their own permits and routing information. However, there are critical security and validation issues that must be studied to determine if carriers direct access is appropriate in the existing application environment. Research into this issue could possibly begin in late I 997. Retention of Annual and Bulk Permits On-Line- Permits Application Finding Control Number484a-97-14 Like annual permits, bulk permits are also good for one year and may be reissued after one year. Annual and bulk permits are moved off-line after one quarter. This presents a difficulty for permits and enforcement personnel attempting to reference or retrieve an annual or bulk permit. Recommendation: We recommend that OSD evaluate the feasibility of retaining annual and bulk permits on-line for one year. Management Response The Department has existing disk space that will allow annual and bulk permits to remain online for a one year period. There are however, issues with the internal operation ofthe permit application regarding the storage of permits that must be resolved in order to implement retaining annual and bulk permits online for a year. A review of the changes required will be undertaken with the application support person and a schedule developed for implementation of one year online storage for annual and bulk permits. The goal is to have this capability available as soon as possible.
F-72

- - - - - - - - - - S t a t e of Georgia----------
Fndngs and Questioned Costs
For the FISCal Ycar Ended Jmc 30. 1997

SUBSEQUENT INJURY TRUST FUND

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-489-97-01

For the year under review, internal accounting control procedures of the Subsequent Injury Trust Fund did not provide for an adequate separation of duties in the performance of certain accounting functions and related procedures in the following control categories:

(I) Cash and Cash Equivalents

(4) Employee Compensation

(2) Revenues/Receivables/Receipts

(5) General Ledger

(3) Expenditures/Liabilities/Disbursements

(6) General Fixed Assets/Property Management

This condition was a result of management's decision to limit the number of administrative staff made responsible for accounting functions.

Management should continue to review the accounting procedures in place. To the extent possible and practical, management should design and implement procedures which would enhance segregation of duties to the above categories.

Management Response

Our agency consist presently of 27 positions. To separate accounting functions in such a small agency with a few positions would not be cost effective.

F-73

---------State of GeortJia - - - - - - - - -
Fndhgs and Que.sHoned Costs
For the fLSCal Year Ended Jme 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY(*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ORGANIZED RESEARCH CONDUCTED BY RESIDENT INSTRUCTION (RI)
ALLOWABLE COSTS/COST PRINCIPLES - RESEARCH AND DEVELOPMENT CLUSTER Unallowable Olympic Costs Finding Control Number FA-503-97-01
(I) Condition:
Questioned costs of $98,219 represents mutually agreed-to-be-unallowable costs associated with the auditee's facilities (buildings, equipment, plant maintenance, etc.) during the 1996 Summer Olympics. Our audit disclosed that the auditee did not incorporate all final adjusting entries in developing its proposal submission to the government. As a result, the auditee did not exclude all space adjustments to recognize the use of its buildings and related costs during the Olympics. We believe the auditee included the unallowable costs in its proposal due to an inadvertent oversight. This, in our opinion, was an isolated incident. The auditee has adequate procedures for screening unallowable costs and we consider its accounting system adequate. However, because these costs were determined to be mutually agreed-to-be-unallowable (see comments below) prior to submission of this proposal, they are subject to the level two penalty pursuant to FAR 42.709-1 (a)(2) and DFARS 231.700a2-l(a)(2). In addition, since the auditee included the unallowable costs in its proposal, we believe that it is in technical noncompliance with CAS 505-40(a).
(2) Criteria:
The questioned costs represent the costs associated with the use of the auditee's facilities by the 1996 Summer Olympics during the period I July 1996 through 15 September 1996. By a letter dated 5 August 1992 the local Administrative Contracting Officer (ACO) requested assurance from the auditee that no costs associated with the 1996 Summer Olympics be charged to F&A cost pools allocated to federally sponsored projects. The auditee responded with a letter dated 14 September 1992 providing such assurance. In addition, the auditee provided details of its specific plans, policies and procedures for ensuring that no Olympic costs would be charged to federally sponsored projects. However, our audit disclosed that, although the auditee established specific accounts and detailed policies and procedures for identifying and segregating Olympic costs, it did not exclude all such costs. The detailed calculations of the unallowable costs are too voluminous to include in this report. The details are in our work papers and are available for review by the contracting officer upon request.
(3) Recommendations:
We recommend that closely following GIT/GTRC establish policies and procedures for incorporating fmal adjusting entries and review by management to ensure all adjustments have been incorporated, prior to submitting its incurred cost proposal to the government will prevent inadvertent oversight as noted above. In addition, since the auditee was able to quantify the impact of CAS noncompliant condition in this audit, we recommend the contracting officer not require the auditee to submit a cost impact proposal per FAR 52.230-6(a)(3)(b)(3).
Management Response
GIT/GTRC concurs with the finding and recommendation identified above concerning the omission of an adjustment to properly recognize the costs associated with the use of certain academic and administrative facilities in the FY97 Experienced Rate Study Proposal.
As indicated above, GIT/GTRC developed and implemented specific plans, policies, and procedures to separately account for Olympic costs to make sure that such costs would not be charged to federally sponsored projects. These policies and procedures provided for separate accounting for Olympic expenses where possible, accounting for residence halls and dining
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-74

---------State of Georaia - - - - - - - - -
Fndilgs and QuesNoncd Costs For the Hscal Year Ended Jme 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY (*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
facilities as part of auxiliary enterprises, and appropriate adjustments to other incurred costs to assure the proper cost accounting, including the adjustment of space utilization for academic buildings where needed. All of these procedures were incorporated into the FY96 and FY97 projected rate studies and the FY 96 experienced rate study which were submitted to federal agencies for consideration and audit, with no exceptions being noted concerning these policies and procedures. For the FY97 experienced rate study, a space utilization study was performed in early 1997 to document the space use of buildings on campus. During the compilation of the details of this FY97 space study, proper recognition of Olympic space utilization in academic and administration buildings during July and August of 1996 was omitted inadvertently. Upon discovery of this omission, GIT/GTRC did prepare and provide all information required to correct this omission.
Existing internal control procedures include final review steps that are performed prior to the release of rate study proposals. These procedures will be revised to specifically incorporate the identification of non-recurring adjustments of this nature in the future.
ALLOWABLE COSTS/COST PRINCIPLES - RESEARCH AND DEVELOPMENT CLUSTER Other Questioned Costs Finding Control Number FA-503-97-02
(1) Condition:
Questioned costs of $20,220 represent an upward adjustment. The questioned costs represent understated allocable administration and general costs and non-allocable GTRC repair and maintenance costs. Because the questioned costs are a result of the auditee's understatement of an allowable cost and non-allocable expenses, they are not subject to penalty.
(2) Criteria:
Our audit of the proposed F&A costs disclosed the auditee overstated its recorded modified total cost base for allocating administration and general costs. The auditee overstated its base by $4,182,202 ($3,000,000 in instruction costs and $1, 182,202 in computer costs). In addition, the auditee included $44,654 in GTRC repair and maintenance costs as part of its sponsored projects administration provided for in the OMB Circular A-21, Section F.7. In addition, the proposed GTRC costs are not costs incurred for common or joint objectives, and, therefore, do not meet the defmition of F&A cost activities specified in OMB Circular A-21, Section C.4. The detailed calculations of the questioned allocable administration and general costs and non-allocable GTRC repair and maintenance costs are too voluminous to include in this report. The details are in our work papers and are available for review by the contracting officer upon request.
(3) Recommendations:
We recommend the auditee review its proposed F&A costs prior to submission of the incurred cost proposal to ensure that it has properly reflected the recorded costs and excluded non-allocable expenses. Also, as previously stated, the following of established policies and procedures for incorporating final adjusting entries and review by management to ensure all adjustments have been incorporated, prior to submitting its incurred cost proposal to the government will eliminate inadvertent oversights.
Management Response
GIT/GTRC concurs with the finding and recommendation presented above and will take appropriate action to improve fmal review procedures that are performed prior to submission of rate proposals.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-75

---------State of GeortJia - - - - - - - - -
Fndi1gs and QuesHooed Costs For the FISCal Year Ended Jme 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY(*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ORGANIZED RESEARCH CONDUCTED ON CAMPUS BY GEORGIA TECH RESEARCH INSTITUTE (GTRI)
ALLOWABLE COSTS/COST PRINCIPLES - RESEARCH AND DEVELOPMENT CLUSTER Unallowable Olympic Costs Finding Control Number FA-503-97-03
(1) Condition:
Questioned costs of$12,657 represent mutually agreed-to-be-allowable costs associated with the use ofthe auditee's facilities during the 1996 Summer Olympics. As stated in Finding Control Number FA-503-97-01, since the costs associated with the 1996 Summer Olympics were determined to be mutually agreed-to-be-unallowable prior to submission of this proposal, they are subject to the level two penalty pursuant to FAR 42.709-l(a)(2) and DFARS 231.700a2-l(a)(2).
(2) Criteria:
The questioned costs represent the expenses associated with the use of the auditee's facilities during the Olympics that are applicable to on campus activities ofGTRI. The detailed calculations of the unallowable costs are too voluminous to include in this report. The details are in our work papers and are available for review by the contracting officer upon request.
(3) Recommendations:
For our audit recommendations with regard to unallowable Olympic costs, see Finding Control Number FA-503-97-01.
Management Response
GIT/GTRC concurs with the finding and recommendation identified above concerning the omission of an adjustment to properly recognize the costs associated with the use of certain academic and administrative facilities in the FY97 experienced Rate Study Proposal.
This condition is caused by the same problem identified above in Finding Control Number FA-503-97-01. Existing internal control procedures include final review steps that are performed prior to the release of rate study proposals. These procedures will be revised to specifically incorporate the identification of non-recurring adjustments of this nature in the future.
ALLOWABLE COSTS/COST PRINCIPLES - RESEARCH AND DEVELOPMENT CLUSTER Other Questioned Costs Finding Control Number FA-503-97-04
(I) Condition:
Questioned costs of $23,585 represent an upward adjustment. The questioned costs represent understated allocable administration and general costs and non-allocable GTRC repair and maintenance costs. See Finding Control Number FA-503-97-02 for additional comments.
(2) Criteria:
The questioned costs are due to the auditee's overstatement of its base for allocating administration and general costs, and non-allocable GTRC repair and maintenance costs. See Finding Control Number FA-503-97-02.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-76

--------State of Georgia--------
Fndngs and Questioned Costs For the FISCal Year Ended Jme 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY (*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
(3) Recommendation:
For our audit recommendations with regard to the questioned allocable administration and general costs and non-allocable GTRC repair and maintenance costs, see Finding Control Number FA-503-97-02.
Management Response
GIT/GTRC concurs with the finding and recommendation presented above and will take appropriate action to improve final review procedures that are performed prior to submission of rate proposals.
ORGANIZED RESEARCH CONDUCTED OFF CAMPUS BY GEORGIA TECH RESEARCH INSTITUTE (GTRI)
ALLOWABLE COSTS/COST PRINCIPLES - RESEARCH AND DEVELOPMENT CLUSTER Unallowable Olympic Costs Finding Control Number FA-503-97-05
( 1) Condition:
Questioned costs of $2,474 represent mutually agreed-to-be-unallowable costs associated with the use of the auditee's facilities during the Olympics. As stated in Finding Control Number FA-503-97-01 since Olympic costs were determined to be mutually agreed-to-be-unallowable prior to submission of this proposal, they are subject to the level two penalty pursuant to FAR 42.709-1(a)(2) and DFARS 231-700a2-1(a)(2).
(2) Criteria:
The questioned costs represent the expenses associated with the use of the auditee's facilities during the Olympics that are applicable to off campus activities of GTRI. The detailed calculations of the unallowable costs are too voluminous to include in this report. The details are in our work papers and are available for review by the contracting officer upon request.
(3) Recommendations:
For our audit recommendations with regard to unallowable Olympic costs, see Finding Control Number FA-503-97-01.
Management Response
GIT/GTRC concurs with the finding and recommendation identified above concerning the omission of an adjustment to properly recognize the costs associated with the use of certain academic and administrative facilities in the FY97 Experienced Rate Study Proposal.
This condition is caused by the same problem identified above in Finding Control Number FA-503-97-01. Existing internal control procedures include fmal review steps that are performed prior to the release of rate study proposals. These procedures will be revised to specifically incorporate the identification of non-recurring adjustments of this nature in the future.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-77

--------State of GeorfJia - - - - - - - -
Fndi1gs and Quc.sHoned Costs For the FLSCal Year Ended Jme 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY (*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS ALLOWABLE COSTS/COST PRINCIPLES - RESEARCH AND DEVELOPMENT CLUSTER Other Questioned Costs Finding Control Number FA-503-97-06 (I) Condition: Questioned costs of $23,312 represent an upward adjustment. The questioned costs represent understated allocable administration and general costs and non-allocable GTRC repair and maintenance costs. See Finding Control Number FA-503-97-02. (2) Criteria: The questioned costs are due to the auditee's overstatement of its base for allocating administration and general costs, and non-allocable GTRC repair and maintenance costs. See comments in Finding Control Number FA-503-97-02. (3) Recommendations: For our audit recommendations with regard to the questioned allocable administration and general costs and non-allocable GTRC repair and maintenance costs, see Finding Control Number FA-503-97-02. Management Response GIT/GTRC concurs with the finding and recommendation presented above and will take appropriate action to improve final review procedures that are performed prior to submission of rate proposals. REPORTING -RESEARCH AND DEVELOPMENT CLUSTER Reports Not Submitted in a Timely Manner Finding Control Number FA-503-97-07 Statement of Condition Numerous reports required by grant and contractual agreements entered into by GTRC and various Federal agencies were not filed in a timely fashion, as specified in the grant and contractual agreements. The following is a listing of reports not filed in a timely fashion for the grants and contracts tested by us.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-78

--------State of GeorfJia -----------
Fndhgs and QucsHoncd Costs
For the Fiscal Year Ended Jme 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY (*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

Agency

CFDA No.

Contract No.

GTRC/GIT Ref. No.

Report

Report Due

No.

Date

Date Mailed

U.S. Army

98.0FA DASG60-95-C-OOO I

A-986I

Monthly Status Report/AOOI

88 3/25/97 3/26/97

U.S. Air Force 97.0FA F09603-9I-G-0096-003 A-9798

Conference Agenda/AOO I

36 1017/96 10/I6/96

U.S. Air Force 97.0FA F08635-92-C-0050

A-1000/ A-I 50 I

Conference Minutes/A007

24 6/24/97 7/3/97

U.S. Navy

12.300 NOOO I4-95-I-0539

E-I8-X28

Performance/ Technical/Letter Report

2

2/28/97 4/22/97

U.S. Dept. of Defense

I2.0FA MDA972-93-I-0030

A-953I

Quarterly R&D Status Report

12

8/4/96 9119/96

U.S. Dept. of Defense

12.0FA MDA972-93-I-0030

A-9531

Quarterly R&D Status Report

15

5/5/97 5/6/97

U.S. Dept. of Defense

I2.0FA 96-7073

A-5121

Progress, Status and Management Report/AOOI

9

8115/96 8/16/96

Criteria

The reporting compliance requirement requires that submission of certain reports in accordance with the grants and contracts entered into by GTRC which contain specific dates and deadlines for submission. Frequently, these reports are the only required output of a given contract and, consequently, need to be filed in a timely fashion.

As all of the reports listed above were ultimately submitted, the only effect of untimely filing is the possible delay of other projects which were related to GTRC and GIT grants and contracts. No other effect is noted with respect to GTRC and GIT.

The typical cause of untimely filing, as stated by to us by GTRC and GIT personnel, was the unavailability of data necessary for the completion of the required reports.
Recommendation
All efforts should be made by GTRC and GIT to ensure that all required contractual deliverables are submitted to the contracting agencies in a timely fashion.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-79

---------State of GeorfJia - - - - - - - - -
Fndi1gs and Questioned Costs
For the Hscal Ycar Ended Jmc 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY(*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Questioned Cost As all of these reports were ultimately submitted, no costs are questioned. Management Response The following efforts are being made to ensure that all required contractual deliverables are submitted to the contracting agencies in a timely fashion: The Office of Contract Administration (OCA) reviews all RFPs and solicitations prior to submission of a proposal for a
sponsored project. Specifically, contractual deliverable requirements are reviewed with the proposed Project Director/Principle Investigator (PD/PI) prior to proposal submission and again, if needed, prior to acceptance of a sponsored agreement. As soon as a new sponsored project is received, OCA reviews the agreement and prepares (for the PD/PI) a listing, including the dates that items are due, of all contractually required deliverables. This deliverable schedule is presented to the PD/PI for review, and they are asked to sign-off on a copy of the schedule to indicate concurrence. This record is then retained in the permanent contract file. OCA prepares and distributes for all campus units (on a monthly basis) a report of deliverables due the following month to contracting agencies under all sponsored research projects. Although the PD/PI receives a complete list of deliverables required at the start-up of the project, this monthly list is provided as a reminder of upcoming items due. More recently, all project deliverable information can be easily accessed by each PD/PI and by all levels of management within a unit via a web-based query tool. OCA also prepares and distributes to all campus units (on a quarterly basis) a report of overdue deliverables for all sponsored research projects. This is a list of all required deliverable items not known by OCA to be satisfied with or submitted to the sponsoring agency. The report is copied to members of upper administration, including Deans, School Chairs and Lab/Center Directors. OCA initiates special follow-up action by way of memos (sample attached) directly to PD/PI's for any deliverable items(s) that are approximately 60 or more days overdue, with special attention given to oldest items. Campus newsletter articles have been issued to emphasize the importance of timely deliverable submission or the need to seek timely relief (extension of due date) from sponsors for required deliverables.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-80

---------State of GeorfJia - - - - - - - - -
Fndi1gs and Questioned Costs For the FISCal Year Ended Jme 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY (*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Log and Track Required Reports Finding Control Number FA-503-97-08

Agency

CFDANo.

Contract No.

GTRC/GIT Ref. No.

U.S. Air Force 97.0FA

F19628-95-C-0002

A-9799

Preparation of Program Review Material

NASA

43.002

NAGW-2753

E-21-687

Annual Report covering 10/96-9/97

U.S. Air Force 97.0FA

F09603-89-G-0077003 A-9093

System/Segment Specification/AOOD

Statement of Condition

Required reports are logged and tracked by GTRC and GIT on a schedule of deliverables. GTRC and GIT did not include the above reports on this schedule. Therefore, submission of these reports is not being monitored.

The reporting compliance requirement requires the submission of certain reports in accordance with the grants and contracts entered into by GTRC.

GTRC and GITs system for ensuring timely and proper filing was not operating adequately with the respect to these reports.

Human error caused these reports to be omitted from the schedule of deliverables.
Recommendation
GTRC and GIT should develop a control to ensure all required reports are input into the schedule of deliverables.
Questioned Costs
No costs are questioned with respect to this fmding.
Management Response
The required reports mentioned in this finding were inadvertently omitted from the deliverable schedules prepared by the Contracting Officers. The deliverable schedules for the specific projects cited have been corrected/revised. The Division Manager responsible for the preparation of deliverable schedules is working with the Contracting Officers to re-emphasize the importance ofpreparing a complete and accurate listing of all contractually required deliverables. (*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF
THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-81

-------State of GeorfJia - - - - - - - -
Fndilgs and Questioned Costs For the fi5Cal Year Ended Jme 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY(*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Log and Track Required Reports Finding Control Number FA-503-97-09

CFDA No.

Contract No.

GTRC/GIT Ref. No.

U.S. Air Force 97.0FA

Fl9628-95-C-0002

A-9799

Interim Field Operation Reports

Statement of Condition

Required reports are logged and tracked by GTRC and GIT on a schedule of deliverables. Although the above report was submitted, GTRC and GIT did not include it on this schedule. Therefore, submission of this report has not been monitored.

The reporting compliance requirement requires the submission of certain reports in accordance with the grants and contracts entered into by GTRC.

GTRC and GIT's system for monitoring the filing required reports was not operating adequately with respect to this report.

Human error caused this report to be omitted from the schedule of deliverables.
Recommendation
GTRC and GIT should develop a control to ensure that all required and all submitted reports are input into the schedule of deliverables.
Questioned Costs
No costs are questioned with respect to this fmding.
Management Response
The required report mentioned in this finding was inadvertently omitted from the deliverable schedule prepared by the Contracting Officer. The deliverable schedule for the specific project cited has been corrected/revised. The Division Manager responsible for the preparation of deliverable schedules is working with the Contracting Officers to re-emphasize the importance of preparing a complete and accurate listing of all contractually required deliverables.

(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-82

--------State of Georgia--------
Fndhgs and Questioned Costs For the F15Cal Year Ended Jme 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY (*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Submit Required Reports Finding Control Number FA-503-97-10

Agency

CFDANo.

Contract No.

GTRC/GIT Ref. No.

Due Date

U.S. Air Force

97.0FA

F09603-91-G-0096-003

A-9798

Conference Minutes/A002

10/31196

NASA

43.002

NAGW-2753

E-21-687

Semi-annual Report covering 4/93-9/93

10/20/93

NASA

43.002

NAGW-2753

E-21-687

Semi-annual Report covering 4/94-9/94

10/20/94

NASA

43.002

NAGW-2753

E-21-687

Annual Report covering 10/95-9/96

10/20/96

U.S. Army U.S. Army

98.0FA

DAAJ09-96-D-OO 12

98.0FA

DAAJ09-96-D-OO 12

A-5327 A-5327

J-MASSIEO-IR Performance Paper (Narrative) SDD/A006/A009 J-MASSDSM Requirements Document (Narrative) SDD/A006/A009

10/25/96 11/22/96

Statement of Condition

Required reports are logged and traced by GTRC and GIT on a schedule of deliverables. Although the above reports were due to be delivered during the fiscal year ended June 30, 1997, they have not been submitted or included on the schedule of deliverables. Therefore, submission of these reports is not being monitored.

The reporting compliance requirement requires the submission of certain reports in accordance with the grants and contracts entered into by GTRC.

GTRC and GIT's system for monitoring the filing of required reports was not operating adequately with respect to these reports.

The typical cause of untimely filing, as stated to us by GTRC and GIT personnel, was the unavailability of data necessary to complete the required reports. In addition, human error caused these reports to be omitted from the schedule of deliverables.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-83

---------State of GeorfJia - - - - - - - - -
F11di1gs and QuesNoned Costs For the fiSCal Year Ended Jme 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY(*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

Recommendation

All efforts should be made by GTRC and GIT to ensure that all required contractual deliverables are submitted to the contracting agencies in a timely fashion. Also, GTRC and GIT should develop a control to ensure that all required reports are input into the schedule of deliverables.

Questioned Costs

No costs are questioned with respect to this finding.

Management Response

The Conference Minutes/A002 report associated with Contract No. F09603-91-G-0096-0033 (GTRC/GIT Project No. A-9798) was included one time on the deliverable schedule and has been delivered at least once during the term of this contract. Since this report is connected to scope of work events where exact dates are unknown, it has been OCA's procedure to not attempt to list subsequent items of this nature on deliverable schedules.

The Semi-Annual and Annual Reports associated with Grant No. NAGW-2753 (GTRC/GIT Project No. E-21-687) were inadvertently omitted from the deliverable schedule prepared by the Contracting Officer. The deliverable schedule has been corrected/revised. The Division Manager responsible for preparation of deliverable schedules is working with the Contracting Officers to re-emphasize the importance of preparing a complete and accurate listing of all contractually required deliverables.

Contrary to the finding reported, the J-MASS/EO-IR Performance Paper (Narrative) SDD/A006/A009 and the J-MASS DSM Requirements Document (Narrative) SDD/A006/A009 associated with Prime Contract No. DAAJ09-96-D-0012 [Subcontract No. SCI28-96-0006 from CAS, Inc. (GTRC/GIT Project No. A-5327)] were included on our deliverable schedule dated February I I, 1997. These particular deliverables have been deleted/modified by action from the sponsor subsequent to the period of this audit.

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Input Correct Date for Required Reports Finding Control Number FA-503-97-1 I

CFDANo.

Contract No.

GTRC/GIT Ref No.

U.S. Army

98.0FA

DASG60-95-C-OOOI A-9861

Monthly Status Report/AOOI

Statement of Condition

Required reports are logged and tracked by GTRC and GIT on a schedule of deliverables. The date mailed of the above report was incorrectly input into that schedule as March 24, 1997 when it was actually mailed on March 26, 1997. Since this report was due on March 25, 1997, it did not appear as a late submission.

The reporting compliance requirement requires the submission of certain reports in accordance with the grants and contracts entered into by GTRC.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-84

---------State of Georgia---------
Fndilgs and QuesHoned Costs For the FISCal Ycar Ended Jmc 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY (*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

GTRC and GIT's system for tracking the filing of required reports was not operating adequately with respect to this report.

Human error caused this input error.

Recommendation

GTRC and GIT should develop a control to ensure that all dates are correctly input into the schedule of deliverables.

Questioned Costs

No costs are questioned with respect to this fmding.

Management Response

Contrary to the finding reported, the mailed date for the report mentioned in this fmding was correctly entered into the deliverables tracking database as March 24, 1997. As indicated by the report transmittal letter, the deliverable was distributed to the sponsoring agency by the performing unit on March 24, 197 and copies were provided to OCA subsequent to the mailing. The actual input of the mailed date was handled by OCA's Distribution Center personnel on March 26, 1997 and appropriated documented in the deliverables file.

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Submit Required Reports Finding Control Number FA-503-97-12

Agency

CFDA No.

Contract No.

GTRC/GIT Ref. No.

Report

U.S. Army

98.0FA

DAAJ05-95-C-OO 12

A-5055

Software Requirement Specification/A006
System/Subsystem Design Specification/A007
Software Design Description/A009
System/Subsystem Design Description/AOOA
Database Design Description/AOOB
Interface Design Description/AOOC

U.S. Army

98.0FA

DAAHO 1-95-A031

A-9993

Program Progress Report/A019

(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-85

--------State of GeorfJkt--------
Fndhgs and QuesHoncd Costs For the: FLSCal Year Ended Jmc: 30. 1997
GEORGIA INSTITUTE OF TECHNOLOGY (*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
Statement of Condition
Required reports are logged and tracked by GTRC and GIT on a schedule of deliverables. The above reports for GTRC/GIT Ref. No. A-5055 are required to be submitted four times based on the occurrence of certain events but are listed on the schedule of deliverables only twice. The above report for GTRC/GIT Ref. No. A-9993 is required to be submitted at least two times but is listed only once on the schedule of deliverables. Therefore, the submission of these reports is not being adequately monitored.
The reporting compliance requirement requires the submission of certain reports in accordance with the grants and contracts entered into by GTRC.
GTRC and GIT's system for monitoring the filing of required reports was not operating adequately with respect to these reports.
Reports required to be submitted more than once based on the occurrence of certain events are only input into the schedule of deliverables once based on common GTRC and GIT practice.
Recommendation
GTRC and GIT should input a separate deliverable into the schedule of deliverables for each event which triggers a required submission.
Questioned Costs
No costs are questioned with respect to this finding.
Management Response
The software/system deliverables associated with Contract No. DAAJ05-95-C-0012 (GTRC/GIT Project No. A-5055) were included two different times on the deliverable schedule that was in effect during the period of this audit. Since these deliverables are connected to scope of work events where the number of occurrences and the exact dates for delivery are unknown, it has been OCA's procedure to not attempt to list subsequent items of this nature on deliverable schedules.
The Program Progress Report/AOI9 associated with Contract No. DAAHOI-95-C-A031 (GTRC/GIT Project No. A-9993) was included one time on the deliverable schedule and has been delivered at least once during the term of this contract. Since this report is connected to scope of work events where the number of occurrences and the exact dates for delivery are unknown, it has been OCA's procedure to not attempt to list subsequent items of this nature on deliverable schedules.
(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-86

--------State of GeorfJia - - - - - - - -
Fndi1gs and QuesHoned Costs For the F15Cal Year Ended Jrne 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY(*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Submit Required Reports Finding Control Number FA-503-97-13

Agency

CFDA No.

Contract No.

GTRC/GIT Ref. No.

U.S. Army

98.0FA

DAAHO l-95-C-A031

A-9993

Statement of Condition

The Product Drawings and Associated Lists/A029 deliverable is due quarterly after the occurrence of a certain event. Although the initial report is included on the schedule of deliverables, the subsequent quarterly reports are not included on that schedule.

The reporting compliance requirement requires submission of certain reports in accordance with the grants and contracts entered into by GTRC.

GTRC and GITs system for monitoring the submission of required reports was not operating adequately with respect to this report.

GTRC and GIT has not established a policy regarding the treatment of these types of reports on the schedule of deliverables.
Recommendation
GTRC and GIT should establish a policy regarding the treatment of these types of reports on the schedule of deliverables and develop a control to ensure this policy is followed.
Questioned Costs
No costs are questioned with respect to this fmding.
Management Response
The Product Drawings and Associated Lists/A029 associated with Contract No. DAAHOI-95-C-A031 (GTRC/GIT Project No. A-9993) was included one time on the deliverable schedule and has been delivered at least once during the term of this contract. Since this deliverable is connected to scope of work events where the number of occurrences and the exact dates for delivery are unknown, it has been OCA's procedure to not attempt to list subsequent items of this nature on deliverable schedules.

(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-87

---------State of GeortJia - - - - - - - - -
Fndi1gs and QucsNoned Costs For the Hscal Ycar Ended Jmc 30. 1997

GEORGIA INSTITUTE OF TECHNOLOGY(*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING- RESEARCH AND DEVELOPMENT CLUSTER Failure to Submit Required Report in a Timely Manner Finding Control Number FA-503-97-14

CFDANo.

Contract No.

GTRC/GIT Ref. No.

U.S. Army

98.0FA

DASG60-95-C-OOO I

A-9861

Statement of Condition

The due date of the Scientific and Technical Report Summary/A002 was not specifically noted in the contract. GTRC and GIT could not locate any documentation to support the due date included on the schedule of deliverables. In addition, this due date is not consistent with those of other required reports or with GTRC and GIT's practices. Therefore, this report may not have been filed on a timely basis.

The reporting compliance requirement requires the submission of certain reports in accordance with the grants and contracts entered into by GTRC.

This report may not have been filed timely.

Human error caused this erroneous due date to be input into the schedule of deliverables.
Recommendation
GTRC and GIT should develop control to ensure that all due dates are properly documented and input into the schedule of deliverables.
Questioned Costs
No costs are questioned with respect to this fmding.
Management Response
In the absence of specific due dates for the Scientific and Technical Report Summary/A002 required by Contract No. DASG60-95-C-0001 (GTRC/GIT Project No. A-9861) our intention was to call for these semi-annual reports one month after the end of each semi-annual period. Due to an inadvertent error, three additional days were added to the due date for each of these reports in our deliverables tracking database and the mistake was never caught. The last required semi-annual report was submitted in June 1998; however, this contract is extended beyond its current completion date (September 30, 1998), we will correct the due dates as stated above.

(*) FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS. F-88

- - - - - - - - - S t a t e of Georgia---------
Fndhgs and Questioned Costs For the FISCal Year Ended Jme 30. 1997
GEORGIA STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-509-97-01
An equipment inventory sample was utilized to test the accuracy and validity of the equipment inventory records as of June 30, 1997. Initially, an equipment inventory sample of fifty (50) randomly selected items was tested. The results of our testing disclosed that twenty-five (25) items, with a total cost of $174,990.75, could not be located. The property control manager subsequently provided the auditors with falsified State Sumlus Property Transfer Form and Invoice documents in an attempt to account for the missing items. Appropriate University personnel were notified of the falsified documentation and additional steps were taken to locate the twenty-five missing items. Georgia State University personnel were able to either locate the actual items or to provide proper transfer documentation for twenty-two of the missing items. As a result of these discrepancies, an additional fifty (50) randomly selected items were chosen for testing. The results of the additional sample disclosed that fifteen (15) items, with a total cost of $91,174.34, could not be located.
Additionally, it was noted that the equipment inventory records contained thirty-three items valued at $168,136.59, which were reported to have been surplused in prior years, but remained on the equipment inventory records.
These discrepancies occurred because of management's failure to adequately monitor the subsidiary equipment inventory records. In addition, management stated that the discrepancies were, in part, a result of the vast number of equipment transfers between locations on the University's campus.
A complete physical inventory should be performed by personnel independent of the Property Management division. In addition, the University should establish appropriate procedures to strengthen internal accounting controls over the property management system to ensure that equipment is properly identified by location, inventory items are entered on and removed from the property management records in an accurate and timely manner, equipment is safeguarded against loss from unauthorized use or disposition and that proper documentation of equipment transfers is maintained on file at the University.
As a result of the discrepancies identified above, we were unable to determine the validity of the total equipment inventory valuation contained in the equipment inventory records, which is a component of the University's Investment in Plant.
Management Response
We concur with this finding. The property control manager who provided the auditors with improper documents is no longer employed at Georgia State University. The University has already taken steps to properly dispose of surplus property and to conduct a complete physical inventory by personnel independent of the property management division. Controls will be put in place to review the fiscal year end reconciliation of equipment inventory and to facilitate the review and documentation of equipment transfers between locations.
With additional procedures and controls mentioned above, we have strengthened the internal accounting controls over the property management system to meet the deficiencies noted.
F-89

--------State of Geort)ia--------
Fndhgs and Qucsnoncd Costs
For the Hscal Year Ended Jme 30. 1997
GEORGIA STATE UNIVERSITY- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
OASIS/STUDENT INFORMATION SYSTEM
Opportunity to Improve Procedures for Posting to General Ledger Finding Control Number FS-509a-97-01
We observed the accountants and managers in the Office Student Accounts filling out by hand the required journal entries to update the general ledger system. Once these forms are completed, they are sent to Accounting Services to be keyed into the general ledger system. The automation of this process would improve accuracy and eliminate a significantly timeconsuming, manual process. This condition has been previously brought to management's attention by the GSU internal audit report of January 15, 1997, and management has concurred with the desirability to automate this process.
RECOMMENDATION:
We recommend that Management consider the merits of modifying the Student Information System to automatically generate journal entries to update the general ledger system.
Management Response
The University concurs with the recommendation to evaluate the merits of automating the interface between the Student Information System and the General Ledger. University programming resources currently are stretched across enhancements to legacy systems, year 2000 conversions, quarter-to-semester conversion, and migration to new FISIHRIS systems. To manage the University's limited programming resources, we have developed a process for analyzing enhancement requests for legacy systems. This process includes assigning priorities based on the following criteria: I) critical to operations, 2) required by regulatory authorities, 3) essential to fiduciary responsibilities, 4) improvement to customer service, and 5) increased functional efficiency. This recommendation is primarily a functional efficiency enhancement. We will perform a cost/benefit analysis on this proposed enhancement and determine whether or not to implement the enhancement based on the programming resources available and the project's priority relative to other needs.
Opportunity to Improve Efficiency in Authorization of Credit Card Payments Finding Control Number FS-509a-97-02
Over the last several years the number of credit card payments have remained within a range of 27% to 30% of the total number of transactions processed by the Office of Student Accounts (20.7% of the total registration payments for 1996). A majority of the credit card payments are not verified during the student registration process. Credit card charges which are accepted by GSU and are subsequently denied by the respective card issuers, cause a significant amount of time reversing the payment and the follow-up collection process. Student Accounts is required to repeatedly contact each student that had an unauthorized credit card payment until a valid payment is received. This condition has also been previously brought to management's attention by the GSU internal audit report of January 15, 1997, and management has concurred with the desirability to automate this process.
RECOMMENDATION:
We recommend that Management review the merits of system enhancements to achieve on-line verification of credit card payments.
Management Response
We concur with the recommendation to evaluate the merits of automating the verification of credit card payments. University programming resources currently are stretched across enhancements to legacy systems, year 2000 conversions,
F-90

---------State of Georsia---------
F11dhgs and QuesNoned Costs For the F15Cal Year Ended Jme 30. 1997
GEORGIA STATE UNIVERSITY- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
quarter-to-semester conversions, and migration to new FISIHRIS systems. To manage the University's limited programming resources, we have developed a process for analyzing enhancement requests for legacy systems. This process includes assigning priorities based on the following criteria: 1) critical to operations, 2) required by regulatory authorities, 3) essential to fiduciary responsibilities, 4) improvement to customer service, and 5) increased functional efficiency. This recommendation is primarily a functional efficiency enhancement but also improves customer service. We will perform a cost/benefit analysis on this proposed enhancement and determine whether or not to implement the enhancement based on the programming resources available and the project's priority relative to other needs.
ACCOUNTS PAYABLE SYSTEM
Opportunities for Monitoring and Reporting the Timeliness of Payments Finding Control Number FS-509a-97-03
At the request of Accounts Payable management, the Accounts Payable system provides a "Prompt Payment Report". Management relies upon this report to measure the timeliness of the University's payments to its vendors. However the report does not identify or consider delays in payments due to invoices received by individual department offices, but are not passed directly to the Accounts Payable office.
RECOMMENDATION:
In addition to the current Prompt Payment Report, we recommend that management require similar reports are provided by MIS identifying potential timeliness exceptions according to the dates of receipt of goods and the vendor's original invoice date. This report should be meaningful in identifying situations where the actual receipt of goods or the receipt of invoices may not have been reported timely.
See also recommendation under the section of this report "Opportunities to Enhance Duplicate Payment Controls".
Management Response
The University concurs that a report comparing receipt date with invoice date would provide additional information that would be beneficial to managing timeliness of vendor payments. It is important to note, however, that the current report does identify delays in payments due to invoices held in departments. The only time these delays would not be identified is if the department that received the invoice neglects to mark the date the invoice was received, a step that is required by current procedures. Management believes that current procedures are adequate to manage the timeliness of payments. Management has conducted additional training of Accounts Payable and University staffto emphasize the importance of timely payments. Management will evaluate the proposed additional reporting and determine whether or not to implement the enhancement based on the programming resources available and the project's priority relative to other needs.
Opportunities to Enhance Duplicate Payment Controls Audit Control Number FS-509a-97-04
The audit team performed a small, haphazard selection oftwenty-six payments from the population of3,774 invoices paid by Accounts Payable during May, 1997. We reviewed these checks and supporting documents in order to confirm our understanding of the Accounts Payable process. In this selection we found two occurrences of duplicate invoices, totaling $206.28. These were reviewed with Accounts Payable management.
F-91

---------State of GeorfJkl---------
Fndhgs and QuesNoned Costs For the Hscal Year Ended Jme 30. 1997
GEORGIA STATE UNIVERSITY- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
RECOMMENDATION:
We recommend that management implement additional controls to reduce the risk of duplicate payments and to assure the timely payment of invoices:
Conduct training with Accounts Payable staff and University department administrators to emphasize the importance of the timely and accurate preparation and processing of disbursement requests, receiving confirmations, and invoices.
Develop a management report to identify suspect payments (e.g., late payments, possible duplicate invoices, etc.) for review and follow-up.
Management Response
The University concurs with the recommendation to increase training. Management has conducted additional training of Accounts Payable and University staff to emphasize the importance of timely and accurate preparation and processing of disbursement requests and related documents. The department has scheduled quarterly training classes that are offered to University staff. Management will evaluate the proposed additional reporting and determine whether or not to implement the enhancement based on the programming resources available and the project's priority relative to other needs.
Opportunity to Improve Invoice Processing Audit Control Number FS-509a-97-05
Georgia State's Accounts Payable processes use and depend upon several computer systems which are not fully integrated. Much of the process of paying invoices is accomplished through manual, document-based procedures. Accounts Payable management requested a Request for Service (RFS) on August 28, 1996, to modify the three-way match process to automate generating the check and updating the general ledger without any other manual effort. The audit team's understanding of this requested change would relieve the Accounts Payable department from a considerable manual effort in processing these invoices and reduce the risk of errors in producing and recording payments.
RECOMMENDATION:
Given the current plans to retain existing financial systems for several years, we recommend that the University review the programming priority regarding the above mentioned Request for Service.
Management Response
We concur that the integration of the three way match process to the generation of the check will streamline invoice processing. University programming resources currently are stretched across enhancements to legacy systems, year 2000 conversions, quarter-to-semester conversions, and migration to new FISIHRIS systems. To manage the University's limited programming resources, we have developed a process for analyzing enhancement requests for legacy systems. This process includes assigning priorities based on the following criteria: 1) critical to operations, 2) required by regulatory authorities, 3) essential to fiduciary responsibilities, 4) improvement to customer service, and 5) increased functional efficiency. This recommendation is primarily a functional efficiency enhancement. We will perform a cost/benefit analysis on this proposed enhancement and determine whether or not to implement the enhancement based on the programming resources available and the project's priority relative to other needs.
F-92

- - - - - - - - - - S t a t e of Georgia----------
Fndilgs and Que.sNoned Costs For the Hscal Year Ended Jme 30. 1997
GEORGIA STATE UNIVERSITY- INFORMATION SYSTEMS CONTROLS REVIEW
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Given current plans to commence implementation of PeopleSoft Finance system this year, and given limited available resources for legacy Finance support, it is likely that this benefit will be deferred to the implementation of the PeopleSoft Payables and Purchasing modules, at which time its implementation will become part of the system baseline.
F-93

---------State of GeorfJia - - - - - - - - -
Fndi1g.s and Que.sNoned Costs For the FLSCal Year Ended Jme 30. 1997
UNIVERSITY OF GEORGIA
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS INVENTORIES Inadequate Controls Over Resale Inventory Reconciliation Process Finding Control Number FS-518-97-01 The following deficiencies in internal controls over the resale inventory reconciliation process were noted:
(I) The University did not provide a reconciliation of the amount of resale inventory derived from a physical count to the amounts reflected by the general ledger for Continuing Education - Food Services and Gift Shop.
(2) The University did not provide for supervisory review and approval of resale inventory reconciliations and related year end adjustments made to the general ledger. As a result, adjusting entries made by the University to correct the general ledger accounts for resale inventories for Continuing Education - Food Services and Gift Shop were incorrect.
These deficiencies were the result of management's failure to establish and implement the proper internal control procedures over resale inventories. The University should establish and implement the appropriate internal controls to ensure that a physical count of resale inventories is taken annually, the physical count is reconciled appropriately with the accounting records and the appropriate adjustments are made to the general ledger if necessary. Management Response The Georgia Center for Continuing Education's administrative services accounting staff now provides a monthly reconciliation between invoices, inventory records and university status reports for the Georgia Center for Continuing Education Food Services and Gift Shop. At least one physical count will be conducted annually and this count will be reconciled to provide the appropriate adjusting entry in the resale inventory accounts of the University's general ledger. The adjusting entry will be reviewed by the department heads and supervisor of auxiliary services and approved by the Georgia Center's chief fiscal officer prior to submission to the University's central accounting office.
F-94

---------State of GeorfJia - - - - - - - - -
Fndilgs and Quesnoned Costs For the FISCal Year Ended Jme 30. 1997

UNIVERSITY OF GEORGIA (*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING Technical Reports Not Properly Filed Finding Control Number FA-518-97-01

Condition: Approximately 8% of the grants included technical reports which were not filed timely. This percentage represents 4 of the 50 grants selected for testing.

The following table lists the technical reports filed improperly:

Budget Number

CFDA#

Date Due

Date Submitted

10-31-RE086-020 25-21-RC295-002 10-31-RE250-059 10-31-RE250-059 10-31-RE250-059 25-26-GC284-00 I

15.000 10.202 66.000 66.000 66.000 lO.R&D

11-30-96 1-15-97 6-21-96 12-13-96 3-21-97 12-1-96

8-28-97 2-15-97 7-15-96 1-15-97 4-15-97 1-13-97

Criteria: Attachment H of OMB Circular A-ll 0 establishes requirements for monitoring and reporting program performance.

Effect: Certain principal investigators failed to comply with the applicable program performance reporting requirements, which could result in loss of federal funds.

Cause: The cause of this finding appears to be noncompliance with existing internal control features as opposed to the absence of such controls.

Recommendation: The University should continue its efforts to ensure that the improved internal controls for the monitoring of technical reports, which were established during fiscal 1992, are being adhered to. This should be accomplished by contacting the faculty members whose reports were delinquent and reminding them of proper procedures. The University should consider developing a monthly report which lists all delinquent technical reports. This list should be submitted to the Vice President of Research so that he can monitor the timeliness of technical reporting.

Management Response

The University continues to contact faculty members whose reports are delinquent and remind them of proper procedures. The University is developing a computerized follow-up system which should be implemented prior to Fiscal Year 2000.

REPORTING Financial Reports Not Properly Filed Finding Control Number FA-518-97-02

Condition: Approximately 4% of the grants selected for testing included fmancial reports which were not filed timely. This percentage represents 2 of the 50 grants selected for testing.

(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS F-95

---------State of Georfjia - - - - - - - - -
Fndilgs and Que.sNoned Costs
For the FLSCal Year Ended Jme 30. 1997

UNIVERSITY OF GEORGIA (*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

The following table describes the reports not tiled timely:

Budget Number

CFDA#

Date Due

Date Submitted

10-11-RUi-021-065 10-31-RE344-112 10-31-RE344-112 10-31-RE344-112 10-31-RE344-112 10-31-RE344-112 10-31-RE344-112 10-31-RE344-112 I 0-31-RE344-112 I 0-31-RE344-112 I 0-31-RE344-112 10-31-RE344-112

66.R&D 93.778 93.778 93.778 93.778 93.778 93.778 93.778 93.778 93.778 93.778 93.778

07-30-97 08-07-96 09-09-96 10-07-96 11-07-96 12-06-96 01-08-97 02-07-97 03-07-97 05-07-97 06-06-97 07-08-97

08-27-97 08-30-96 12-18-96 12-18-96 12-18-96 12-18-96 02-19-97 03-04-97 04-22-97 06-24-97 06-24-97 08-04-97

Criteria: Attachment H of OMB Circular A-110 establishes requirements for monitoring and reporting program performance.

Effect: The University's business office failed to comply with the applicable program performance reporting requirements, which could result in loss of federal funds.

Cause: The grant agreements for these awards have a unique reporting requirement which stipulates that quarterly or monthly financial reports are to be submitted by the business office. Financial reports of this kind traditionally are not prepared quarterly or monthly. Therefore, the cause of this finding appears to be due to a lack of knowledge of the required reports for these particular grants.

Recommendation: The University should strive to ensure that the required reports are submitted on a timely basis.

Management Response

The University agrees and has negotiated a more reasonable deadline with the flow-through sponsor. Previously, the flowthrough sponsor required a monthly report by the fifth working day of each month. Now, 45 days is permitted.

SPECIAL TESTS AND PROVISIONS Students Did Not Receive Required Counseling Student Financial Aid Cluster Finding Control Number FA-518-97-03

Condition: Approximately 3% of the students (4 of 132 students) who were selected during the review of the SFA programs did not receive the required counseling.

Criteria: The University is required to provide exit counseling to a student who is no longer attending school at least halftime. If the student does not attend the counseling session, the University must mail the information to the student's last known address.

(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS F-96

----------State of GeorfJia - - - - - - - - - -
Fndhgs and QucsHoned Costs
For the FISCal Year Ended Jme 30. 1997
UNIVERSITY OF GEORGIA (*)
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Effect: The University did not inform the student, either at an exit counseling session or by mail, of the student's obligation regarding loan repayment. Therefore, the student has not been notified of the responsibilities under the terms of the loan or counseled in debt management. Cause: The University is required to conduct an exit counseling session when the student graduates or otherwise ceases at least half-time study. If the student does not attend the counseling session, the information is to be mailed to the student's last known address. The student was informed of the obligation to attend the exit counseling session. However, the student did not attend the session. The required information was not mailed to the student's last known address, and no further action was taken. Recommendation: The University should provide exit counseling to all students, either during counseling sessions or by mail. Management Response The University does notify students who apply for graduation - and who fall below half-time - of their obligation to attend an exit counseling session. It is University procedure to mail exit materials to students who do not attend the session or otherwise notify the University that their graduation date has changed. Regarding the four exceptions found during the audit, two students had Federal Direct Loans and two students had Perkins Loans. Exit materials were mailed to the Direct Loan recipients who did not attend the Spring or Summer 1997 counseling sessions, but were not mailed until October 8, 1997. A programming error was discovered regarding the two students with Perkins Loans. The program was not properly identifying semester students who applied for graduation. After the program was modified, we attempted to generate exit materials for these semester students but the program would not allow us to "go back in time." We, therefore, had to rely on another program which identifies loan recipients who are no longer enrolled at the University. This program was run on October 2, 1997 after both the Fall Semester and Fall Quarter terms began. Materials were mailed to these students and have since been completed and returned to our office.
(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS F-97

-------State of GeorfJia - - - - - - - -
Fndhgs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997
ALBANY STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUEIRECEIVABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number FS-521-97-01
An examination of student accounts receivable at June 30, 1997 revealed that $428,184.76 of receivables were over one year old and not supported by approved fmancial aid. This condition occurred because of management's failure to obtain approved documentation to support financial aid before disbursement of funds. There is no provision in the policies of the Board of Regents for deferments of student accounts without the student having approved documentation of fmancial aid at the time of registration.
Collections of students accounts receivable should be made on at least a quarterly basis, and no student should be granted a deferment without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivable, if necessary.
For the year under review, a sample of fifty student accounts was examined. This examination disclosed that three (3) student loan files could not be provided for review. This condition occurred because files have been moved several times since the 1994 flood. Management should continue efforts to locate these student files.
Management Response
We concur with this finding. The Institution contracted with KPMG Peat Marwick to provide training for the Financial Aid staff, to ensure that proper procedures are used for the making of financial aid awards, including the need to obtain approved documentation to support fmancial aid before disbursement of funds. This training has occurred and the Institution will continue to monitor Student Accounts Receivables closely. In addition, the Institution has outsourced the collection of current receivables to private companies and feels confident that those balances will be reduced. Also, the Institution will continue its efforts to locate the three (3) student loan files.
FUND EQUITIES Deficits to be Funded from Subsequent Years' Operations Finding Control Number FS-521-97-02
Our review of Intercollegiate Athletics revealed a deficit fund balance of $133,219.01 at June 30, 1997. This deficit is a result of the University's lack of sufficient funds to meet obligations on a current basis. The Board of Regents Policy Manual Section 702.02 states that auxiliary enterprises "will be placed on a self-supporting basis, and the State will not make an appropriation to fmance its operation".
The University should take appropriate action to ensure this deficit is funded.
Management Response
We concur with this fmding. The Athletic Director, the Business Office and the Vice President for Fiscal Affairs have developed a plan of action to control operations of the Athletic Program, so that expenditures will not exceed revenue within the current fiscal year. Additionally, a plan to reduce the fund balance deficit has been developed.
F-98

- - - - - - - - - - S t a t e of Georgia----------
Fndi\gs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
ALBANY STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $2,640.00 Finding Control Number FA-521-97-01
For the year under review, a sample of forty-one student fmancial aid files was selected to determine if fmancial aid was properly calculated and awarded to eligible students. The items sampled contained fmancial aid disbursements of $288,769.65 out of a population of $12,986,911.59. Our examination revealed that two students received overpayments totaling $2,640.00 as shown below:
(1) One student's award was not adjusted for a change in enrollment status. The student originally registered for classes then formally dropped classes before the beginning of the quarter. The questioned cost of $1,760.00 resulted from management's failure to adjust the award before disbursement was made to the student.
(2) One student was disbursed $880.00 of financial aid in excess of the student's predetermined fmancial need based on estimated cost of attendance. Title IV of the Higher Education Act of 1986 states that an institution must coordinate Title IV programs with other Federal and non-Federal student fmancial aid programs it administers and must establish controls to preclude the awarding of assistance in excess of a student's financial need. This error was caused by management's failure to review the student's grant award before disbursement was made.
A projection of these monetary errors to the total population resulted in likely questioned costs in excess of$10,000.00.
Procedures should be implemented to ensure that student awards are based on correct enrollment status and that students are not disbursed financial aid in excess of need. The University should contact the U. S. Department of Education regarding resolution of these questioned costs.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U.S. Department of Education Federal Direct Student Loan Program (CFDA 84.268)
Management Response
We concur with this fmding. The students have been notified and their accounts have been charged for unallowable disbursements. The Institution has reviewed procedures to ensure that the enrollment status of a student is monitored for eligibility prior to the disbursement of funds. The Financial Aid Office has reviewed procedures for monitoring adjustment to grant awards to ensure that the coordination of Title IV programs and other Federal and non-Federal student aid programs are coordinated. Additionally, the Fiscal Affairs Office and the Financial Aid Office have rescheduled their monthly meetings. The contact person for this finding is Ken Dyer, Vice President of Fiscal Affairs.
F-99

- - - - - - - - - - S t a t e of Georgia----------
Fndflgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997

ARMSTRONG ATLANTIC STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number FS-524-97-01
In a corrective action response for a prior year finding concerning uncollateralized deposits, the University indicated that procedures had been implemented to ensure that deposits were collateralized in accordance with the Official Code of Georgia Annotated Section 50-17-59. However, as of June 30, 1997, the University again failed to have two certificates of deposit fully collateralized as required. This noncompliance occurred because of management's failure to adequately monitor the collateralization of balances at individual banks. The University should implement adequate procedures to monitor the collateralization of bank balances to ensure compliance with State Laws governing deposits and investments.
Management Response
We concur with this finding. All current certificates of deposit will have collateralization documentation on file and future certificates of deposit will have collateralization documentation at the time the certificate is issued.
GENERAL LEDGER H.O.P.E. Program Reconciliation Report Not Reconciled to Accounting Records Finding Control Number FS-524-97-02
In a corrective action response for a prior year finding concerning the H.O.P.E. program reconciliation report not reconciling to the accounting records, the University indicated procedures had been established to ensure the report reconciled to the accounting records. However, for the year under review, the University's H.O.P.E. Scholarship Program reconciliation report which was provided to the Georgia Student Finance Commission again did not reconcile with the accounting records as indicated below:

Report Item

Per H.O.P.E. Reconciliation

Per Accounting
Records

Difference

Cash Disbursed to School

$ 1,715,513.00

$ 1,762,292.00

$ 46,779.00

Amount Awarded to Students

$ 1,704,501.00 $ 1,732,965.46 $ 28,464.46

The difference occurred because management failed to reconcile accounting records to the H.O.P.E. Scholarship Program reconciliation report at year-end.

Procedures should be established to ensure that the H.O.P.E. Scholarship Program reconciliation report is reconciled to the University's formal accounting records and that documentation is maintained supporting the reconciliation. The University should contact the Georgia Student Finance Commission to resolve the reported differences.

Management Response

We concur with this finding. An accountant was employed in the financial aid office to assist with the H.O.P.E. Program and to reconcile the report. However, we will continue to have difficulty reconciling H.O.P.E. awards to accounting records because of the time lag between awards and actual expenditures. For example, awards made in June may not be expended until July. So the awards are recorded in one fiscal year and the expenditures in another.

F-100

- - - - - - - - - - S t a t e of Georfjia - - - - - - - - - -
Fndings and QuesHoned Costs
For the FISCal Ycar Ended Jmc 30. 1997 ARMSTRONG ATLANTIC STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Unearned Revenue Not Supported by Detail Listing Finding Control Number FS-524-97-03 For the year under review, the University could not provide a detail listing of the unearned revenue for summer quarter fees as of June 30, 1997. This condition occurred due to management failing to produce the report from the Banner Registration/Accounting System. The University should implement procedures to ensure that a detail listing of unearned revenue is maintained to support the amounts recorded in the accounting records. Management Response We concur with this finding. The Banner student information system is being refmed to produce a detailed listing of unearned revenue in the format required by the State Auditor. However, until we have a better interface between the Banner student information system and the accounting system this listing will be difficult if not impossible to produce.
F-101

----------State of GeorfJia - - - - - - - - - -
Fndhgs and Que.sHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUGUSTA STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-527-97-01
For the year under review, an equipment inventory sample of 40 randomly selected items was utilized to test the accuracy and validity of the equipment inventory records. The results of our testing procedures disclosed that two items, with a total cost of$5,742.96 could not be located.
In addition to the unallocated items noted above, additional procedures disclosed the following deficiencies:
(1) Equipment deletions/disposal in the amount of $644,695.16 have not been adjusted in the general ledger or subsidiary equipment inventory records.
(2) A variance of $190,745.81 remained unidentified between the University's general ledger and the subsidiary equipment inventory records.
The discrepancies occurred because of management's failure to adequately monitor the subsidiary equipment records. The University should establish appropriate procedures to strengthen internal accounting controls and to ensure that assets are safeguarded against loss from unauthorized use or disposition.
Management Response
We concur with this recommendation. Procedures have been established to reconcile general ledger accounts with subsidiary equipment inventory records. The reconciliation will be performed by the Comptroller's office at least once per year and prior to the preparation of the Annual Financial Report. The property control officer will perform periodic verification of inventory items.
CASH AND CASH EQUIVALENTS Inaccurate Accounting Procedures Finding Control Number FS-527-97-02
For the year under review, interest earned on temporary investments was not properly recorded in the accounting records. This deficiency occurred because of management's failure to adequately monitor and record investment activity which resulted in an inaccurate presentation of the financial statements.
Procedures should be implemented by the University to ensure that all investment activity is properly monitored and recorded in the accounting records.
Management Response
We concur with this recommendation. Investment activity will be closely monitored by the Comptroller's office. Changes in investment value and earnings will be recorded on a timely basis. Some investments will be consolidated in a pooled investment fund to provide greater returns and easier reconciliation.
F-102

----------State of Georgia----------
Fndings and Questioned Costs
For the FISCal Year Ended Jme 30. 1997
CLAYTON COLLEGE AND STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIES/DISBURSEMENTS Overpayment of Hope Program Awards Questioned Cost: $440.09 Finding Control Number FS-528-97-01
For the year under review, a sample of twenty-five (25) student fmancial aid files was selected to determine if fmancial aid was properly calculated and awarded to eligible students. The items sampled contained HOPE financial aid disbursements of $10,002.00 out of a HOPE population of $1,880, 191.00. Our examination revealed that two students received overpayments of HOPE funds totaling $440.09. This condition occurred because of miscalculations of grant awards and management's failure to review grant awards before disbursing funds.
Management should ensure that student financial aid awards are properly reviewed and approved prior to disbursement. The University should contact the Georgia Student Finance Commission regarding resolution of this finding.
Management Response
We concur with this finding. In one case, a student's change of major resulted in funds being withdrawn; the student was not billed for the $28.09 that had already been spent. The Office of Financial Aid now has direct responsibility for billing students who have funds withdrawn because they are found to be ineligible after the funds have been disbursed. In the other case, funds were disbursed in excess of the amount the student was eligible to receive because the new computer system had not been programmed to pro-rate disbursement amounts in awards which combine grant types. ($412.00 in excess funds.) The computer now pro-rates disbursed amounts.
GENERAL LEDGER Clearing Account Balance Not Supported by Detail Listing Finding Control Number FS-528-97-02
For the year under review, the University could not provide adequate supporting documentation for a balance sheet clearing account which had an accounts receivable balance of $62,091.61. This account balance resulted from an interface between the University's Banner Student Registration System and the University's accounting system. Management was unable to produce a subsidiary listing from the Banner Student Registration System supporting the balance recorded on the accounting system's general ledger.
The University should implement procedures to ensure that appropriate detailed subsidiary records are generated from the Banner Student Registration System that support the balances recorded on the general ledger.
Management Response
We concur with this finding. The account is in the process of being reconciled. The College is working with sister institutions and with the Regents Office to help with software support in reconciliation. Additional staff may be used to complete the reconciliation by June I, 1998. The Director of Fiscal Affairs is taking steps to assure that once the accounts are reconciled, that they will continue to be reconciled on a timely basis.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-528-97-03
For the year under review, an equipment inventory sample of one hundred (I 00) randomly selected items was utilized to test the accuracy and validity of the University's equipment inventory records. The results of our testing disclosed the following:
F-103

----------State of Georgia----------
FIIdings and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
CLAYTON COLLEGE AND STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
(1) Four (4) items had been surplused but were not removed from the inventory listing.
(2) Three (3) computers were destroyed while being repaired/upgraded but were not removed from the inventory records.
(3) One (1) item had been destroyed due to water damage but had not been removed from the inventory records.
These deficiencies occurred because of management's failure to adequately monitor the subsidiary equipment inventory records. The University should establish appropriate procedures to strengthen internal accounting controls and to ensure that assets are safeguarded against loss from unauthorized use or disposition.
Management Response
We concur with this finding. The Director of Fiscal Affairs and the Director of Procurement will work together to revise procedures that will result in timely updating of records and set dates for review and reconciliation of equipment records to safeguard assets. This should be accomplished by May I, 1998.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $1,743.00 Finding Control Number FA-528-97-01
For the year under review, a sample of twenty-five (25) student financial aid files was selected to determine if financial aid was properly calculated and awarded to eligible students. The items sampled contained Federal fmancial aid disbursements of $31,596.00 out of a Federal Student Financial Aid population of $1 ,665,678.00. Our examination revealed that three students received Federal financial aid overpayments totaling $1,743.00. A projection of these monetary errors to the total Federal Student Financial Aid population resulted in likely questioned cost in excess of$10,000.00.
One overpayment of$1,420.00 occurred because management failed to use the updated family contribution when calculating the award for the student. Two other overpayments totaling $323.00 occurred because management disbursed funds in excess of approved grant awards.
Management should ensure that student financial aid awards are properly reviewed and approved prior to disbursement. The University should contact the U.S. Department of Education regarding resolution of this fmding.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U.S. Department of Education Peii Grant Program (CFDA 84.063)
Management Response
We concur with this finding.
F-104

----------State of Georgia----------
Fndilgs and Que.sNoncd Costs
For the Hscal Year Ended Jme 30. 1997
CLAYTON COLLEGE AND STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
In one case the quarter credit hours showing on the fmancial aid side of the new computer system did not match the quarter credit hours showing on the billing side of the new computer system, causing a disbursement of excess funds. ($206.00 in excess funds.) Although this still happens occasionally, the Office of Financial Aid, Catherine McClarin, Director of Financial Aid, is now aware of the problem and runs an identification process each quarter after batch disbursement to identify any discrepancies and correct any disbursement of excess funds before the quarter has begun.
In another case, the student corrected her SAR. The corrected ISIR did not roll over electronically, so the student was awarded on the original ISIR. This resulted in an incorrect award and disbursement of excess funds. ($1,420.00 in excess funds.) Although this still happens occasionally, when the Office of Financial Aid is aware that a correction is being made, specific steps are followed to "hold" the file until the corrected ISIR has been received.
ELIGIBILITY SPECIAL TESTS AND PROVISIONS Weakness in Internal Control Structure for Student Financial Assistance Programs Student Financial Aid Cluster Program Finding Control Number FA-528-97-02
For the year under review, our tests of the internal control structure for administering the Student Financial Assistance Programs revealed weaknesses in the system of internal controls based upon the standards in 34 CFR 668.16 which require that the University administer the Student Financial Assistance Programs with adequate checks and balances in its system of internal controls.
These conditions resulted from management's failure to establish adequate administrative procedures for initial determination and subsequent revision of grant awards prior to disbursing funds. Appropriate procedures and controls should be established by the University to ensure that the Student Financial Assistance Programs are in compliance with the applicable rules and regulations.
Management Response
We concur with this finding. The Office of Financial Aid, Catherine McClarin, Director of Financial Aid, has taken steps to establish adequate administrative procedures for initial determination and subsequent revision of grant awards prior to disbursing funds.
REPORTING Incorrect Student Payment Summary Report Student Financial Aid Cluster Program Finding Control Number FA-528-97-03
For the year under review, the U. S. Department of Education Student Payment Summary (SPS) report indicated that the University incurred $1,587,244.00 in Federal Pell Grant Program expenditures. This amount represented the University's fmal authorized amount of the Federal Pell Grant Program award for fiscal year 1997. However, the University actually incurred a total of $1,589,742.00 in fiscal year 1997 Pell Grant Program expenditures. In order to be reimbursed for the excess Pell Grant expenditures, the University, in conformity with Federal Statutes, must certify the validity of these payments to the U. S. Department of Education. The Federal agency can then institute an upward adjustment of the fiscal year 1997 authorized amount in order to make the funds available to the University.
F-105

----------State of Georgia----------
Fndings and Que.sHoncd Costs
For the FISCal Ycar Ended Jmc 30. 1997
CLAYTON COLLEGE AND STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Pell Grant Program (CFDA 84.063)
Management Response We concur with this finding. The discrepancy occurred as a result of Pell awards which were not disbursed through the new computer system and had to be reported using a manually created Pell Payment Voucher. Procedures are not in place to ensure that these awards will be correctly reported. The contact person is Catherine McCiarin, Director of Financial Aid. SPECIAL TESTS AND PROVISIONS Exit Counseling Not Conducted Student Financial Aid Cluster Program Finding Control Number FA-528-97-04 For the year under review, an examination of eleven loan recipients identified three loan recipients who should have received exit counseling. For these three recipients, no documentation was available to verify that the required exit counseling had been conducted. Federal Regulation (34 CFR 682.604) requires institutions to conduct and maintain documentation of exit counseling. This condition occurred because management failed to provide exit counseling to the students. The University should ensure that all students requiring exit counseling are properly identified and that exit counseling is conducted as required by Federal regulations. Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Family Education Loan Program (CFDA 84.032)
Management Response We concur with this finding. Exit Counseling procedures were established and followed beginning in the Fall Quarter of the 1997/98 academic year. The contact person is Catherine McClarin, Director ofFinancial Aid.
F-106

- - - - - - - - - - S t a t e of Georgia----------
Fndngs and Questioned Costs For the Fiscal Year Ended Jme 30. 1997
FORT VALLEY STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-533-97-01
For the year under review, the University's accounting procedures were insufficient to provide for adequate internal control over the cash accounts and the bank reconciliation process. The following deficiencies were noted:
I) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
2) The monthly bank reconciliations for the operating account were not performed in a timely manner.
3) Hand drawn checks were issued with duplicate check numbers to replace lost checks. The lost checks were not voided in the accounting system and the replacement checks were never entered into the system. This deficiency allowed the theft of checks from their cashier's office to go undetected for an extended period of time.
4) The monthly bank statements for the operating account were not reconciled to the general ledger resulting in an unidentified variance of $2,464.65 between the reconciled bank balance and the book balance at June 30, 1997.
These deficiencies were a result of management's disregard of proper internal control procedures over cash and bank reconciliations that are necessary to adequately safeguard and report the cash operations of the University. The University should implement appropriate procedures and controls to ensure that reconciliations are performed and needed adjustments are recorded on a timely basis. The University should discontinue the practice of altering preprinted checks and should record all checks issued in the accounting system correctly. Also, the unidentified variance should be researched and appropriate corrections made.
Management Response
We concur with this recommendation. In July 1997 an accounting assistant was hired and given the responsibility for bank reconciliations. Also, during the current period the procedures and form for reporting lost checks was revised to include a sign off by the Director of Accounting Services. All lost checks are voided and replaced by a separate check which is cross referenced to the lost check. In addition reconciling items are being cleared on a monthly basis and all differences are investigated and resolved within the month they are discovered. The accounting assistant and Director of Accounting Services are researching the unreconciled variance. On determining the cause of the variance, an appropriate adjustment, as required, will be made to the accounting records.
CASH AND CASH EQUIVALENTS Inadequate Separation of Duties Finding Control Number FS-533-97-02
For the year under review, the University did not provide for adequate separation of duties in the performance of certain accounting functions and related procedures in the Cash and Cash Equivalents control category. Segregation of duties involving key accounting functions is the basis for achieving an adequate system of internal control. Inadequate separation of duties creates an environment which does not provide reasonable assurance that accounting data and financial statements are accurate and complete.
This deficiency was a result of management not assigning employee duties in a manner to adequately safeguard assets and/or promote efficiency and accuracy in key accounting functions. The University should review the accounting procedures in
F-107

- - - - - - - - - - S t a t e of Georgia----------
F11di1gs and Quc.sHoned Costs For the Fr.scal Year Ended Jme 30. 1997
FORT VALLEY STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
place, design procedures which would enhance segregation of duties relative to the above control category, and implement those procedures to strengthen the internal controls over the accounting function.
Management Response
We concur with this recommendation. During October 1997 the Vice President for Business and Finance reviewed the various accounting functions and reorganized the department to insure adequate separation of duties. As a result procedures were revised and duties were reassigned to ensure an adequate degree of internal control. The Director of Accounting Services will periodically review the cash and cash equivalent controls to ensure that duties involving key accounting personnel are adequately separated.
REVENUESIRECEIV ABLES/RECEIPTS Improper Student Accounts Receivable Finding Control Number FS-533-97-03
At June 30, 1997, the University had $590,459.58 in student account receivables which were not supported by approved financial aid. A review of these receivables revealed that $568,038.91 of the receivables were accumulated prior to Summer Quarter of 1996. There is no provision in the policies ofthe Board of Regents for deferments of student accounts without the student having approved documentation of financial aid at the time of registration. This condition occurred because management disregarded the policies of the Board of Regents.
Collections of student accounts receivable should be made on at least a quarterly basis, and no student should be granted a deferment without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivable, ifnecessary.
Management Response
We concur with this recommendation. Beginning in Fall of 1997, the University billed students on a monthly basis. In addition those students who failed to clear their deferments were placed on hold which caused them to be ineligible to receive any services from the institution until the deferment has been cleared. The Student Accounts Manager is responsible for working with Financial Aid to ensure that all deferments are cleared in a timely manner. The University has also in accordance with Regents BFS procedures 17, placed the oldest accounts in a reserve and placed other noncurrent accounts with Williams and Fudge Collection Agency. In addition, the Director of Accou!lting Services has strengthen the collection procedures and reviews the aged receivable with the Student Accounts Manager to ensure that current balances are cleared.
FUND EQUITIES Deficits to be Funded from Subsequent Years' Operations Finding Control Number FS-533-97-04
At June 30, 1997, the University's Intercollegiate Athletics had a deficit fund balance of$23,647.27. This deficit is a result of the University's lack of sufficient funds to meet obligations on a current basis. The Board of Regents' Policy Manual Section 702.02 states that auxiliary enterprises "will be placed on a self-supporting basis, and the State will not make an appropriation to finance its operations."
The University should take appropriate action to fund this deficit.
Management Response
We concur with this recommendation. The Vice President for Student Affairs, Athletic Director and Vice President for Business and Finance have developed an action plan to fund this deficit and control the Athletic Program expenditures.
F-108

----------State of Georgia----------
Fndilgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997

FORT VALLEY STATE UNIVERSITY

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Donnant Restricted Funds Finding Control Number FS-533-97-05

For the year under review, three projects existed that had no activity in the fiscal year. It was noted that the grant period had ended for all three projects.

These donnant accounts are a result of management's failure to monitor the activity occurring in the Restricted Funds and failure to return excess funds promptly to the grantor when the project is complete. The University should implement procedures that will provide proper monitoring of the Restricted Funds and grant periods to ensure that funds are returned to the grantor when the project is complete. The University should also contact the grantors to detennine if the donnant account funds are to be returned.

Management Response

We concur with the recommendation. However, it must be pointed out that three projects in question, the auditors were presented with documentation showing that the University had attempted to contact two of the grantors. During the month of February, 1998, the Director of Accounting Services worked with the Grants and Contracts Accountant as well as with Internal Auditors and State Auditors to clean up all old outstanding balances. A monitoring system for restricted accounts is in place that requires a fonnal quarterly review by the Director of Accounting Services to ensure that the University is in compliance with Circular A-110.

GENERAL LEDGER H.O.P.E. Program Reconciliation Report Not Reconciled to Accounting Records Finding Control Number FS-533-97-06

For the year under review, the University's H.O.P.E. Scholarship Program reconciliation report which was provided to the Georgia Student Finance Commission did not reconcile with the accounting records as indicated below:

Report Item

Per H.O.P.E. Reconciliation

Accounting Records

Difference

Amount Awarded to Students

$ 448,735.00

$ 435,657.76

$ 13,077.24

The difference occurred because management failed to reconcile accounting records to the H.O.P.E. Scholarship Program reconciliation report at year-end.

Procedures should be established to ensure that the H.O.P.E. Scholarship Program reconciliation report is reconciled to the University's fonnal accounting records and documentation is maintained supporting this reconciliation. The University should contact the Georgia Student Finance Commission regarding resolution of this fmding.

Management Response

We concur with this recommendation. The Grants and Contracts Accountant and the Student Accounts Manager has been given the assignment to work with a Financial Aid staff person to ensure that all student aid accounts are reconciled on a quarterly basis. In addition all reconciliation will have to be reviewed and signed by both the Director of Accounting Services and the Director of Financial Aid.

F-109

----------State of Georaia - - - - - - - - - -
Fndi1gs and Que.sHoned Costs
For the FISCal Year Ended Jme 30. 1997
FORT VALLEY STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Failure to Maintain Complete Records Student Financial Aid Cluster Program Questioned Cost: $608.88 Finding Control Number FA-533-97-01
For the year under review, an examination of the student financial aid files of forty-seven students revealed that the University failed to maintain complete files for fifteen students as required by 34 CFR 668.23. The files were incomplete due to missing award letters, lack of documentation to support cost of attendance calculations and missing mitigating circumstances forms. After this situation was brought to the attention of the fmancial aid director, the missing information was provided for the fifteen students. However, the information provided contained December 1997 dates indicating that the required documentation did not exist until requested by the auditors.
Our examination of these files disclosed that one student was disbursed $608.88 of fmancial aid in excess of documented financial need. The items sampled contained financial aid disbursements of $360,744.67 out of a population of $16,939,823.82. A projection of this monetary error to the total population resulted in likely questioned costs in excess of $10,000.00.
This deficiency was a result of management's failure to adequately review student files to ensure their completeness. The University should implement adequate controls to ensure that all student financial assistance files are complete and available for review upon request. The University should contact the U.S. Department of Education regarding resolution of this questioned cost.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Family Education Loans (CFDA 84.032) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
Management Response
We concur with this recommendation. At the time the auditors requested the documents in question, the department was in the process of updating student files on the BANNER Student Financial Aid System. Therefore, the decision was made to supply them with computer generated award letters. This resulted in the date on the award letters being equal to the date that they were generated for the system rather than the date they were originally generated. This fact was pointed out to the auditors when the letters were presented to them. The Institution has since completed the updating of all student files and the Director of Financial Aid is working with the counselors to ensure that all files remain current. Therefore, we do not anticipate this situation occurring in the future. The contact person is Jeanette Huff, Director of Financial Aid.
REPORTING Expenditures in Excess of Authorization Student Financial Aid Cluster Program Finding Control Number FA-533-97-02
For the year under review, the Student Payment Summary (SPS) report to the U. S. Department of Education indicated that the University incurred $3,803,253.00 in Federal Pell Grant Program expenditures. This amount represented the University's
F-110

---------State of GeortJia - - - - - - - - -
Fndilgs and Que.sHoned Costs
For the FISCal Year Ended Jme 30. 1997
FORT VALLEY STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
authorized amount of the Federal Pell Grant award for fiscal year 1997. However, the University's accounting records reflected $3,816,655.00 in fiscal year 1997 Pell Grant program expenditures or $13,402.00 in excess of the authorized amount. In order to be reimbursed for the excess Pell Grant program expenditures, the University, in conformity with Federal Statutes, must certify the validity of these payments to the U. S. Department of Education. The Federal agency can then provide appropriate adjustments of the fiscal year 1997 authorized amount in order to make the funds available to the University.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Pell Grant Program (CFDA 84.063)
Management Response
We concur with this recommendation. The Director of Accounting Services and the Director of Financial Aid are in the process of reconciling the differences between the documents referred to above. Based on the results appropriate adjustments will be made to the accounting and/or the PELL Expenditure records. Upon completion of their reconciliation which should be complete by May I, 1998, they will be responsible for ensuring that all student aid accounts are reconciled on at least a quarterly basis. These quarterly reconciliations should eliminate any differences between the accounting and fmancial aid records. The contact person is Stanley Williams, Director of Accounting Services.
REPORTING Inadequate Documentation for Report Student Financial Aid Cluster Program Finding Control Number FA-533-97-03
For the year under review, the University failed to provide documentation to support Part VI, Section A of the Fiscal Operations and Application to Participate (FISAP) report submitted to the U.S. Department of Education on October I, 1997 for the award period July I, 1996 through June 30, 1997.
Federal regulations (34 CFR 674.3, 675.3 and 676.3) require the University to ensure that the information is compiled and available for review upon request. This noncompliance was a result of management's failure to retain information after the report was submitted. The University should retain all information used to complete the FISAP report and make it available for review upon request.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038)
Management Response
We do not concur with this recommendation. For the year under review, the gathering of data for student clusters on the Fiscal Operations Report had to be processed manually due to a technical problem with the computer program. During the examination the tally sheets used to compile the data could not be located. However, the auditors were invited to examine the source documents from which the tally sheets were prepared by they declined to do so.
F-Ill

- - - - - - - - - - S t a t e of G e o r g i a - - - - - - - - - -
Fndi1gs and Questioned Costs For the FISCal Year Ended Jme 30, 1997
FORT VALLEY STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
The regulation states that Institution must retain records used to compile the FISAP and that those records must be available for inspection upon request. Since the source documents used to prepare the tally sheets were available, the Director of Financial Aid takes the position that the University was in compliance with the regulation.
However, the Director will implement procedures to insure that all information, including tally sheets, will be retained in the future for examination. The contact person is Jeanette, Huff, Director of Financial Aid.
REPORTING Reports Not Reconciled Student Financial Aid Cluster Program Finding Control Number FA-533-97-04
For the year under review, expenditures reported on the following required reports for Federal Financial Assistance programs submitted by the University to the U.S. Department of Education were not reconciled as follows:
(1) The Student Payment Summary (SPS) report, which reports Pell Grant expenditures for the year, was not reconciled to the accounting records.
(2) The Fiscal Operations and Application to Participate (FISAP) report had amounts reported for various programs which did not reconcile to the accounting records.
(3) The expenditures reported on the FISAP report for the Pell Grant, Supplemental Educational Opportunity Grant and College Work-Study Programs were not reconciled with the reported disbursements on the PMS272-A report at June 30, 1997.
Federal regulations (34 CFR 674.19, 675.19, 676.19, 690.81 and 690.83) require the University to ensure that the information is accurate and reconciled as necessary. The deficiencies identified were a result of management's failure to adequately reconcile reports submitted to the accounting records.
The University should implement adequate controls to ensure that these reports are accurately completed and supported by the accounting records. Detail reconciliations should be prepared for any variances and maintained as part of the supporting documentation.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Supplemental Educational Opportunity Grant (CFDA 84.007) Federal Work-Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038) Federal Pell Grant Program (CFDA 84.063)
Management Response
We concur with this recommendation. However, we must point out that the amounts reported on the FISAP for FSEOG and FCWS agreed to the general ledger at June 30. The Director of Accounting Services and the Director of Financial Aid are in the process of reconciling the differences between the documentation in question. The grants and contracts accountant, Perkins Loan accountant and a financial aid assistant have been assigned responsibility for reconciliation of the various PELL, Perkins, FSEOG and FCWS report and maintaining all supporting documentation.
F-112

- - - - - - - - - - S t a t e of Georgia----------
Fndi1gs and QuesHoned Costs
For the fiSCal Year Ended June 30. 1997 FORT VALLEY STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Upon completion of their reconciliation by May I, 1998, the two directors will be responsible for maintaining a system that ensure that all student aid accounts are reconciled with the general ledger on at least a quarterly basis. The contact person is Stanley Williams, Director of Accounting Services.
F-1 13

----------State of Georaia ----------
Fndi1gs and QucsNoncd Costs
For the Hscal Year Ended Jme 30. 1997
GEORGIA SOUTHERN UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS REPORTING Incorrect Student Payment Summary (SPS) Report Student Financial Aid Cluster Program Finding Control Number FA-539-97-01 Our examination of the Federal Pell Grant Program for the 1995-96 award year disclosed that the University's authorized Pell Grant award amount was $5,936,826.00. The University incurred a total of$5,965,035.00 in Pell Grant expenditures per the fiscal year 1996 Fiscal Operations Report and Application (FISAP) or $28,209.00 in excess of the authorized amount. In order to be reimbursed for the excess Pell Grant payments, the University, in conformity with Federal statutes, is responsible for certifying the validity of those payments to the U. S. Department of Education. The Federal agency can then institute an adjustment to the 1995-96 authorized amount. Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Pell Grant Program (CFDA 84.063)
Management Response We concur with this finding. Georgia Southern University has made an official request for a Federal Pell Grant Authorization Adjustment for fiscal year 1996. The Institution contracted with KPMG Peat Marwick LLP to conduct the Student Financial Aid Assistance Audit Enclosure Report, resolve the differences between the Institution's EDPMS 272 Reports and the U.S. Department of Education's final Student Payment summary and perform the independent auditors' required attestation. The Finding Control Number was the last step in completing the official request for a Federal Pell Grant Authorization Adjustment as directed by Dear Colleague Letter (DCL -P-95-5), (DCL-GEN-9-14) for fiscal year ended June 30, 1996. Georgia Southern University has undertaken these efforts not only to ensure proper resolution of the audit finding, but more importantly, to ensure timely reconciliation and reporting of Federal Pell Grant expenditures in the future. The contact person is William Rabitsch, Comptroller.
F-114

----------State of GeorBia - - - - - - - - - -
Fndngs and QuesHoned Costs
For the Fiscal Year Ended Jme 30. 1997
SAVANNAH STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS INVENTORIES Inadequate Supply/Resale Inventory Records Finding Control Number FS-548-97-01 For the year under review, the supply/resale inventory records revealed that the internal accounting control procedures for the supply and resale perpetual inventory system were deficient. The following is a summary of the deficiencies:
(I) The physical inventory counts for the bookstore inventory at fiscal year end were not performed in an orderly and efficient manner.
(2) Plant operations perpetual inventory system was not operational. The amounts based on the inventory listing at June 30, 1997, were not recorded on the general ledger. Audit adjustments were made to reflect this inventory on the University's financial statements.
(3) The bookstore inventory was recorded incorrectly on the general ledger at retail price rather than at cost. Audit adjustments were necessary to reduce the inventory valuation to cost.
These deficiencies are a result of management's failure to follow written policies and procedures and to ensure inventories are properly maintained. The University should implement procedures to ensure that physical inventory counts are performed in a reliable manner and are included in the general ledger. Management Response We concur with this finding. (1) Bookstore personnel will strictly follow inventory procedures in place. (2) Plant Operation's storage area has been re-arranged to separate inventory items from non-inventory items awaiting
delivery to departments. To further enhance the inventory system, Georgia Commodity Codes have been assigned to inventory items. Formal procedures have been developed to conduct physical inventory at the end of the fiscal year. The inventory value with corresponding reserve will be properly reflected on the fiscal year 1998 books. (3) The June 30, 1997, Bookstore ending inventory has been revised to reflect inventory at cost with corresponding adjustment to be made on the year-end fmancial report. In view of the fact that the bookstore software (MBS) does not produce inventory at cost, Bookstore personnel will reformat inventory reports on a spreadsheet at cost.
F-115

----------State of Georgia----------
Fndings and QucsHoned Costs
For the Hscal Ycar Ended Jmc 30, 1997

SOUTHERN POLYTECHNIC STATE UNIVERSITY

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

REVENUESIRECEIV ABLES/RECEIPTS Deficit Cash Balances/Inadequate Accounts Receivable Documentation Finding Control Number FS-550-97-01

At June 30, 1997, the Defense Logistics Agency Apparel Research project in Restricted Funds had a cash deficit of $217,716.05. A review of internal controls over this Restricted Fund project revealed the following deficiencies:

(I) Billing procedures were not in place to ensure timely request of funds to cover expenditures.

(2) Grant availability was not always verified prior to disbursement of funds.

As a result of these deficiencies, this deficit cash balance was created and has been carried on the accounting records for an extended period of time. The University's fmancial statements reflect an accounts receivable of $217,716.05 to fund this deficit cash balance. However, $117,716.05 of this accounts receivable is not supported by grant award documents.

The University should implement procedures to ensure that grant funds are available prior to disbursement and that billings to grantors are made in a timely manner. The University should contact the grantor agency to determine if grant funds are available to fund this deficit cash balance. Also, the University should take appropriate action to secure funding for any deficit cash balance not covered by grant funds.

Management Response

We concur with this finding. Ms. Karen Holley, Director of Budgets & Fiscal Affairs, will reconcile this account and initiate accounting adjustments prior to June 30, 1998. Further, appropriate procedures will be documented by Ms. Holley to assure regular review of restricted fund accounts so that this problem does not reoccur again.

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING FISAP Report Not Reconciled to Accounting Records Student Financial Aid Cluster Program Finding Control Number FA-550-97-01

For the year under review, amounts reported on the Fiscal Operations and Application to Participate (FISAP) Report submitted by Southern Polytechnic State University to the U.S. Department of Education on October I, 1997, did not agree with the accounting records as indicated below:

FISAP Report Item

FISAP Report

Accounting Records

Difference

Institutional Share of Earned Compensation Federal Share of Earned Compensation Administrative Cost Allowance

$ 12,611.00 $ 37,834.00 $ 2,631.00

$ 13,832.24 $ 41,996.31 $ 2,801.05

$ 1,221.24 $ 4,162.31 $ 170.05

Federal regulation (34 CFR 675.19) requires the College to ensure that financial information reported is accurate and reconciled to the accounting records.

The difference between the accounting records and the FISAP Report were not reconciled. The University should implement procedures to ensure that the FISAP Report is accurately completed and supported by the accounting records. Detail reconciliations should be prepared for any adjusted amounts and maintained a part of the supporting documentation.
F-116

----------State of Georgia----------
FD1di1gs and Que.snoned Costs
For the Hscal Year Ended Jme 30, 1997
SOUTHERN POLYTECHNIC STATE UNIVERSITY
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Federal Work Study Program (CFDA 84.033)
Management Response
We concur with this finding. The University has retained the services of an accountant with significant Title IV experience. This individual will begin his employment on April 13 of this year. His first task will be to review all Title IV accounts and fully reconcile each to current Department of Education balances. Thereafter, it will be his responsibility to perform this review and reconciliation on a quarterly basis, so that when fiscal year end reporting occurs the balances contained in the accounting records will accurately and completely support the balances reported externally. Ms. Karen Holley will document and implement appropriate procedures to insure that amounts are reconciled as required under Federal regulation 34CFR675.19.
SPECIAL TESTS AND PROVISIONS Exit Counseling Not Conducted Student Financial Aid Cluster Program Finding Control Number FA-550-97-02
Federal regulation (34 CFR 682.604) requires Southern Polytechnic State University to conduct in-person exit conferences with Federal loan recipients who are graduating or will otherwise be enrolled less than half-time. Federal regulations also require the University to document that the exit conference was held. For the year under review, our examination revealed that the University did not conduct in-person exit counseling for a total of three students (out of fifteen students sampled) who either graduated or who were enrolled at less than half-time status. Federal regulations allow the University to mail exit counseling information to loan recipients only in cases in which the students do not attend the exit conference or the students withdrew from school without the University's prior knowledge. Our examination revealed that the University did not maintain documentation in the students' files to show that exit counseling information had been mailed to the students.
The University should ensure that all students requiring exit counseling are properly identified and that exit counseling is conducted and documented as required by Federal regulations.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U. S. Department of Education Federal Direct Student Loan Program (CFDA 84.268)
Management Response
We concur with this finding. When the quarterly graduation list is received from the Office of the Registrar, it will be compared to the balances contained in the Department of Education's required software, EDExpress. Anyone having received a loan will be frozen for an exit interview. Once the exit interview has been conducted, the student will then be released from the hole and the Office of Financial Aid will be notified. Ms. Sandy Weaver, Accountant II, will document and implement appropriate procedures to insure these conferences are conducted timely as required under Federal regulation 34 CFR 682.604.
F-117

----------State of Georgia----------
Fndngs and QucsHoned Costs
For the Ftscal Year Ended Jme 30. 1997
VALDOSTA STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-551-97-01
For the year under review, it was noted that Valdosta State University did not provide for adequate separation of duties in the performance of accounting functions and related procedures pertaining to the control category Expenditures/Liabilities/Disbursements. This deficiency was a result of management not assigning employee duties in a manner to adequately safeguard assets and/or promote efficiency and accuracy in key accounting functions.
The University should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above control category, and implement those procedures to strengthen the internal controls over the accounting function.
Management Response
We agree with your recommendation. By shifting accessibility of certain CUFA Subsystems and reassignment of duties within the Financial Services department we have attempted to rectify any non-compliance with the principle of segregation of duties. We hope to continue to strive for better segregation with re-departmentalization of some duties and the implementation of a new financial system which allows for greater flexibility in such matters. The Vice President of Business & Finance, James M. Brignati, the Director of Finance, Cindy Meyer, and the Director Personnel, Inman Grimsley are taking steps to change procedures and will have these in place as soon as the Board of Regents makes the new software available to our institution.
REVENUEIRECEIV ABLES/RECEIPTS Student Accounts Receivable Not Supported by Financial Aid Finding Control Number FS-551-97-02
On June 30, 1997, Valdosta State University had $195,111.66 in student accounts receivable which were incurred prior to Summer quarter, 1997, and had no financial aid as of June 30, 1997, to support the receivable. This condition occurred because of management's failure to obtain approved documentation to support financial aid before disbursement of funds. There is no provision in the policies of the Board of Regents for deferments of student accounts without the student having approved documentation of financial aid at the time of registration.
Collections of students accounts receivable should be made on at least a quarterly basis, and no student should be granted a deferment without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivable, ifnecessary.
Management Response
We agree with your recommendation. We have reviewed and amended the policies we use to validate student registrations and the various sources of financial aid used as payment. Basically, we moved the point of the financial aid process continuum at which we accept the aid as payment further down the processing pipeline. We have also issued a Request for Proposal to credit reporting agencies to enable us to report student receivables. Since your report we have been able to collect $20,000 of monies owed to Valdosta State. We are also exploring the use of a collection agency to continue to reduce the receivables.
The majority of the receivables were not generated by our disbursing any funds to the student as asserted in the fmding, but by our having validated students' registration with processed financial aid which failed to materialize at a later time. The receivables are unpaid fees, not inappropriately disbursed financial aid. Officials responsible for continued pursuit of
F-118

- - - - - - - - - - S t a t e of Georgia----------
Fndhgs and Que.sHoned Costs
For the FISCal Year Ended Jme 30. 1997
VALDOSTA STATE UNIVERSITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
accounts receivable collection and the verification of financial aid include the Director of Finance, Cindy Meyer and the Director of Financial Aid, Tommy Moore.
EXPENDITURES/LIABILITIES/DISBURSEMENTS H.O.P.E. Disbursements Made to Ineligible Students Questioned Costs: $408.00 Finding Control Number FS-551-97-03
For the year under review, an examination of fifty students receiving H.O.P.E. Scholarship funds revealed $408.00 was awarded and disbursed to three students who had not met satisfactory academic progress requirements. The H.O.P.E. Scholarship Program requires a minimum 3.0 grade point average to maintain satisfactory academic progress. These deficiencies occurred the first quarter Valdosta State University implemented the BANNER system and the employees were not familiar with the system.
Procedures were implemented Winter quarter 1997 to ensure that a review of satisfactory academic progress is made for each student before awarding and disbursing H.O.P.E. Scholarship funds. The University should contact the Georgia Student Finance Commission regarding the resolution of these questioned costs.
Management Response
We agree with your recommendation. The Director of Financial Aid, Tommy Moore will contact the Georgia Student Finance Commission to obtain guidance as to the resolution of this matter by June 30, 1998.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
SPECIAL TESTS AND PROVISIONS Lack of Written Federal Work-Study Agreements Finding Control Number FA-551-97-01
For the year under review, an examination of Federal Work-Study students employed with private organizations revealed that there were no written agreements between the organizations and Valdosta State University. Federal regulations require that the institution enter into a written agreement with any agency or organization providing employment under the Federal Work-Study program. This condition occurred because management was not aware of the Federal regulations pertaining to Federal Work-Study students employed with private organizations.
Procedures should be implemented to ensure that any agency or organization employing students under the Federal WorkStudy program has a written agreement with Valdosta State University.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U.S. Department of Education Federal Work-Study Program- CFDA No. 84.033
Management Response
We agree with your recommendation. The Assistant Director of Student Employment Services, Ms. Emily Davis, will obtain any currently outstanding agreements and will implement procedures to maintain these agreements in the future as applicable by June 30, 1998.
F-119

---------State of GeortJia - - - - - - - - -
Fndhgs and QuesNoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
STATE UNIVERSITY OF WEST GEORGIA
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Controls Over Cash Receipts Finding Control Number FS-554-97-01
For the year under review, the accounting procedures of the University were insufficient to provide for adequate control over cash receipts. The following deficiencies were noted:
I) Cash received at various campus locations was not verified by an employee independent of the cash receipting process prior to the transfer of funds to the Business Office.
2) Cash receipt books were not adequately monitored to ensure that all receipts written were recorded on the University's books.
3) Receipt books were not maintained intact to ensure their issuance in proper numerical sequence.
4) Cash receipts were not submitted in a timely manner to the Business Office to be recorded and deposited.
These deficiencies were the result of management's failure to establish and implement proper internal control procedures over the receipt and recording of cash which are necessary to safeguard and report the cash and cash equivalents of the University. The University should establish and implement appropriate internal controls to ensure that cash receipts are properly recorded, maintained and submitted to the Business Office for deposit in a timely manner.
Management Response
We concur.
1) The Comptroller has put procedures in place where applicable to provide independent verification of the cash receiving process.
2) We have implemented a process to monitor and account for the receipts books through the Comptroller's Office. The receipt books are controlled when issued and receipts monitored against a receipt log as the receipts come in.
3) The process listed in number 2 above will ensure proper sequence of the receipts.
4) Procedures are being put into place to ensure receipts are turned into the Business Office within 5 working days or when the amount reaches $50. This will be verified by the University's Internal Auditor.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $712.50 Finding Control Number FA-554-97-01
For the year under review, a sample of twenty (20) student financial aid files was selected to determine if fmancial aid was properly calculated and awarded to eligible students. The items sampled contained fmancial aid disbursements of $131,411.51 out of a population of $16,649,443.69. Our examination revealed that one student received an overpayment totaling $712.50. A pr0jection of this monetary error to the total population resulted in likely questioned costs in excess of $10,000.00. The following factors contributed to this overpayment:
F-120

- - - - - - - - - - S t a t e of Georgia----------
F11di1gs and QuesHoned Costs
For the FISCal Year Ended June 30. 1997
STATE UNIVERSITY OF WEST GEORGIA
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
I) Inadequate monitoring of Federal Work-Study Program students by the Geology Department allowed the student to exceed his Federal Work-Study award.
2) Management failed to adjust the student's cost of attendance and award as a result of his graduation following spring quarter. The student's initial award was based on twelve months attendance rather than on the three quarters actually attended.
Management should develop and implement procedures to ensure that students participating in the Federal Work-Study Program are not allowed to earn in excess of their award amount. Management should also ensure that student fmancial aid awards are reviewed and adjusted (if necessary) upon any change in a student's status. The University should contact the U.S. Department of Education regarding resolution ofthis fmding.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U.S. Department of Education Federal Work-Study Program (CFDA 84.033) William D. Ford Federal Direct Loan Program (CFDA 84.268)
Management Response
We concur with the finding of$712.50 but not necessarily with the extrapolation to $IO,OOO.
Procedures are being put into place within the Federal Work-Study Program by the Financial Aid Director to ensure that hours worked and dollars paid are authorized and do not exceed the Federal Work-Study Awards. The procedures also ensure that awards are monitored on a quarter by quarter basis, which allow us to catch any awards that exceed the period because of students dropping out of school.
ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Cost: $I,628.I I Finding Control Number FA-554-97-02
For the year under review, testing was performed on the entire population of the University's intercollegiate athletic teams to determine if financial aid was properly calculated, awarded and disbursed to eligible students. This testing revealed that five students received overpayments totaling $I,628.1 I. Four of these overpayments resulted from management's failure to adjust the students' Federal Direct Loan payment by the amount of the student's athletic book scholarships. As a result, students were overpaid by the amount of the book scholarships. One of the overpayments resulted from a student receiving an award based on twelve months attendance but was, in fact, enrolled for three quarters.
Management should develop and implement procedures to ensure that students receiving athletic book scholarships are not disbursed Federal funds until all other award disbursements have been posted to the student's account. Management should also ensure that student financial aid awards are reviewed and adjusted, if necessary, upon any change in a student's status. The University should contact the U.S. Department of Education regarding resolution of this finding.
F-I21

- - - - - - - - - - S t a t e of Georaia - - - - - - - - - -
Fndngs and Quesnoned Costs
For the FISCal Year Ended Jme 30. 1997

STATE UNIVERSITY OF WEST GEORGIA

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

Federal Programs/Awards Affected:

Student Financial Aid Cluster Program U.S. Department of Education William D. Ford Federal Direct Loan Program (CFDA 84.268)

We concur. Our existing Book Scholarship (books only, no supplies) process is as follows:

For All Sports EXCEPT Football

1. The coaches complete a charge ticket for each student (including his or her social security number) authorizing the

student to receive a Book Scholarship.

2. The student brings the charge ticket to the Book counter. The books are pulled and the charge is made.

3. The Bookstore Manager reconciles and separates the charge tickets by sport the first word day after the drop-add

period of each quarter.

4. The Bookstore Manager completes a Scholarship Summary Form. This form and a copy of each ticket is distributed

as follows:

Financial Aid

Original

Comptroller

Copy

Bookstore-Receivables

Copy

Assistant Athletic Director-Business Manager

Copy

Head Coach

Copy

5. Financial Aid posts the charge to each student's award record in Banner. The students are then in effect, over-

awarded for the amount of the book allotment under the financial aid cost of attendance.

6. The Comptroller's Office makes the transactions to the appropriate Athletic accounts and to the Bookstore.

7. The Coach of each sport collects the books at the end of the quarter from the students. A reconciliation is not

performed by the Athletic Department. The books collected are returned to the Bookstore and the department

receives a credit.

Football Only

1. The Head Coach submits charge tickets and each student's schedule prior to each quarter.

2. Prior to each quarter, the books are reserved for each student based on the schedule submitted.

3. The student makes any adjustments to his or her schedule, as necessary. The students come to the book counter to

pick up their books. The charge is made when the student picks the books up at the Bookstore.

4. The Bookstore Manager reconciles and separates the charge tickets by sport the first work day after the drop-add

period of each quarter.

5. The Bookstore Manager completes a Scholarship Summary Form. This form and a copy of each ticket is distributed

as follows:

Financial Aid

Original

Comptroller

Copy

Bookstore-Receivables

Copy

Assistant Athletic Director-Business Manager

Copy

Head Coach

Copy

6. Financial Aid posts the charge to each student's award record in Banner. These students are then in effect, over-

awarded for the amount of the book allotment under the fmancial aid cost of attendance.

7. The Comptroller's Office makes the transactions to the appropriate Athletic accounts and to the Bookstore.

8. The Coach of each sport collects the books at the end of the quarter from the students. A reconciliation is not

performed by the Athletic Department. The books collected are returned to the Bookstore and the department

receives a credit.

F-122

---------State of Georgia---------
Fndng.s and Que.stloned Co.st.s
For the FISCal Year Ended Jme 30. 1997
STATE UNIVERSITY OF WEST GEORGIA
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
Effective Winter quarter 1998, Financial Aid is recording the estimated Book Scholarship from the Athletic Department's offer sheet to the student. The award amount is adjusted to actual cost when the Bookstore distributes the Scholarship Summary Form and charge tickets after the drop-add period of each quarter. We are currently reviewing this process to adjust the award so that the amount charged is adjusted if and when the books are returned to the Bookstore during the "book buy-back" period each quarter. We intend to improve the controls and post the net award to the student's fmancial aid account within the U.S. Department of Education's and NCAA's regulations.
ELIGIBILITY Inadequate Control Procedures Student Financial Aid Cluster Program Questioned Cost: $14,061.47 Finding Control Number FA-554-97-03
For the year under review, the internal control procedures of the State University of West Georgia were found to be inadequate in monitoring Federal Work-Study Program participants working in the Athletic Department. The following matters were noted:
I) Students were allowed to work and submit time cards prior to receiving a Federal Work-Study award and/or signing a work agreement.
2) No written job descriptions existed for any of the Federal Work-Study Program positions in the Athletic Department.
3) It was noted that students sometimes completed time cards at the. Financial Aid office, rather than recording time as they worked.
4) Numerous time cards were submitted either with no approval date or an approval date prior to the last date worked as indicated on the time card.
5) Of twelve (12) athletes who participated in the Federal Work-Study Program under the supervision of the Athletic Department, eight (8) were paid in excess of their award.
6) In two instances, multiple time cards for the same student were submitted for the same day and hours worked. One student submitted two cards reflecting similar but not identical hours worked for the same two-week pay period. These cards were signed by both the student and the supervisor on successive days. Subsequently, the student received and cashed two checks.
7) Two time cards were submitted and approved showing time worked on February 31, 1997 (non-existent date), and a non-existent day between November 10 and November 11, 1996.
8) Several time cards were submitted and approved claiming the students worked during holidays or quarterly breaks when school offices were closed.
9) Students were paid for time cards indicating they had worked during class times or during intercollegiate athletic events where their participation was documented in official game records.
10) One student omitted the beginning and ending daily work times for an entire week.
F-123

----------State of Georaia - - - - - - - - - -
Fndi1gs and QuesNoned Costs
For the FLSCal Year Ended Jme 30. 1997
STATE UNIVERSITY OF WEST GEORGIA
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
11) One student submitted time cards for each pay period from March 22, 1997 through May 30, 1997. On June 6, 1997, the student also submitted a time card for the period April 3, 1997 through May 13, 1997, claiming 13.5 hours for three unspecified dates. Because of the failure to include dates worked on the second time card, it was not possible to ascertain if duplicate payment was made for the same hours worked.
12) Estimated time to be worked for all participants was submitted to the University's Human Resources Department on December 9, 1996, and June 16, 1997, for the payroll period from December 9 to December 27, 1996, and for the payroll period from June 14 to June 30, 1997, respectively.
I3) Upon examination of the actual time cards, it is apparent that several individuals signed time cards using the name of one supervisor.
The questioned cost of$14,061.47 is the total amount of Federal Work-Study Program wages paid to athletes employed by the Athletic Department during the year ended June 30, 1997.
The University should develop and implement policies and procedures to ensure that: (I) students are not permitted to work under the Federal Work-Study Program until they have received an award and signed a work agreement; (2) job descriptions for all jobs are prepared and maintained in each student's file; (3) students record their time as they work and not when time cards are submitted; (4) a supervisor is prohibited from signing a blank time card or allowing a student to retain possession of an incomplete time card after it has been approved; (5) each department monitors the earnings of their work-study student(s) to ensure student(s) do not earn wages in excess of their award; (6) written time records for each student are maintained by their supervisor to ensure that the time is properly reported by students; (7) all time cards are signed by the actual supervisor or, when necessary, other appropriate personnel on behalf of the supervisor.
Subsequent to June 30, I997, it was noted that the University did not require that beginning and ending times worked be recorded on time cards. Although it is not a Federal Work-Study Program regulation, the University should require students to record the specific date worked and beginning and ending times.
The University should contact the U.S. Department of Education regarding resolution of this fmding.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U.S. Department of Education Federal Work-Study Program (CFDA 84.033)
Management Response
We concur. The Director of Financial Aid and the Director of Athletics, in combination with their respected vice presidents and Dr. Beheruz Sethna, President, realize the seriousness of this finding.
As noted in the letter from Dr. Beheruz Sethna to the Department of Education dated 1/22/98, a copy of which was sent to you with the draft report response on I/22/98, we have engaged the services of the Financial Aid Audit Team ofKPMG (Peat Marwick) to perform a focused audit for us on the FWSP Program. The fieldwork of the audit started in early February and was completed March I2, I998. They focused on reviewing the fmdings of the State Audit Agency for the year I997, to validate the questionable amounts and then audited the time cards submitted for the athletic programs, for the fiscal years ending I995 and I996 to determine if we have a problem in prior years. We have thus focused on a three-year history of the problem. In addition, they sampled and reviewed as necessary the FWSP charges for non-athletic departments to ascertain the program has not been overcharged and proper controls are in place. We expect the KPMG report by April3, 1998.
F-124

-----------State of Georgia-----------
Fndings and QuesHoned Costs For the FISCal Ycar Ended Jmc 30. 1997
STATE UNIVERSITY OF WEST GEORGIA
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS We do have a concern over the Questioned Cost amount of $14,061.47, for 1997. The total Athletic Department FWSP allocation for 1997 was $14,556.37. The comments indicate that this problem was confined to the Baseball Program. The Baseball Program allocation was $10,468.75. Although, KPMG is validating the actual amount in question for 1997, I do not believe the amount indicated in this finding should exceed the amount of the Baseball Program.
F-125

---------State of GeorfJia - - - - - - - - -
Fndilgs and Questioned Costs
For the fiSCal Year Ended Jme 30. 1997
DALTON COLLEGE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS REPORTING Incorrect Student Payment Summary Report Student Financial Aid Cluster Program Finding Control Number FA-569-97-01 For the year under review, the U. S. Department of Education Student Payment Summary (SPS) report indicated that the College incurred $949,061.00 in Federal Pell Grant Program expenditures. This amount represented the College's fmal authorized amount of the Federal Pell Grant Program award for fiscal year 1997. However, the College actually incurred a total of $1,014,119.25 in fiscal year 1997 Pell Grant Program expenditures. In order to be reimbursed for the excess Pell Grant expenditures, the College, in conformity with Federal Statutes, must certify the validity of these payments to the U. S. Department of Education. The Federal agency can then institute an upward adjustment of the fiscal year 1997 authorized amount in order to make the funds available to the College. Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Pell Grant Program (CFDA 84.063)
Management Response The amounts and explanations as detailed by the Audit Department are correct for the Fiscal Year 1997 and we do not concur with the audit finding. Our Director of Financial Aid, Sylvia Graves, and Thomas E. Godbee, Comptroller, have reconciled all Pell financial aid and accounting records for Fiscal Year 1997. Processes have been incorporated and strengthened through the Financial Aid Office and the Comptroller's Office to avoid future upward adjustment conditions as noted in the audit finding. As part of Dalton College's Corrective Action Plan, future submissions will be closely monitored and verified by Thomas E. Godbee to avoid a finding of this nature. We anticipate this response is satisfactory and the appropriate documents provided will be sufficient to correct this finding, allowing an upward adjustment by the Federal Agency to make these funds available to Dalton College for Fiscal Year 1997.
F-126

----------State of Georgia----------
Fndilgs and QuesHoncd Costs
For the FISCal Ycar Ended Jmc 30. 1997
FLOYD COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-573-97-01
For the year under review, the accounting procedures of the College were insufficient to provide for adequate control over the bank reconciliation process. The following deficiencies were noted:
I) The monthly bank statements for the Floyd, Polk, Chattooga Medical Society Scholarship Fund bank account were not obtained by the College and thus the monthly interest earned was not recorded on the general ledger.
2) The June 30, 1997 bank statement for the payroll account was not properly reconciled to the general ledger.
3) The interest and the bank service charges disclosed through the bank reconciliation process for the payroll account were carried as reconciling items for extended periods of time.
These deficiencies were the result of management's failure to implement the proper internal control procedures over the cash and bank reconciliations which are necessary to adequately safeguard and report the cash and cash equivalents of the College. The College should establish appropriate internal controls to ensure that bank statements are obtained and reconciled with the accounting records monthly and that required adjustments are recorded in a timely manner.
Management Response
No response was received from management.
FUND EQUITIES Deficit Restricted Funds Finding Control Number FS-573-97-02
At June 30, 1997, the College had two Restricted Funds with deficit balances totaling $113,439.49 for which documentation of funds available to cover the deficits was not provided. Funds should not be expended in projects that do not have funds available.
These deficit balances are a result of management's failure to establish controls to ensure that grants are available and that reimbursement requests are made in a timely manner. The College should implement procedures to ensure that all grants are current, that funds are available to cover expenditures and that reimbursement requests are made in a timely manner. The College should review the individual Restricted Funds to determine if all available funding was requested, if the receipts were correctly posted to the funds, and if any other source of funding can be used to fund the deficits.
Management Response
No response was received from management.
F-127

---------State of Georgia---------
Fndi1gs and Que.sHoned Costs
For the FLSCal Ycar Ended Jmc 30. 1997

FLOYD COLLEGE

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER H.O.P.E. Program Reconciliation Report Not Reconciled to Accounting Records Finding Control Number FS-573-97-03

For the year under review, the College's H.O.P.E. Scholarship Program reconciliation report, which was provided to the Georgia Student Finance Commission, did not reconcile with the accounting records as indicated below:

Report Item

Per H.O.P.E. Reconciliation

Per Accounting
Records

Difference

Cash Disbursed to School

$ 495,735.70

$ 476,705.05

$ 19,030.65

Amount Awarded to Students $ 560,135.19

$ 540,922.21

$ 19,212.98

The differences occurred because management failed to reconcile accounting records to the H.O.P.E. Scholarship Program reconciliation report at year end. The College should establish procedures to ensure that the H.O.P.E. Scholarship Program reconciliation report is reconciled to the College's formal accounting records and that documentation is maintained supporting this reconciliation. The College should contact the Georgia Student Finance Commission to determine if any further action is warranted relative to the unidentified differences.

Management Response

No response was received from management.

GENERAL LEDGER Agency Fund Deficits and Lack of Purpose Statements Finding Control Number FS-573-97-04

At June 30, 1997, the College had fifteen agency funds that had deficit balances totaling $7,202.09. In addition, the College failed to provide purpose statements for the individual agency funds.

These deficiencies were the result of the College's disbursing funds prior to or in excess of the receipt of funds and resulted from management's failure to establish agency funds in accordance with Board of Regents policies and procedures. The College should implement procedures to monitor and to establish the individual agency funds in a manner that complies with Board of Regents policies and to ensure that all funds are received prior to the disbursement. The College should seek reimbursement for the deficit balances from the organizations involved.

Management Response

No response was received from management.

F-128

----------State of Georata - - - - - - - - - -
Fndings and QuesHoned Costs For the Hscal Year Ended Jme 30. 1997
FLOYD COLLEGE GENERAL LEDGER
Balance Sheet Items Not Supported By Detail Listings Finding Control Number FS-573-97-05 As of June 30, 1997, the College could not provide detail listings of accounts receivable, unearned revenue - summer quarter fees, and student deposits. Detailed subsidiary records are necessary to support the amounts recorded on the accounting records and financial statements. This condition occurred because management could not produce the required reports from the new Banner Registration/Accounting System. The College should implement procedures to ensure that subsidiary records supporting accounts receivable, unearned revenue and student deposits are available upon request. Management Response No response was received from management.
F-129

----------State of Georaia - - - - - - - - - -
Fndhgs and Que.sHoned Costs
For the FLSCal Year Ended Jme 30. 1997
MACON COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-581-97-01
For the year under review, the accounting procedures of the College were insufficient to provide for adequate control over the bank reconciliation process. The following deficiencies were noted:
(1) The monthly bank reconciliations for the operating account were not performed in a timely manner.
(2) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
These deficiencies were the result of management's failure to implement proper internal control procedures over cash and bank reconciliations that are necessary to adequately safeguard and report the Cash and Cash Equivalents of the College. The College should establish appropriate internal controls to ensure that bank statements are reconciled with the accounting records monthly and that needed adjustments are recorded on a timely basis.
Management Response
We concur with this finding. Reconciling items carried for extended periods of time were under review by the Director of Business Services at the time of the state audit. They have since been reconciled and the prior adjusts were made in accounting. The Director of Business Services, Russell A. Williams, has taken steps to assure that all bank accounts are reconciled in a timely manner and that book errors are identified and properly adjusted in a timely manner.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequate Equipment Inventory Records Finding Control Number FS-581-97-02
For the year under review, an equipment inventory sample of twenty randomly selected items was utilized to test the accuracy and validity of the equipment inventory records. The results of our testing procedures disclosed the following exceptions:
(1) One item on the equipment listing could not be located.
(2) A source of funds used to purchase the items was not included.
(3) Fifteen items did not have a proper acquisition date.
(4) Fourteen items did not have a reference to original documentation.
(5) One item was not adequately described.
In addition, we identified ten items from their site and attempted to trace them back to the equipment inventory listing provided. Of these items, three could not be found on the equipment inventory listing. Approximate value ofthe three items is estimated at $8,700.00.
Other problems noted in our testing of equipment inventories were as follows:
(1) The listing of disposals provided did not indicate how the item was disposed of or the date of disposition.
F-130

----------State of Georsia - - - - - - - - - -
Fndings and QuesHoned Costs
For the FLSCal Year Ended Jme 30. 1997 MACON COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS (2) The equipment inventory listing provided for review could not be reconciled to the amount recorded on the general ledger. A variance of$515,450.05 was noted.
These deficiencies occurred because of management's failure to adequately monitor the subsidiary equipment inventory records. The College should establish appropriate procedures to strengthen internal accounting controls to ensure that assets are safeguarded against loss from unauthorized use or disposition. Management Response We concur with this finding. The Director of Plan Operations, David S. Sims, has developed and implemented an Asset Management Policy. We are currently in the process ofre-inventorying the campus equipment and expect to be completed by April 1998. This process will enable us to reconcile the new inventory listing to that recorded on the general ledger and record all necessary adjusts prior to the end of the fiscal year.
F-131

----------State of Georgia----------
Fndi1gs and Que.snoned Costs
For the Fiscal Year Ended Jme 30, 1997 MIDDLE GEORGIA COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUESIRECEIV ABLES/RECEIPTS Student Accounts Receivables Not Supported by Financial Aid Finding Control Number FS-584-97-01 On June 30, 1997, it was noted that the College had $52,435.87 in student accounts receivable which were over one year old and were not supported by approved financial aid. There is no provision in the policies of the Board of Regents for deferments of student accounts without the student having approved fmancial aid at the time of registration. This condition occurred because management disregarded the policies of the Board of Regents. No student should be granted a deferment without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivables, if necessary. Management Response We concur with this finding. These receivables are due to changes in a student's financial aid after registration or due to the student's withdrawal. Part of the identified finding consists of accounts that are several years old. The likelihood of collection becomes more and more remote each year. An integrated system for financial aid, registration, and student fees has been implemented and will improve this problem. Also, collection efforts have been increased.
F-132

---------State of Georgia---------
Fndings and QuesNoned Costs
For the Hscal Ycar Ended Jmc 30. 1997 SOUTH GEORGIA COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FUND EQUITIES Deficit to be Funded from Subsequent Years' Operations Finding Control Number FS-587-97-01 The review report for the years ended June 30, 1995 and June 30, 1996, noted that Auxiliary Enterprises, excluding Intercollegiate Athletics, had net deficit balances of$24,694.00 and $128,414.94, respectively. The Board of Regents' Policy Manual, Section 702.02, states that Auxiliary Enterprises "shall be placed on a self-supporting basis, and the State will not make an appropriation to finance its operations." As of June 30, 1997, the College had a net deficit fund balance in the Auxiliary Enterprises, excluding Intercollegiate Athletics, of $221,091.26. The cause of this deficit is due to the lack of sufficient funds to meet obligations. The College should budget and provide for adequate funds to cover this deficit. Management Response We concur with this recommendation. The current operating position of Auxiliary Enterprises has deteriorated as the residential student population decreased. Current operating deficits are, as always, supported by prior years' reserves in excess of the deficit. At no time are state funds used to subsidize the operation of Auxiliary Enterprises. We do not anticipate a turnaround in the residential population but have made several changes in Auxiliary Enterprises which should decrease the deficit. At the end of Fall Quarter 1996, the operation of two dorms was combined into one dorm. This mid-year change helped to reduce the housing deficit for fiscal year 1997 by almost $30,000. The mandatory meal plan requirement has also been eliminated. This enabled the college to downsize its food service operation and should result in further reducing the deficit.
F-133

- - - - - - - - - - S t a t e of Georgia----------
Fndilgs and QuesHoncd Costs
For the FISCal Ycar Ended Jmc 30. 1997
GEORGIA MILITARY COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-590-97-01
The College was unable to provide subsidiary fixed asset records or other historical cost evidence supporting the balances reported for general fixed assets.
The College should take appropriate action to provide for an adequate property management system for general fixed assets which would include subsidiary records that adequately reflect an inventory of land, buildings and equipment owned by the College. Such records should include but not be limited to (I) date acquired, (2) acquisition cost, (3) estimated replacement cost, (4) location and description. Detailed records should be maintained for all deletions and additions to the Plant Fund.
Management Response
We concur with the findings.
(1) College accounting records for FY 98 are scheduled to be closed on or before August 15, 1998.
(2) The College will adjust accounting procedures to comply with auditor recommendations regarding postings to Restricted Fund accounts. Management oversight of the postings to Restricted Fund accounts has been increased to insure that the omissions cited during the FY 97 audit will not recur.
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number FS-590-97-02
Our examination included a review of the internal accounting controls utilized by the College in maintaining their accounting records. The following conditions relating to inadequate accounting procedures were found to exist:
(I) The accounting records for fiscal year 1997 were not closed until November 10, 1997.
(2) Activity for Restricted Funds for approximately the last three and one-half months of the fiscal year was not recorded on the accounting records. In addition, the general ledger cash balance for Restricted Funds was incorrect.
Proper internal accounting controls necessitate that all accounting activity is posted to the accounting records and that the accounting records are closed in a timely manner. Inadequate accounting procedures create an environment which does not provide reasonable assurance that accounting data and fmancial statements are accurate and complete.
The conditions identified above resulted from poor accounting practices and because of management's failure to adequately monitor and implement procedures to ensure that all activity is posted to the accounting records and that the accounting records are closed in a timely manner.
Extensive audit procedures and numerous journal entries were necessary to correct the financial statements utilizing source documentation.
The accounting personnel of the College were given instructions in the recommended accounting procedures for recording Restricted Fund activity and were made aware of the need to close their fiscal year accounting records in a timely manner. The College should review the accounting procedures in place, design procedures to correct deficiencies noted, and implement those procedures to strengthen the internal controls over the accounting function.
F-134

---------State of GeorfJia---------
Fndhgs and QuesNoned Costs
For the FISCal Vcar Ended Jmc 30. 1997 GEORGIA MILITARY COLLEGE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS Management Response We concur with the recommendation regarding land, buildings, and equipment. The College is in the process of implementing a new inventory system which should be in place near the end of FY 98. The system is integrated with our fmancial accounting system and will enable the College to better insure that equipment is added to the inventory in a timely and more accurate manner. The College has not yet been able to identify the funds necessary to obtain outside, professional assistance to properly assess the valuation of the older buildings owned by Georgia Military College. This initiative may be further delayed until FY 00.
F-135

----------State of Georgia----------
Fndings and QuesHoned Costs
For the F15Cal Year Ended Jme 30. 1997

SKIDAWAY INSTITUTE OF OCEANOGRAPHY

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-593-97-01

In the year under review, the Institute did not provide for adequate separation of duties in the performance of accounting functions and related procedures. This deficiency was a result of management's decision to limit the number of administrative staff responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff. These weaknesses in internal control pertain to all funds and programs administered by the Institute. The control categories affected are as follows:

(1) Cash and Cash Equivalents

(3) Expenditures/Liabilities/Disbursements

(2) Revenues/Receivables/Receipts

(4) General Ledger

Separation of duties involving key accounting functions is the basis for achieving an adequate system of internal control.

Management Response

We concur that a higher degree of internal control should be achieved. In cooperation with the University of Georgia, Internal Audit staff, we have begun to identify control categories with the highest risk factors. Compensating controls will be implemented as appropriate in order to reduce the relative risk involved with each control category.

F-136

----------State of Georgia----------
Fndilgs and QuesNoned Costs
For the Hscal Ycar Ended Jmc 30. 1997 SANDERSVILLE TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties Finding Control Number FS-817-97-0 I For the year under review, our examination determined that the Technical Institute did not provide for adequate separation of employee duties in the performance of accounting functions and related procedures for all funds. This deficiency was a result of management's decision to limit the number of administrative staff made responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff. Management Response We concur with the finding. On January 16, 1998 management added one additional accounting person to more appropriately distribute accounting functions. To be more specific; (I) Beginning January I, 1998, the accountant will take the bookstore inventory to eliminate the internal control issue of the
bookstore salesperson performing this task. (2) The receipt reconciliation point has been changed to include an additional balancing point in the cash receipting and
depositing process. One person will receive cash and write receipts, another will reconcile the receipts to cash, another will deposit the cash and, an additional person will enter the deposits to the system. (3) An additional staff member will approve and sign off on all accounts payable invoices to add another control point in the accounts payable process.
F-137

----------State of GeortJia - - - - - - - - - -
Fndi"\gs and QuesNoned Costs
For the FISCal Year Ended Jme 30. IW7
WEST GEORGIA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-819-97-01 For the year under review, it was noted that the Institute's accounting procedures did not provide adequate internal control over the bank reconciliation process. The accounting procedures related to cash were found to be deficient as follows:
(I) The monthly bank statements for the operating and federal accounts were not reconciled properly for any month of the fiscal year. Adjustments were necessary to correct the accounting records as of June 30, 1997.
(2) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
These conditions occurred because management did not implement appropriate procedures and controls to ensure that all bank statements were reconciled to the general ledger on a timely basis and that reconciling items were identified and corrected promptly. The Institute should implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger on a timely basis and that reconciling items are identified and corrected promptly. The Institute should establish procedures which ensure that cash and cash equivalents are adequately safeguarded. Management Response We concur with this finding. West Georgia Technical Institute is implementing appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger on a timely basis and that all reconciling items are identified and corrected.
(1) All bank deposits and disbursements for each month are posted to the financial accounting system (FACS). (2) All prior year book errors will be resolved. (3) Adequate detail of any adjustments are being kept on a monthly basis. (4) Beginning February 1998, all bank statements will be reconciled to the general ledger within ten working
days of receipt of bank statements. The Vice President of Administrative Services will approve all bank reconciliations. The Administrative Coordinator is responsible for completing all bank reconciliations.
F-138

---------State of Georgia---------
Fuidir\gs and QuesHoned Costs For the FISCal Ycar Ended Jmc 30. 1997
ALBANY TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number FS-820-97-01
For the year under review, accounting deficiencies were noted in the accounting records of Albany Technical Institute as described below:
(1) Numerous posting errors in balance sheet, revenue and expenditure accounts were identified and corrected during the course of our field work.
(2) The Institute failed to include a new bank account on the accounting records. The account was opened in January of 1997.
(3) Accounts receivable and accounts payable subsidiary records as presented for review were not properly reconciled to the general ledger control accounts. Numerous adjustments were necessary to reconcile subsidiary records to the accounting records.
(4) Numerous adjustments were necessary to reconcile salary payments made to employees as reported to the Georgia Department of Audits with the amounts recorded as salaries in the general ledger.
These deficiencies occurred because of management's failure to establish procedures to review and reconcile balances on the general ledger with supporting records and to ensure that all bank accounts were included on the Institute's accounting records. The Institute should establish appropriate procedures to ensure that the general ledger is posted, balanced and reviewed on a monthly basis and that detail records supporting the general ledger are complete, accurate and reliable. Corrective action should be taken to ensure that the accounting records include all bank accounts and transactions.
Management Response
We concur with this finding. Effective January 1998 - February 1998, local procedures were established to review and reconcile balances on the general ledger on a monthly basis with proper supporting documentation reviewed and approved by both the Accounting Manager and Vice President of Administration. The draft bank account for the Blakely Satellite Center was established on the accounting records in January 1998.
GENERAL LEDGER Agency Fund Overpayments Finding Control Number FS-820-97-02
At June 30, 1997, Albany Technical Institute had a deficit balance of$15,983.10 in the Fiduciary Fund Type- Agency Funds - HOPE Scholarship Program. This deficit balance is the result of disbursing funds in excess of available funds. Payments should not be made in excess of collections for Agency Funds.
Appropriate action should be taken by the Institute to secure reimbursement of this overpayment.
Management Response
We concur with this finding. Effective Fall Quarter 1998, HOPE grant charges are being balanced daily to ensure validity of the charges. Information is being transmitted electronically among systems to ensure accuracy.
A new position has been established, effective January 1998, in the Business office to handle Financial Aid Reconciliation of both HOPE and PELL and manage the refund process to students.
F-139

----------State of Geor5ia - - - - - - - - - -
Fndilgs and QuesNoned Costs
For the Hscal Year Ended Jme 30. 1997
ALBANY TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-820-97-03
For the year under review, it was noted that the Institute's accounting procedures did not provide adequate internal control over the bank reconciliation process. The accounting procedures related to cash were found to be deficient as follows:
(1) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
(2) Numerous adjustments were necessary to reconcile the accounting records with bank statements.
These conditions occurred because management did not implement appropriate procedures and controls to ensure that all bank statements were reconciled to the general ledger on a timely basis and that reconciling items were identified and corrected promptly.
The Institute should implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger on a timely basis and that reconciling items are identified and corrected promptly. The Institute should establish procedures which ensure that cash and cash equivalents are adequately safeguarded.
A review of the Institute's procedures for costing of resale inventories revealed that inventory was not properly updated for new costs when items were purchased.
This condition occurred because management failed to adequately monitor activity for the resale inventory records. The Institute should implement appropriate procedures to ensure that the resale inventory system is updated for new costs when items are purchased.
Management Response
We concur with this finding. Effective January 1998, the Accounting Manager will reconcile bank statements to the general ledger, identify reconciling items and make corrections within (5) business days of the revenue subsystem close. Vice President of Administration to review and approve.
Procedures are in effect to update resale inventory through an average costing method. Procedures will be updated to verify all price updates when items are purchased. Verification to occur quarterly by Business Office Coordinator and Accounting Manager.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-820-97-05
A review of the equipment inventory records revealed that an unidentified variance of $230,719.49 existed between the equipment inventory records and the general ledger at June 30, 1997. Also, the equipment inventory records were not updated for all equipment purchases made in fiscal years 1996 and 1997.
These deficiencies occurred due to management's failure to ensure that equipment inventory records were properly updated and reconciled to the general ledger. The Institute should establish the necessary controls to ensure that equipment inventories are maintained in accordance with provisions of the State Property System Manual.
F-140

---------State of GeorfJia - - - - - - - - -
Fndilgs and Quc.sHoncd Costs
For the fiscal Year Ended Jme 30. 1997

ALBANY TECHNICAL INSTITUTE

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Management Response

We concur with this finding. A review of equipment inventory records for fiscal years 1993, 1994, 1995, 1996 and 1997 are being reviewed and institute records be updated to identify unresolved issues and accurately reflect equipment purchases. Appropriate procedures and controls will be established to resolve future occurrences. Accounting Manager and Vice President of Administration will be responsible for verification of purchase updates to the Property Management System.

Current process and procedures are being reviewed to identify problem areas. New procedures will be established to properly update and reconcile equipment inventory records to the general ledger on a monthly basis in accordance with provisions of the State Property System Manual. A physical inventory of all equipment inventory will also be conducted.

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING Federal Cash Transaction Report Not Reconciled Pell Grant Program (CFDA 84.063) Finding Control Number FA-820-97-01

For the year under review, "cash on hand end of period" reported on the Institute's fmal monthly fiscal year 1997 Federal Cash Transaction Report - Status of Federal Cash to the U. S. Department of Education could not be reconciled to the accounting records as indicated below:

Report Date

Cash on Hand End of Period Reported on Form PMS272

Ending Cash Per Accounting
Records

Difference

June 30, 1997

$===56=2=.0=0

$====7=20=8=.4=4 $-6,646.44

This difference occurred due to failure to reconcile records maintained by the Financial Aid Office, which are used to prepare the Federal Cash Transaction Report, with the formal accounting records maintained in the Business Office.

Procedures should be established to ensure that all Federal Cash Transactions Reports are reconciled to the Institute's formal accounting records, and documentation should be maintained reflecting this reconciliation. The Institute should contact its grantor agency regarding this unreconciled difference.

Management Response

We concur with this fmding. Effective January 1998 the PMS report will be balanced monthly to the cash balance reflected on the general ledger. All adjustments, voids, or deletes will be taken into consideration when cash requests are made to avoid a cash on hand balance. Our Banner/Business Office Coordinator will be responsible for the balancing action with Financial Aid. The PELL draw down for Winter Quarter 1998 will be adjusted for the Cash on Hand Balance. The contact person is Cathy Skates, Vice President of Administration.

F-141

- - - - - - - - - S t a t e of Georgia---------
Fndilgs and Quc.sfioned Costs For the FISCal Ycar Ended Jmc 30. 1997
AUGUSTA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequate Equipment Inventory Records Finding Control Number FS-824-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by Augusta Technical Institute in maintaining their State Property System. A sample of 30 equipment items was selected to test the accuracy of the Institute's property management records. These items contained a value of$130,320.61 out of a population of $4,978,406.51 and were selected for the purpose of locating the equipment as recorded in the inventory records. The results of our testing procedures disclosed that two items, with a total cost of $4,000.00 could not be located. In addition to the unlocated items noted above, additional procedures disclosed that one item with an acquisition cost of$2,355.19 was not included on the inventory listing.
The Institute is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified were caused by the Institute's failure to follow guidelines for maintaining equipment inventories.
The Institute should follow established procedures to ensure that equipment inventory records are maintained in accordance with the State Property Management System Manual.
Management Response
We concur with this finding. To improve on the efficiency of the equipment inventory records, the property clerk has examined the inventory process and completed a new physical inventory; thereby, updating all equipment changes in order to reconcile to the property books. In addition, measures have been taken to train personnel in the responsible department, the importance of performing an accurate inventory review and the importance of maintaining their inventory, notifying the property clerk when changes occur. Responsibility and procedures have been re-emphasized at the department level.
REVENUESIRECEIV ABLES/RECEIPTS Inadequate Accounting Control Procedures Finding Control Number FS-824-97-02
The following deficiencies were noted in procedures and documentation of the "Other" accounts receivable balances as of June 30, 1997:
(1) The "Other" accounts receivable category included $490.16 in student receivables outstanding from FY '96, $1,431.65 from fiscal year 1992,$2,779.96 from fiscal year 1991, and $22,071.97 from fiscal year 1990.
Tests of underlying documentation to support these receivables disclosed numerous instances where supporting documentation was not adequate to determine if the amounts recorded were actually valid receivables.
(2) The "Other" accounts receivable category included $9,019.86 in checks returned for insufficient funds from fiscal year 1996 or earlier.
(3) The "Other" accounts receivable category included $589.89 in accounts receivable for tuition and fees from fiscal year 1993 for which payment was deferred by the Institute under a "Tuition Work Assistance Agreement" to enroll and attend classes at the Institute. Under this agreement, students were allowed to enroll and attend classes in exchange for work for the Institute. The "Tuition Work Assistance" policy was discontinued as ofJune 30, 1993.
F-142

- - - - - - - - - - S t a t e of Georgia----------
Fndi1gs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
AUGUSTA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
(4) The "Other" accounts receivable category included $2,764.98 in accounts receivable for tuition and fees for which payment was deferred by the Institute. These defennents were a result of the Institute's approving a number of students for Pell Grants only later to find the students were ineligible.
Deferring payment of tuition and fees without approved financial aid is beyond the authority granted to the Institute by the Administrative Central Office of the Georgia Department of Technical and Adult Education. This practice by the Institute should be discontinued.
The Institute should initiate collection procedures in an effort to collect all amounts due to the Institute. Furthennore, the Institute should review all delinquent student accounts receivable to detennine if the amounts accurately reflect amounts owed to the Institute.
Management Response
We concur with this finding.
(1) Outstanding receivables are monitored throughout the year and attempts are made to collect monies owed to the Institute.
(2) Outstanding receivable for insufficient funds from prior years are pursued for collection. Every student with fees due is shown in our Banner student system and their accounts are placed on hold status, preventing them from all transactions until their fees are paid. In FY93, procedures were developed, and remain as policy in FY94, to remove students from classes if their check for fees is returned.
(3) For FY93 Tuition Work Assistance outstanding receivables were established in exchange for the student working for the Institute, however, balances remaining in these accounts resulted from the student withdrawing from school before completing the hours required to work. Efforts are being made to collect these debts and holds have been placed on the student's account. In FY94, with the implementation of the Hope Grant Program, the need for Tuition Work Assistance was eliminated.
(4) The Financial Aid Office eligibility detennination has been improved upon through the utilization of the Banner Financial Aid System and the Electronic Data Exchange System software packages, allowing ineligibility to be detected sooner. Also a more intense screening before approval has been implemented. Attempts are made to collect the debt from the student and a hold is placed on the student's file.
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-824-97-03
For the year under review, Augusta Technical Institute's accounting procedures did not provide for adequate internal control over the bank reconciliation process. The following deficiencies were noted:
(I) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
(2) There was no administrative review to detennine that bank reconciliations were correct and that all required adjustments had been made.
This condition resulted from the Institute's failure to implement adequate internal controls over the bank reconciliation process. The Institute should implement appropriate procedures and controls to ensure that all reconciling items are
F-143

---------State of Georgia---------
Fndilgs and Quc.sNoncd Costs For the Hscal Year Ended Jme 30. 1997
AUGUSTA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS identified and corrected promptly. Administrative reviews should be performed and documented to ensure that bank reconciliations are accurate and performed in a timely manner. Management Response We concur with this finding. (I) The Institute is aware of the procedures for promptness in correcting any discrepancies discovered during the bank
reconciliation and are making adjustment to ensure timely correction of any discrepancy. (2) An administrative policy to review the reconciled bank statement and ensure timely adjustments are made, is in place.
The policy will be strictly adhered to, effective immediately.
F-144

----------State of Georgia----------
Fndhgs and Questioned Costs For the FISCal Ycar Ended Jmc 30, 1997
CARROLL TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
ACCOUNTING CONTROLS (OVERALL) Inadequate Separation ofDuties Finding Control Number FS-826-97-01
For the year under review, our examination determined that Carroll Technical Institute did not provide for adequate separation of employee duties in the performance of accounting functions and related procedures for all funds. This deficiency was a result of management's decision to limit the number of administrative staff made responsible for accounting functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with existing staff.
Management Response
We concur with this finding. An assessment of each staff member's duties has been completed. As a result, specific employee's duties have been reassigned that will provide for proper separation of tasks. The Director of Administration, Mike Speir, has taken steps to insure that this reassignment of functions and responsibilities will allow the institute to achieve a higher degree of internal control.
GENERAL LEDGER Detail Listing of Accounts Payable not Reconciled with General Ledger Finding Control Number FS-826-97-02
For the year under review, the detail listing of accounts payable (FACS Report 2060) was not reconciled with the general ledger. This condition occurred because management failed to ensure that the subsidiary ledgers agreed to the general ledger. Procedures should be implemented by the Technical Institute to ensure that subsidiary records are reconciled to the general ledger.
Management Response
We concur with this finding. A process to reconcile the general ledger (GIFS Report #2410/11112) with the subsidiary ledger (GIFS Report #2060) has been implemented by the institute. This task will be performed on a monthly basis during the report balancing function. This procedure, which is based on a comparison of the general ledger to the related subsystem, will identify data necessary for the appropriate adjustment.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequate Safekeeping of Assets Finding Control Number FS-826-97-03
For the year under review, our examination included a review of the internal accounting controls utilized by Carroll Technical Institute in maintaining their State Property System and testing the system for compliance with applicable laws and regulations. Several inappropriate conditions were found to exist that pertain to State laws and regulations and these matters have been identified in detail within the Federal Awards Findings and Questioned Costs, fmding FA-826-97-01.
The Institute is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified were caused by the Institute's failure to follow guidelines for maintaining equipment inventories.
The Institute should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
F-145

---------State of GeorfJia - - - - - - - - -
Fndilgs and QucsHoned Costs
For the FISCal Ycar Ended Jmc 30. 1997
CARROLL TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Management Response
See entity response for fmding control number FA-826-97-01.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequate Safekeeping of Assets Finding Control Number FA-826-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by Carroll Technical Institute in maintaining their property management system. This review also included testing the system for compliance with Federal laws and regulations. Seventy-five (75) equipment items were selected to test the accuracy of the Institute's property management records. These items had a value of $303,769.05 out of a population of $4,326,698.02 and were selected for the purpose of locating the equipment as reflected by the inventory records. The following deficiencies were noted:
(I) One (I) item totaling $3,500.00 could not be located.
(2) Thirty-four (34) items were located other than the location indicated in the equipment inventory records.
(3) Thirty-one (31) items on the inventory listing had no serial number and/or inadequate descriptions.
(4) Three (3) equipment items were located but displayed no decal.
(5) One (I) equipment item had two different numbered decals on it and was listed on the inventory listing twice.
The Institute is required to maintain equipment inventories in accordance with provisions of OMB's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Rule). The discrepancy identified above was caused by the Institute's failure to follow guidelines for maintaining equipment inventories, including physically locating items periodically.
The Institute should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of OMB's Common Rule.
Federal Programs/Awards Affected:
U. S. Department of Education Adult Literacy - CFDA No. 84.002 Vocational Education- Basic Grants to States- CFDA No. 84.048
U.S. Department of Health and Human Services Job Opportunities and Skills Training- CFDA No. 93.561
Management Response
We concur with this finding. A schoolwide effort utilizing a multi-step approach has begun thus providing an indepth review of the information as it relates to the PROPS records. The key component of this process focuses on the taking of a physical inventory by all divisions throughout the institute. This process will provide the PROPS Coordinator with data needed for
F-146

----------State of GeorfJkt - - - - - - - - - -
Fndhgs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997 CARROLL TECHNICAL INSTITUTE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS the appropriate adjustments. Consequently, this will ensure the accounting records are in agreement with the actual location. When appropriate, the disposition of any asset will be recognized and documented accordingly. To provide continued validity and reliability in the data reflected in the accounting records, interim inventories will be taken. This proactive approach will yield a reconciliation between the accounting records and the actual physical inventory. The contact person is Myra Kibler, Staff Accountant.
F-147

---------State of Georgia---------
Fndi1gs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997
CHATTAHOOCHEE TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUESIRECEIV ABLES/RECEIPTS Failure to Follow-Up on Accounts Receivable Finding Control Number FS-827-97-01
For the year under review, an examination of the procedures for requesting/collecting outstanding accounts receivable disclosed the following deficiencies:
(I) Failure to properly monitor collection of accounts receivable. Institute personnel failed to match receipt of funds with amounts requested.
(2) Billing procedures were not in place to ensure the timely request of funds from grantors to cover project expenditures.
As a result of management's failure to adequately monitor the collection of receivables due from grantors, local funds had to be utilized to fund projects which would have been funded by grantors had reimbursement requests been made in a timely manner.
The Institute should implement procedures to ensure that billings to sponsors and grantors are made in a timely manner. The Institute should also ensure that proper procedures are followed to monitor and match the receipt of funds with the request for reimbursement.
Management Response
We concur with this finding. However, during the period in which the error/finding occurred, procedures were in place to monitor the collection of accounts receivable and make timely reimbursement requests from the grantor. The grantor failed to reimburse the Institute for one month's expenditures, and the Institute's accounting system FACS, applied grantor funds received by the Institute to the oldest outstanding receivable. A July 1996 reimbursement of funds was never received from Cobb County JTPA, so the system applied the August receipt to the July receivable, and so forth. Cobb County's JTPA contracted ended June 30, 1997, with an administrative deadline of September 30, 1997. The error was not discovered by the Institute until after September 30 deadline, when Cobb County JTPA ceased to exist, so that the Institute's efforts pursue collection of the outstanding receivable were unsuccessful. Additional procedures, effective February 1998, were established by the Institute to properly monitor collection of accounts receivable and match receipt of funds with amounts requested. Monthly billing procedures already in place at the time of the error are considered to be effective to ensure the timely requests of funds from grantors to cover project expenditures. Because the fmding occurred with certain control procedures already in place, effective February 1998, the Institute established a month-end review procedure to investigate and pursue collection of outstanding accounts receivable balances.
REVENUESIRECEIV ABLES/RECEIPTS Unpaid Tuition and Fees Finding Control Number FS-827-97-02
For the year under review, an examination of the fmancial aid records of twenty-two students revealed that the summer quarter tuition and fees of $191.00 for one student were never recorded on the Institute's accounting records.
The discrepancy occurred because Financial Aid Department personnel failed to submit certain required documents to the Accounting Department that would ensure that tuition and fees were properly recorded.
The Institute should establish the necessary internal controls to ensure that tuition and fee charges which are processed through the Financial Aid Department are properly forwarded to the Accounting Department for inclusion in the Institute's formal accounting records.

----------State of Georgia----------
Fndngs and QuesNoned Costs For the Fiscal Year Ended Jme 30. 1997
CHATTAHOOCHEE TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
Management Response
We concur with this fmding. Effective Spring Quarter 1998, the Institute revised its revenue reconciliation procedures to ensure that each quarter's tuition and fee revenue recorded by the Financial Aid Office ties to the Accounting Department's total requests for reimbursement. Effective March 2, 1998, the Institute improved its records management system to ensure timely and accurate processing of student financial aid documentation, especially during new student registration, when FAO workload is at a peak.
REVENUESIRECEIV ABLES/RECEIPTS Students Accounts Receivable Not Supported by Financial Aid Finding Control Number FS-827-97-03
Our review disclosed that the Institute had $21,850.25 in student accounts receivable for tuition and fees which were not supported by approved financial aid at the time of registration. This condition occurred because of management's failure to establish appropriate procedures to ensure that financial aid was properly awarded before funds were disbursed.
Deferring payment of tuition and fees without approved financial aid is beyond the authority granted to the Institute by the Administrative Central Office of the Georgia Department of Technical and Adult Education.
Collection of student accounts should be made on at least a quarterly basis, and no student should be granted a deferment without having approved financial aid. It is recommended that legal means be used to collect all student accounts receivable, if necessary.
Management Response
We concur with this finding. However, the student accounts receivable were established to record fmancial aid overpayments to students who were later determined to have been ineligible to receive fmancial aid awards. The Institute does not intend to defer payment of tuition and fees without approved financial aid, or for any other reason. Effective March 2, 1998, the Institute established additional procedures and a review process to ensure that all financial aid awards are approved prior to student attendance, which will eliminate any subsequent student accounts receivable. At the time of the FY97 audit, the Business Office followed a policy of monitoring student accounts receivable and applying each student's Pell Grant funds received by the Institute to the student's outstanding receivable, if any, before disbursement of funds to students. Effective Spring Quarter 1998, the Institute amended its collection policy to pursue and monitor collection of all outstanding student accounts receivable at least on a quarterly basis.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
ACTIVITIES ALLOWED OR UNALLOWED CASH MANAGEMENT ELIGIBILITY PERIOD OF AVAILABILITY OF FUNDS REPORTING SPECIAL TEST AND PROVISIONS Weaknesses in Internal Control Structure For Student Financial Assistance Programs Student Financial Aid Cluster Program Finding Control Number FA-827-97-01
For the year under review, our tests of the internal control structure for administering the Student Financial Assistance Programs indicated that the Institute has an inadequate system of internal controls based upon the standards in 34 CFR
F-149

---------State of Georgia---------
Fndhgs and Que.stloncd Costs For the Hscal Year Ended Jme 30. 1997
CHATTAHOOCHEE TECHNICAL INSTITUTE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
668.I6. Federal regulations require that the Institute administer the Student Financial Assistance Programs with adequate checks and balances in its system of internal controls.
As a result of the Institute's continuing difficulties in administering the Student Financial Assistance Programs, the U.S. Department of Education (USDOE) conducted a program review of the Title IV programs for the I993-1996 award years. A Final Program Determination Review Letter, dated February 26, I997, reflected a liability of $I 85,601.00 which should be remitted to USDOE. At the present time, the Institute is involved in litigation with USDOE concerning this liability.
These conditions resulted from management's failure to establish adequate administrative procedures and to provide an adequate system of internal controls for the Student Financial Assistance Programs. Appropriate procedures and controls should be established by the Institute to ensure that the Student Financial Assistance Programs are in compliance with the applicable rules and regulations.
Federal Programs/Awards Affected:
Student Financial Aid Cluster Program U.S. Department of Education Federal Supplemental Educational Opportunity Grant (FSEOG) (CFDA 84.007) Federal Work Study (FWS) (CFDA 84.033) Pell Grant Program (CFDA 84.063)
Management Response
We concur with this finding. During FY97, the Institute appointed a task team to evaluate all phases of the Financial Aid Office (FAO). Recommendations from the task force resulted in an additional management position and additional assistant counselors for the department. Effective January I, I998, the organizational chart was amended so that the Director ofFAO reports to the Institute's Chief Financial Officer (CFO). Under direction of the CFO, the Institute has implemented procedures to improve communications between departments and to improve administration of the FAO with adequate checks and balances in its system of internal controls. The Institute's new Director of FAO, employed February 1998, is reviewing all phases of operation in the FAO, including staff duties, administrative procedures, and records management; the results of this review will be reflected in the Institute's revised FAO Policy Manual, expected to be complete April I, 1998. The Institute is in the process of establishing necessary internal controls to comply with the U.S. Department of Education's Dear Colleague Letter P-97-2. The controls will be implemented by the Institute, effective April I, I998. As of March 9, 1998, the Institute is stiii in litigation with USDOE, and the outcome ofthe case is pending. The contact person is Kary Porter, Chief Fiscal Officer.
ELIGIBILITY Improper Determination of Enrollment Status Student Financial Aid Cluster Program Questioned Costs: $3 I 0.00 Finding Control Number FA-827-97-02
For the year under review, an examination of the financial aid records and class schedules of twenty-two students receiving Federal fmancial aid revealed two students who were awarded and disbursed $310.00 of Title IV assistance in excess of allowable limits for their enrollment status. Federal regulations (34 CFR 690.63) and The Federal Student Financial Aid Handbook require that a student's Pell Grant payment for each payment period is calculated by determining the student's enrollment status for the term. Based upon that enrollment status the award is determined by payment and disbursement schedules established by the U.S. Department of Education.

---------State of Georgia---------
Fndilgs and Quc.sNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997
CHATTAHOOCHEE TECHNICAL INSTITUTE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS In the two instances identified, conversion of student clock hours for certain programs of study were improperly rounded up which resulted in overpayments of Pell Grants of $310.00. The students were disbursed the maximum amount allowed for a full-time student. However, the students were only eligible for less than full-time grants based on their enrollment status which resulted in the above overpayments. These questioned costs and noncompliance resulted from management's failure to properly monitor the enrollment status of financial aid recipients and to properly calculate the conversion of student clock hours. The Institute should implement procedures to ensure that the enrollment status of fmancial aid recipients and the student clock hour conversion calculations are monitored to prevent disbursement of Title IV funds to those students who are ineligible. Reimbursement of $310.00 should be secured for refund to the Pell Grant program. Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Pell Grant Program (CFDA 84.063)
Management Response
We concur with this finding. Effective Fall Quarter 1997, the Institute amended its procedure of calculating the conversion of student clock hours to base enrollment status of diploma students who were applying for, eligible for, or receiving Title IV funds, solely on the basis of clock hour. The Institute now determines enrollment status based on the exact number of clock hours, with no rounding. Effective Winter Quarter 98, the Institute established a procedure to monitor the enrollment status of financial aid recipients on a quarterly basis. The contact person is Kary Porter, ChiefFiscal Officer. REPORTING Incorrect Student Payment Summary Report Student Financial Aid Cluster Program Questioned Costs: $3,612.00 Finding Control Number FA-827-97-03 For the year under review, the Student Payment Summary (SPS) report for the U.S. Department of Education indicated that Chattahoochee Technical Institute incurred $560,846.00 in Federal Pell Grant Program expenditures. However, the Institute's accounting records reflected $559,278.00 in fiscal year 1997 Pell Grant payments. The following reconciliation summarizes the report errors made by the Institute in reporting Pell Grant Program expenditures to the U.S. Department of Education:
F-151

---------State of GeorfJia - - - - - - - - -
Fndi1gs and Que.sHoned Costs For the FISCal Year Ended Jme 30. IW7

CHATTAHOOCHEE TECHNICAL INSTITUTE

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

AMOUNT REPORTED ON SPS REPORT

$ 560,846.00

REPORTING ERRORS

CATEGORY

DESCRIPTION

AMOUNT

Students on SPS Report for amount greater than actual disbursement

$ -5,180.00

II

Student on SPS Report for amount

less than actual disbursement

2,378.00

III

Students not on SPS Report

but received Pell Grant funds

1,234.00

-1,568.00

ACTUAL DISBURSEMENTS FOR 1997 AWARD YEAR

$ 559,278.00

The Institute should report to the U. S. Department of Education the downward adjustments in Category I which will reduce the Institute's final authorization for the fiscal year 1997 award. In order for the Institute to be reimbursed for the Pell Grant expenditures in Categories II and III, the Institute, in conformity with Federal Statutes, must certify to the U.S. Department of Education the validity of these payments. The Federal agency can theri make appropriate adjustments to the fiscal year 1997 authorized amount in order to make additional funds available to the Institute.

Federal Programs/Awards Affected:

Student Financial Aid Cluster Program U.S. Department of Education Pell Grant Program (CFDA 84.063)

Management Response

We concur with this finding. In 1997, the Financial Aid Office submitted Pell Grant payment data very close to the 9/30/97 deadline. Some students' data submitted to the U.S. Department of Education were rejected. Due to the reporting deadlines, the Institute was unable to reconcile the school's balance to the SPS and make corrections. Therefore, effective Winter Quarter 1998, the Institute will abide by a policy of timely transmission and reconciliation of the SPS. The Institution is in the process of establishing procedures needed to comply with the U.S. Department of Education's Dear Colleague Letter P97-2, which will allow the Institute to certify the validity of the payments and receive appropriate adjustments to the FY97 authorized amount. These procedures will be effective Spring Quarter 1998. The contact person is Kary Porter, Chief Fiscal Officer.

SPECIAL TEST AND PROVISIONS Financial Aid Transcript Not Requested Student Financial Aid Cluster Program Finding Control Number FA-827-97-04

For the year under review, an examination of twenty-two Federal financial aid recipients revealed that the file of one student who previously attended another eligible institution did not contain the required fmancial aid transcript from that institution or any documentation indicating that Chattahoochee Technical Institute had requested a fmancial aid transcript. Federal regulations (34 CFR 668.19) require that for any students applying for Title IV funds, the institution must obtain a fmancial aid transcript if the student previously attended another eligible institution and maintain the transcript on file. Until an
F-1~2

---------State of GeorfJia - - - - - - - - -
Fndi1gs and Quesnoned Costs
For the Hscal Year Ended Jme 30. 1997 CHATTAHOOCHEE TECHNICAL INSTITUTE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS institution receives a fmancial aid transcript from each eligible institution attended, the institution may disburse Pell funds to the student for one payment period only. The student in question was disbursed Pell funds for two payment periods. This noncompliance occurred because management failed to ensure that all eligibility requirements were met for the student aid recipient. The Institute should implement the necessary procedures to ensure that all required documents are obtained and placed in the financial aid folders. The Institute should contact the grantor agency regarding the resolution of this finding. Federal Programs/Awards Affected: Student Financial Aid Cluster Program
U.S. Department of Education Pell Grant Program (CFDA 84.063)
Management Response We concur with this finding. Effective Fall Quarter 1997, the Institute implemented procedures to ensure that no student receives financial aid until all eligibility requirements are met. Effective Spring Quarter 1998, the Institute established and implemented a review procedure to ensure that no student receives Title IV funds for more than one pay period without a complete financial aid file. The contact person is Kary Porter, Chief Fiscal Officer.
F-153

----------State of Georaia - - - - - - - - - -
Fndi1gs and QuesHoned Costs For the FLSCal Year Ended Jme 30. 1997
COLUMBUS TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequate Property Management Procedures Finding Control Number FS-828-97-01
For the year under review, our examination included a review of the controls utilized by Columbus Technical Institute in maintaining their State Property System. This review also included testing the system for compliance with State laws and regulations. A number of conditions relating to inappropriate accounting practices were found to exist and have been identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-828-97-01.
The Institute is required to maintain equipment inventories in accordance with the State Property Management System Manual. The discrepancies identified were caused by the Institute's failure to follow these guidelines for maintaining equipment inventories.
The Institute should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with the State Property Management System Manual.
Management Response
We concur with this finding. See Agency Response for Federal Awards Finding Control Number FA-828-97-01.
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FA-828-97-01
For the year under review, our examination included a review of the controls utilized by Columbus Technical Institute in maintaining their property management system. This review also included testing the system for compliance with Federal laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
(1) Equipment purchases were not updated to the PROPS (Property Records System). (2) Equipment activity reflected in the FACS (Fiscal Accounting Control System) was not reconciled to the
PROPS. (3) A physical inventory has not been conducted within the last two years.
The Institute is required to maintain equipment inventories in accordance with provisions of paragraph 32 ofOMB's Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments (Common Rule). The discrepancies identified above were caused by the Institute's failure to follow guidelines for maintaining equipment inventories.
Management Response
We concur with this finding. A complete physical inventory will be taken of equipment on hand as of June 30, 1998 by Clarence Bowen, Vice President of Administrative Services. All necessary adjustments will be made during the fiscal year ending June 30, I998. A physical inventory will be scheduled every 2 years there after. Items purchased with Carl Perkins funds during fiscal year 1997 were added to inventory by December 12, 1997 by Seleta Thornton, Purchasing Specialist. Inventory additions will be made as items are received as of December 15, 1997 by Seleta Thornton. Finally a fiscal year end reconciliation of equipment inventory will be completed by Patsy Burrell, Director of Administration, as of June 30, 1998. The contact person is Clarence Bowen, Vice President of Administrative Services.

---------State of Georf)ia - - - - - - - - -
Fndilgs and Qucstloned Costs
For the FISCal Year Ended Jme 30. 1997
DEKALB TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUESIRECEIV ABLES/RECEIPTS Inadequate Accounting Control Procedures Finding Control Number FS-830-97-01
For the year under review, our examination of accounts receivable records revealed the following deficiencies:
(I) The subsidiary records for accounts receivable did not agree with the amounts reported in the general ledger. These receivables were not supported by adequate documentation nor could the Institute identify the receivables by vendor to determine if the amounts recorded were actually earned by the Institute.
(2) As of June 30, 1997, the accounts receivable amounts included $23,523.16 of checks returned for insufficient funds of which $12,266.49 were from fiscal year 1996 or earlier.
(3) As of June 30, 1997, accounts receivable of$19,868.06 were recorded on the general ledger for which cash had already been received and deposited.
These conditions occurred because the Institute did not establish appropriate procedures to ensure that subsidiary records were maintained and updated on a timely basis. Accounts receivable records should be reconciled to the general ledger and supporting documentation should be maintained by the Institute. The Institute should initiate collection procedures in an effort to collect all amounts due. Additionally, the Institute should review all accounts receivable to determine if the amounts accurately reflect amounts owed to the Institute.
Management Response
We concur with this finding.
(I) Disagreement of subsidiary records and the accounts receivable balance occurred in the accounting system maintained prior to the conversion to state governance. Use of this system will be terminated, and all receivables will be maintained on the state accounting system.
(2) Effort will be made to collect account receivable amounts resulting from checks returned for insufficient funds.
(3) We will attempt to identify the amount(s) involved to make the appropriate entry to credit the account receivable; if we are unable to determine the composition of this amount, we will request assistance of DTAE staff resolving this amount.
GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number FS-830-97-02
Effective July 1, 1996, management of DeKalb Technical Institute was transferred from the DeKalb County Board of Education to the Department of Technical and Adult Education to be operated as a State supported member institute of postsecondary education in Georgia. Subject to terms of the agreement, certain assets, liabilities, and fund balances were included in this transfer.
Our review disclosed that the beginning fund balance for the "A" Budget Fund, as reflected in the DeKalb Technical Institute's general ledger, did not agree with the prior year's ending fund balance. This condition occurred because management did not ensure prior year general ledger balances were properly closed. As a result, a proper accounting "cutoff' did not occur between fiscal years 1996 and 1997. Extensive procedures were necessary to reconcile and adjust for activity which erroneously crossed fiscal years. An unidentified fund balance variance of $7,295.44 remained after
F-155

---------State of Georaia - - - - - - - - -
Fndi1gs and Que.sHoned Costs For the Fiscal Year Ended Jme 30. 1997
DEKALB TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS adjustments were made. The DeKalb Technical Institute should establish procedures to ensure that general ledgers are closed properly and accounting activity is reported in the proper fiscal period. Management Response We concur with this finding. General ledger balance variances occurred in the accounting system maintained prior to conversion to state governance. Use of this system wiii be terminated. GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Improper Recording of Capital Leases Finding Control Number FS-830-97-03 An examination of the General Fixed Assets Account Group for the year under review, disclosed several deficiencies in the Institute's handling of capital leases.
(1) The Institute failed to record assets acquired through capital leases on the equipment inventory records as prescribed by The Accounting Procedures and Instruction Manual issued by the State Auditor. State agencies (which includes technical institutes) are required to record assets obtained through capital lease agreements at the fair market value at the time of purchase.
(2) The Institute failed to maintain copies of the lease agreements. Attempts to obtain copies of the lease agreements were unsuccessful.
These conditions occurred because management disregarded the provisions of the State regulations regarding capital leases. The Institute should establish controls to ensure that assets acquired through capital leases are recorded in accordance with the aforementioned manual. Management Response We concur with this finding. Capital-leases assets will be recorded on the property inventory. Copies of all lease agreements will be obtained.
F-156

---------State of Georgia---------
Fndi"lgs and QuesNoned Costs For the Hscal Year Ended Jme 30. 1997
MIDDLE GEORGIA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EMPLOYEE COMPENSATION Salary Overpayment Questioned Cost: $1,224.00 Finding Control Number FS-836-97-01 For the year under review, a sample of twenty payroll transactions disclosed that Middle Georgia Technical Institute overpaid an employee in the amount of $1,224.00. The overpayment was the result of duplicate payment for work performed. The Institute should implement internal control procedures to ensure duplicate payments are not made for work performed. Reimbursement of $1,224.00 should be secured from the employee and deposited to the Institute's Budget Fund. Management Response We concur with the finding. We have reviewed all similar payments for the period in question and found the duplicate payment to be an isolated incident. We have strengthened our procedures to ensure that this will not reoccur. The former employee has been contacted repeatedly, and we are trying to set up a reimbursement schedule with her.
F-157

---------State of Georgia---------
F11di1gs and Que.sNoned Costs
For the FISCal Ycar Ended Jmc 30, 1997

MOULTRIE AREA TECHNICAL INSTITUTE

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-837-97-01

For the year under review, the Moultrie Area Technical Institute did not provide for adequate separation of duties in the performance of accounting functions and related procedures for the following control categories:

(I) Cash and Cash Equivalents

(3) General Ledger

(2) Revenues/Receivables/Receipts

Separation of duties involving key accounting functions is the basis for achieving an adequate system of internal control. Inadequate separation of duties creates an environment which does not provide reasonable assurance that accounting data and financial statements are accurate and complete. This deficiency was a result of management not assigning employee duties in a manner to adequately safeguard assets and/or to promote efficiency in key accounting functions.

The Institute should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above control categories, and implement those procedures to strengthen the internal controls over the accounting functions.

Management Response

We concur with this finding. The function of making and recording some deposits was not adequately separated. However, procedures have been implemented in March 1998 to separate these functions.

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

CASH MANAGEMENT Excessive Cash Balances Finding Control Number FA-837-97-01

A review of the cash management procedures for the Pell Grant Program disclosed that cash draws were made in advance of immediate cash needs. On August 29, 1996, Moultrie Area Technical Institute used the ACHIEFT method to drawdown funds which were disbursed from Agency funds on September 26, 1996.

Federal cash drawdowns should not exceed the immediate need. For institutions using the ACHIEFT method, immediate need is defined as need for a three-day period.

The excessive cash balances are a result of management's failure to adequately forecast the cash needs of this program. Procedures should be implemented by the Institute to ensure that requests for cash draws do not exceed the immediate need.

Federal Program/Awards Affected:

Student Financial Aid Cluster Program U.S. Department of Education Federal Pell Grant Program - CFDA No. 84.063

F-158

----------State of Georgia----------
Fndngs and QuesHoned Costs For the FISCal Year Ended Jme 30. 1997
MOULTRIE AREA TECHNICAL INSTITUTE
FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS Management Response We concur with this finding. Procedures were implemented in November 1997 which insure that requests for draws do not exceed the immediate need. The contact person is Ken Strickland, Vice President of Administrative Services.
F-159

----------State of Georaia - - - - - - - - - -
Fndngs md Quc.sHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997
NORTH GEORGIA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Theft of Funds Amount: $7,241.13 Finding Control Number FS-838-97-01
For the year under review and through July 31, 1997, it was discovered that a theft of funds had occurred at North Georgia Technical Institute. An employee with access to the checks and a signature stamp wrote and cashed checks from the general and payroll bank accounts totaling $6,946.13. These checks were not recorded on the general ledger. In addition, this same employee wrote personal checks to the Institute for cash totaling $295.00 which were later returned to the Institute as insufficient fund checks. Documentation relating to the unrecorded checks and returned deposits was removed from the bank statements by the employee.
This condition occurred because management failed to provide for adequate internal control over the bank reconciliation process and the check writing function. Procedures should be implemented to ensure that internal controls relating to the bank reconciliation process and the check writing function are operating effectively. North Georgia Technical Institute should seek restitution from the individual involved for the total amount of $7,241.13 for deposit into the appropriate Institute bank accounts.
The individual involved in the theft of funds is no longer employed by the Institute.
Management Response
We concur with this finding. Restitution of $7,241.13 was made by the individual responsible for the theft. Also, North Georgia Technical Institute has implemented a procedure which separates the bank reconciliation process and check writing function.
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-838-97-02
For the year under review, our examination of internal controls disclosed that North Georgia Technical Institute's accounting procedures did not provide for adequate internal controls over the bank reconciliation process and the check writing function. The following deficiencies were found to exist:
(1) Blank checks for the Institute's general, payroll and Pell Grant bank accounts were not safeguarded appropriately.
(2) The duty of performing the bank reconciliations on the payroll and Pell Grant accounts was not adequately separated from the check writing function for these accounts.
(3) There was no administrative review to determine that bank reconciliations were prepared accurately and that all reconciling items were identified and the appropriate adjustments made to the accounting records.
These conditions occurred because management failed to evaluate its assignment of accounting duties and perform administrative reviews in relation to bank reconciliations and the check writing function.
The Institute should implement the appropriate procedures and controls to ensure that internal controls related to the bank reconciliation process and check writing function are in place and operating effectively.
F-160

----------State of Geor5ia - - - - - - - - - -
Fndi1gs and Que.sNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997 NORTH GEORGIA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS AfanagementResponse We concur with this finding. North Georgia Technical Institute has implemented procedures which safeguard the blank checks, separate the bank reconciliation process and the check writing function, and perform a review of bank reconciliation.
F-161

----------State of Geor5ia - - - - - - - - - -
Fndi1gs and Questioned Costs
For the fiSCal Year Ended Jme 30. 1997
PICKENS TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-840-97-01
For the year under review, Pickens Technical Institute did not provide for adequate separation of duties in the performance of accounting functions and related procedures for the following control categories:
(1) General Fixed Assets/Property Management
(2) Expenditures/Liabilities/Disbursements
This deficiency was a result of management's decision to limit the number of administrative staff made responsible for accounting functions. Separation of duties involving key accounting functions is the basis for achieving an adequate system of internal control.
Management Response
The lack of personnel in the Business Office precludes complete separation of duties. During 1997 and continuing into 1998 duties affecting Expenditures/Liabilities/Disbursements for Pickens Technical Institute involve personnel from other departments giving better separation of duties and internal controls.
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number FS-840-97-02
For the year under review, the Institute's accounting procedures were insufficient to provide for adequate internal control over the bank reconciliation process. The following deficiencies were noted:
(I) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
(2) The monthly bank statements for the operating account and Federal funds account were not reconciled to the general ledger resulting in unidentified variances of $4,545.81 and $12.00, respectively, between the reconciled bank balance and the book balance. These variances remained unresolved at June 30, 1997.
These deficiencies were the result of management's disregard of proper internal control procedures over cash and bank reconciliations that are necessary to adequately safeguard and report the cash and cash equivalents of the Institute. The Institute should establish appropriate internal controls to ensure that bank statements are reconciled with the accounting records monthly and that needed adjustments are recorded on a timely basis.
Management Response
Management concurs with this finding. The accounts are being reconciled on a timely basis and adjustments to accounting records will be given to DTAE in the third quarter of FY 1998.
F-162

---------State of Georgia---------
Fndilgs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
THOMAS TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS Inadequate Control Procedures Finding Control Number FS-846-97-01 For the year under review, Thomas Technical Institute's accounting procedures did not provide for adequate internal control over the bank reconciliation process. The following deficiencies were noted:
(1) The monthly bank statements for the general operating account were not properly reconciled to the general ledger for the last six months of the fiscal year.
(2) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time.
(3) At June 30, 1997, an unlocated difference of $296.13 existed between the bank reconciliation and the general ledger balance.
The Institute should implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger on a timely basis and that all reconciling items are identified and corrected promptly.
Management Response We concur with this finding. The account has been reconciled and an adjustment made of $296.13 for the unlocated difference. The accountant, Sarah Wilson, has taken steps to assure that all bank accounts are reconciled in a timely manner so that this problem will not occur again. INVENTORIES Inadequate Resale Inventory Records Finding Control Number FS-846-97-02 For the year under review, we were unable to reconcile the change in resale inventory through an analysis of yearly purchases/sales activity as reflected on the accounting records. Appropriate action should be taken by management to ensure that accounting records document the purchases/sales activity for all resale inventory. Management Response
We concur with this finding. The accountant, Sarah Wilson, and the bookstore operator, Glenda Slater, will review on a monthly basis the cost versus retail price of items bought for resale through the bookstore. These two employees will coordinate this activity through print outs of the accounting records and the bookstore computerized cash register in order to ensure that accounting records document the purchase/sales activity for all resale inventory.
F-163

----------State of GeorfJia - - - - - - - - - -
Fndngs and Que.sNoned Costs For the Hscal Ycar Ended Jmc 30. 1997
VALDOSTA TECHNICAL INSTITUTE
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Accounting System Deficiency Finding Control Number FS-848-97-01 For the year under review, the accounts payable subsidiary ledger was not reconciled with the general ledger as presented for examination. As ofthe end of fieldwork, neither Valdosta Technical Institute nor the Georgia Department of Technical and Adult Education could determine the cause ofthe variance between the subsidiary ledger and the general ledger. Management is currently coordinating their efforts with the computer systems staff of the Georgia Department of Technical and Adult Education to resolve the problem and establish procedures to ensure that controls over electronic data processing are adequate for reconciling the subsidiary ledger to the general ledger. Management Response We concur with this finding. Our Institution was directed by Institutional Support of the Georgia Department of Technical and Adult Education and the Statewide Systems was responsible for the correction of the accounting system error. On October 17, 1997, our staff made a manual journal entry to correct the control account.
F-164

---------State of GeorfJia - - - - - - - - -
Fndilgs and QucsHoned Costs
For the FISCal Ycar Ended Jmc 30. 1997

JEKYLL ISLAND STATE PARK AUTHORITY

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-910-97-01

For the year under review, our examination included a review of the internal accounting controls utilized by the Jekyll Island State Park Authority in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. Our review revealed numerous equipment items were deleted from Convention Center inventory records without adequate documentation to support disposition of the equipment.

The Authority is required to maintain equipment inventories in accordance with provisions of the State Property System Manual. The discrepancies identified above were caused by the Authority's failure to follow guidelines for maintaining equipment inventories.

The Authority should establish the necessary procedures to ensure that equipment inventories are maintained in accordance with provisions of the State Property System Manual.

Management Response

We concur with this finding. A fixed asset procedure manual that describes the process and approving signatures required for removal of equipment has been completed. Audit exceptions were found in food and beverage due to the remodel of the Convention Center. Special precautions will be taken to assure proper procedures are followed on future renovations.

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-910-97-02

For the year under review, an examination of the internal accounting control procedures of the Jekyll Island State Park Authority revealed that the Authority did not provide for an adequate separation of duties in the performance of certain accounting functions and related procedures in the following control categories:

(I) Cash and Cash Equivalents

(4) Employee Compensation

(2) Revenue/Receivables/Receipts

(5) Inventories

(3) Expenditures/Liabilities/Disbursements

(6) General Ledger

The Authority should review the accounting procedures in place, design procedures which would enhance segregation of duties relative to the above control categories and implement those procedures to strengthen the internal control over the accounting functions.

Management Response

We concur with this finding. The Accounting department was reorganized in July 1997. Those employees with access to the accounting system no longer have access to cash. Supervisory review procedures have been added to provide dual control where separation of duties could not economically be justified. The new payroll system provides the ability to run exception reports to verify all changes made to the payroll register. This will increase the internal controls for employee compensation.

F-165

---------State of GeorfJia - - - - - - - - -
Fndngs and QuesNoned Costs
For the FISCal Year Ended Jme 30. 1997
JEKYLL ISLAND STATE PARK AUTHORITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Accounting/Internal Control Deficiencies Finding Control Number FS-910-97-03
For the year under review, the accounting procedures and internal controls of the Jekyll Island State Park Authority did not ensure that timely deposits of receipts were made to the bank. This deficiency occurred because management did not ensure cash receipts were deposited on a daily basis.
The Authority should develop policies and procedures for bank accounts to ensure that deposits are made in a timely manner.
Management Response
We concur with this finding. The Authority's policies and procedures are to make deposits on a daily basis. The accounting department will continue to make surprise cash counts, which could identify deposits not being made in a timely manner.
INVENTORIES Inconsistencies in Accounting for Resale Inventory Finding Control Number FS-910-97-04
For the year under review, the Authority purchased concessions and souvenirs for resale which were not included in the Authority's inventory system. This deficiency occurred because management did not ensure inventories maintained at all locations were recorded on the general ledger.
The Authority should determine and document the materiality of all resale inventories and ensure that material inventories are accounted for on the general ledger.
Management Response
We concur with this finding. The Campground, Museum, and Summer Waves gift shops were not recorded as assets on the Balance Sheet but expensed at the time of purchase. The total dollar amount was previously determined to be immaterial. Management agreed to place these inventories on the books as of year-end. Inventory counts will be conducted as of yearend and the balance sheet adjusted accordingly.
GENERAL LEDGER Detailed Listing of Salaries Not Reconciled Finding Control Number FS-910-97-05
For the year under review, the listing of salary payments made to employees as reported to the Georgia Department of Audits did not reconcile with the amounts recorded as salaries in the general ledger as presented for examination. A comparison of the amounts submitted to the Department to the general ledger disclosed a difference of $7,422.69. An analysis of this difference resulted in corrections being made to the listing submitted to the Department in the amount of $8,574.43. The remaining difference of $1,151.74 is reflected as an unlocated variance on the "Reconciliation of Salaries and Travel" schedule of this report. The Authority should ensure that the quarterly reports submitted to the Georgia Department of Audits are balanced to the general ledger.
Management Response
We concur with this finding. The payroll reports are run on a system independent of the general ledger. These payroll reports are currently reconciled by the General Ledger Manager to verify they agree to the General Ledger prior to being submitted to the Georgia Department of Audits.
F-166

---------State of GeorfJia - - - - - - - - -
Fndi1gs and QucsHoned Costs
For the FISCal Year Ended Jme 30. 1997

JEKYLL ISLAND STATE PARK AUTHORITY

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURES/LIABILITIES/DISBURSEMENTS Voucher Sample and Account Analysis Exceptions/Improper Expenditures Finding Control Number FS-910-97-06

An examination of all vouchers classified as employee incentive expenditures together with an examination of 199 randomly selected expenditure vouchers was performed to test the validity and accuracy of the Authority's expenditure transactions. The vouchers examined revealed the following deficiencies:

(1) Four vouchers were paid from a copy and/or fax copy rather than an original invoice. (2) Five vouchers did not contain an invoice. (3) Sixty vouchers lacked purchase orders. (4) Twelve vouchers lacked receiving reports. (5) Three vouchers lacked approval for payment. (6) The following expenditures were determined to be unallowable and in violation of Article III, Section VI,
Paragraph VI of the Constitution of the State of Georgia which provides, in part, as follows:

"...the General Assembly shall not grant or authorize extra compensation to any public officer, agent, or contractor after the service has been rendered or the contract entered into."

EXPENDITURE CATEGORY/PURPOSE Supplies and Materials Coffee and Flowers Other Operating Expenses Employee Incentives Travel Improper Charges

AMOUNT $ 370.18
5,410.15 47.95

$ 5,828.28

These conditions occurred because of management's failure to establish and implement controls over the disbursing function to ensure compliance with State laws and regulations. All expenditures should be supported by proper documentation including purchase orders, original invoices, receiving signatures and signatures for approval of payment. The Authority should implement procedures to ensure that expenditures are reviewed for accuracy, proper documentation, and compliance with state laws and regulations prior to payment and recording of such expenditures in the fmancial records.

Management Response

We concur with this finding. The Authority has increased management's training of procedures and improved disbursement controls. The majority of the exceptions to the disbursement system are the absence of purchase order numbers. The Authority is researching implementing a purchasing card system that would eliminate this requirement for purchases less than $2,500. The Georgia Department of Audits has signed off on this system. Employee incentives, such as the Authority sponsored Christmas party, turkey certificates, coffee and flowers have been eliminated.

F-167

- - - - - - - - S t a t e of Georfjla - - - - - - - -
Fndhgs and QuesHoned Costs
For the FLSCal Year Ended Jme 30. 1997
JEKYLL ISLAND STATE PARK AUTHORITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Accounting/Internal Control Deficiencies Finding Control Number FS-910-97-07
For the year under review, an analysis of the accounting procedures and internal controls of the Jekyll Island State Park Authority revealed certain employees were allowed to submit time sheets for days to be worked four to six days before the end of the pay period. This condition occurred because of management's policy to allow time sheets to be submitted before the end of the pay period.
The Authority should develop policies and procedures to ensure that the practice of allowing time sheets to be submitted before the end of the pay period is discontinued.
Management Response We concur with this finding. The current payroll process for fully benefited salaried employees is to tum in their time cards four days prior to the end of the pay period. No overtime or compensation time is permitted to be recorded for these four days. This allows the payroll to be processed and available to employees on payday. The Authority is moving its pay date for these employees to one week in arrears in order to correct this issue. Employees who are not eligible for benefits are already paid one week in arrears.
REVENUESIRECEIV ABLES/RECEIPTS Accounting/Internal Control Deficiencies Finding Control Number FS-910-97-08
For the year under review, the accounting and internal controls of Jekyll Island State Park Authority were found to be inadequate in the area of cash receipts. The following matters came to our attention as a result of our examination.
The accounting department utilized offline computer generated spreadsheets to record the daily sales and receipting processes from the various receipting locations. The totals from these spreadsheets are posted to the general ledger on a monthly basis by journal entry. Two days in the month of June 1997 were selected to test the validity of activity reported on the daily sales transaction reports from six major receipting locations. The reports were then traced into the spreadsheets referred to above and to deposits made to the bank. This testing along with further review of the receipting process revealed the following deficiencies:
(I) The Museum was unable to provide daily cash register tapes for individual cash transactions.
(2) The Authority records, by journal entry, certain 100% meal discounts as "interdepartmental transfers and house charges" through revenues and expenditures. An analysis of journal entries for the fiscal year revealed the Authority recorded revenues and expenditures of $655.42 for employee meals including their guests, employee parties, and meals for various other individuals.
(3) The Convention Center maintains files for each event which utilizes their facilities and/or services. Examination of files for two convention engagements disclosed alcoholic beverages used during functions were not inventoried before and after the operation of cash bars. Additionally, the Authority did not perform any analysis or calculations to determine the reasonableness of receipts from sales of alcoholic beverages.
Numerous convention center engagements had exhibitors who required electrical and equipment rentals. Documentation for the billing of charges associated with electrical and equipment rentals was not available for review. Only deposit slips were in files to support these charges. Prenumbered receipts were not maintained in numerical sequence.
F-168

---------State of GeorfJia - - - - - - - - -
Fndi1gs and QuesHoned Costs
For the FISCal Year Ended Jme 30. 1997
JEKYLL ISLAND STATE PARK AUTHORITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS (4) The accounting department does not consistently issue prenumbered receipts to revenue collecting locations. Receipts are written on a ledger sheet on a weekly basis. The ledger sheet had some supporting documentation, however, not all receipts on the sheet were supported.
As a result of the aforementioned deficiencies, fraud or irregularities could have occurred without being detected. These deficiencies were the result of management's failure to implement and monitor accounting and internal control procedures relating to cash receipts. The Authority should review each locations' receipting procedures and develop accounting and internal control procedures which provide for accountability of cash receipts to reduce the risk of fraud or irregularities occurring and to ensure safeguarding of Authority assets. Management Response We concur with this finding. The method of recording revenues into the General Ledger is being revised in order to improve efficiencies and controls. The lack of automation at the point of sales requires all entries to be keyed into the General Ledger. This is in excess of 4,300 entries a year. Previously, these numbers were maintained on an independent spreadsheet and entries made in total to the general ledger. The new computer system now has the capacity to allow for daily direct entry into the general ledger system and accordingly is being recorded in that manner. The following corrective measures were taken.
I. Museum cash register receipts are being handed to the customer at the time of transaction. Duplicate tapes are generated by the cash register and maintained. In addition, pre-numbered tickets are collected at the first stop of the tram tour.
2. In June of 1997, employee meal discounts were set at 40%. 3. The controls over alcoholic beverages have significantly increased. A spreadsheet has been developed to
determine the projected cash receipts for the alcohol consumed at a cash bar. Cash on hand is then compared to projections. Additional controls such as pre-measured pourers have been added. The result is evidenced by the improved cost/sales rations, which are monitored on a monthly basis. Video and other electrical equipment has been outsourced to an independent provider. 4. The Accounting department started issuing pre-numbered revenue receipts in July of 1997. These cash receipts are issued by an employee who does not have access to the general ledger, at the time cash is turned into the Administrative office. This process is only used for miscellaneous, small dollar amounts.
F-169

---------State of Georgia---------
Fndilgs and Questioned Costs For the FISCal Ycar Ended Jmc 30. 1997
LAKE LANIER ISLANDS DEVELOPMENT AUTHORITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUES!RECEIV ABLES/RECEIPTS Accounts Receivable Deleted Finding Control Number FS-913-97-01 For the year under review, the Lake Lanier Islands Development Authority deleted accounts receivable in the amount of $118,045.02. The Authority made a determination that the receivables were either recorded in error or that previous collections had not been properly credited to the receivable account. However, the Authority could not provide documentation to support the cancelled receivables. The Lake Lanier Islands Development Authority should establish controls to ensure that future adjustments to accounts receivable are fully documented. Management Response I concur with this finding. We have established controls to ensure that adjustments to accounts receivable in the future will be fully documented.
F-170

---------State of GeortJia - - - - - - - - -
Fndilgs and QuesNoned Costs
For the Hscal Year Ended Jme 30. 1997 GEORGIA STUDENT FINANCE AUTHORITY(*)
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS REVENUEIRECEIV ABLES/RECEIPTS Failure to set up Prior Years' Allowance for Doubtful Accounts Finding Control Number FS-917-97-0 I The Authority received notification from one of its lenders on March 8, 1996 indicating the existence of a material liability. This information was not effectively utilized in the development of the loan loss reserve. We believe that this information should have been considered in the development in the 1996 financial statements. Management Response We concur with this finding. The loan loss reserve has since been adjusted and corrected. We have advised all Directors, Supervisors and Department Managers to notify senior management and the Chief Financial Officer immediately upon the receipt of any information that may impact the operations or fmancial statements of the Authority. The Director of the State Loans Division, Morris Thomas, and the Director of Administrative Services/Accounting, David Benner, have taken steps to ensure that all pertinent information is disseminated to responsible persons on a timely basis so that this problem will not occur again.
(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS F-171

---------State of Georgia---------
Fndi1gs and QucsHoned Costs
For the Hscal Ycar Ended Jmc 30. 1997

GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION(*)

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

GENERAL LEDGER Claims Paid did not Agree with ED Form 1130 Finding Control Number FS-918-97-01

Criteria:

The Corporation should reconcile the general ledger and other detail subsidiary accounting reports to the U.S. Department of Education (ED) reporting forms.

Condition:

We noted during our audit that the Corporation could not reconcile the amount of claims paid during the reporting period on the ED Form 1130 to the general ledger.

Questioned Costs:

We did not detect any questioned costs due to this reportable condition.

Context:

The total for "claims paid" for the year ended June 30, 1997 as reported in the general ledger did not agree to the difference between the cumulative "claims paid" amounts on the June 30, 1997 and June 30, 1996 ED Form 1130 by approximately $2,700,000.

Effect:

An integral part of the Corporation's internal control process is the reconciliation of the detail accounting records and subsidiary records to U.S. Department of Education reports. This ensures the Corporation is submitting accurate information.

Recommendation:

We recommend the Corporation complete a reconciliation of all relevant information included in forms submitted to ED to detail records to ensure that all information submitted is accurate.

(See finding FA-918-97-0 I)

Management Response

We concur with this finding. All ED forms should be based on accurate data. However, we feel it necessary to clarify the reported condition. The 1130 Form referenced is not used to post data to the general ledger. This is done with the Form 1189 that is used to request reimbursement from ED for claims paid to lenders. The 1189 is reconciled in total, not loan type, to the general ledger for claims paid as well as collections. It should also be noted that input, including claims paid, to the default collections system is reconciled by loan type to the general ledger. Another distinction to be noted is that Form 1130 is used to report information from the inception of the Corporation through the current reporting quarter. In addition, the 1997 fiscal year was the first year the Corporation converted to an automated general ledger system that, by nature, should be more accurate. Therefore it is unclear at what point the general ledger data and the 1130 data were not reconciled.

We have also instituted an additional review comparing the quarterly 1130 form to the corresponding monthly 1189 forms. The Corporation's Chief Accountant, Mimi Carter, will perform this procedure.

Finally, the Corporation's conversion to the Great Lakes software for guarantee services, including federal reporting which the U. S. Department of Education staff has reported as being compliant, should eliminate any ongoing differences between the procession of the 1189 data and the 1130 data should they be software related.

(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY

OTHER AUDITORS

F-172

- - - - - - - S t a t e of Georff1a-------
Fndhgs and Questioned Costs
For the FISCal Ycar Ended Jmc 30. 1997

GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION(*)

FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS

REPORTING Reports not Reconciled Finding Control Number FA-918-97-01

Criteria:

The Corporation should reconcile the general ledger and other detail subsidiary accounting reports to the U.S. Department of Education (ED) reporting forms.

Condition:

We noted during our audit that the Corporation could not reconcile the amount of claims paid during the reporting period on the ED Form 1130 to the general ledger.

Questioned Costs:

We did not detect any questioned costs due to this reportable condition.

Context:

The total for "claims paid" for the year ended June 30, 1997 as reported in the general ledger did not agree to the difference between the cumulative "claims paid" amounts on the June 30, 1997 and June 30, 1996 ED Form 1130 by approximately $2,700,000.

Effect:

An integral part of the Corporation's internal control process is the reconciliation of the detail accounting records and subsidiary records to U.S. Department of Education reports. This ensures the Corporation is submitting accurate information.

Recommendation:

We recommend the Corporation complete a reconciliation of all relevant information included in forms submitted to ED to detail records to ensure that all information submitted is accurate.

(See finding FS-918-97-01)

Management Response

We concur with this finding. All ED forms should be based on accurate data. However, we feel it necessary to clarify the reported condition. The 1130 Form referenced is not used to post data to the general ledger. This is done with the Form 1189 that is used to request reimbursement from ED for claims paid to lenders. The 1189 is reconciled in total, not loan type, to the general ledger for claims paid as well as collections. It should also be noted that input, including claims paid, to the default collections system is reconciled by loan type to the general ledger. Another distinction to be noted is that Form 1130 is used to report information from the inception of the Corporation through the current reporting quarter. In addition, the 1997 fiscal year was the first year the Corporation converted to an automated general ledger system that, by nature, should be more accurate. Therefore it is unclear at what point the general ledger data and the 1130 data were not reconciled.

We have also instituted an additional review comparing the quarterly 1130 form to the corresponding monthly 1189 forms. The Corporation's Chief Accountant, Mimi Carter, will perform this procedure.

Finally, the Corporation's conversion to the Great Lakes software for guarantee services, including federal reporting which the U. S. Department of Education staff has reported as being compliant, should eliminate any ongoing differences between the procession ofthe 1189 data and the 1130 data should they be software related.

(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS F-173

---------State of GeorfJia - - - - - - - - -
Fndi1gs and QuesHoned Costs
For the Hscal Year Ended Jme 30. 1997

GEORGIA AGRICULTURAL EXPOSITION AUTHORITY

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-926-97-01

For the year under review, the internal accounting controls procedures of the Georgia Agricultural Exposition Authority did not provide for an adequate separation of duties in the performance of certain accounting functions and related procedures in the following control categories:

(1) Cash and Cash Equivalents (2) Revenues/Receivables/Receipts (3) Expenditures/Liabilities/Disbursements

(4) Employee Compensation (5) General Ledger (6) General Fixed Assets/Property Management

The Authority should continue to review the accounting procedures in place. To the extent possible and practical, the Authority should design and implement procedures which would enhance segregation of duties relative to the above categories.

Management Response

The Management of the Georgia Agricultural Exposition Authority recognizes the importance of the proper segregation of duties as they relate to various financial functions. Our on going objective is to maintain a system of internal accounting controls which would include organizational arrangements that would provide an appropriate division of responsibilities. This system would then provide reasonable assurances that transactions of the Authority are executed in accordance with management's general or specific authorizations, that the financial records fairly reflect, in reasonable detail, the transactions of the Authority, and that the Authority's assets are properly safeguarded. However, due to limitations in personnel, whereby all accounting functions are performed by only two individuals, obviates the Authority from attaining the optimum level of separation of responsibilities. Furthermore, the addition of staff solely to merit an enhanced level of organizational effectiveness, i.e., to allow an improvement in the separation of duties and responsibilities, would not be cost effective nor cost justified, especially during a time of government streamlining, downsizing, and redirection. The Authority will continue to objectively evaluate internal control issues as they relate to the separation of duties, and strive to strengthen areas where deficiencies are found to exist.

F-174

- - - - - - - - - - S t a t e of Georgia----------
Fndngs and QuesNoned Costs
For the Hscal Year Ended Jme 30. 1997 GEORGIA AGRIRAMA DEVELOPMENT AUTHORITY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL LEDGER Inadequate Accounting Procedures Finding Control Number FS-940-97-01 For the year under review, the general ledger for the Georgia Agrirama Development Authority as presented for examination was not in balance. Extensive procedures were performed in attempting to identify the out-of-balance amount. However, an unidentified variance of$3,915.13 remained at June 30, 1997. This out-of-balance condition was a result of the Authority's failure to balance the general ledger on a monthly basis. Procedures should be implemented by the Authority to ensure that the general ledger is balanced on a monthly basis. Management Response We concur with this finding. The general ledger for the period ended June 30, 1997 was recorded using a manual system. The Comptroller has installed a computer program and beginning July 1, 1997 the general ledger will be maintained on the computer system and will allow for checks and balances.
F-175

---------State of GeortJia - - - - - - - - -
Fndilgs and Quc.sHoned Costs
For the FLSCal Year Ended Jme 30. 1997
GEORGIA GOLF HALL OFFAME
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-958-97-01 For the year under review, the Georgia Golf Hall of Fame was unable to provide subsidiary fixed asset records supporting the balances reported for general fixed assets. The Board is required to maintain equipment inventories in accordance with the State Property Management System Manual. The discrepancy identified above, was caused by the Board's failure to follow guidelines for maintaining equipment inventories. The Georgia Golf Hall of Fame should take the appropriate action to provide for an adequate property management system for general fixed assets which would include subsidiary records that adequately reflect an inventory of sculptures and equipment owned by the Board. Such records should include, but not be limited to; (I) acquisition date, (2) acquisition cost, (3) description, (4) decal number or other identifying means, (5) location, (6) serial number and (7) condition. In addition, detailed records should be maintained for all deletions and additions to the fixed asset records. Management Response An inventory report for all bronze sculptures purchased by the GGHF have not been logged onto the computer for inventory purposes. An inventory report for all project related items has also been implemented. EMPLOYEE COMPENSATION Failure to Submit Salary and Travel Listing Finding Control Number FS-958-97-02 For the year under review, the Georgia Golf Hall of Fame failed to submit salary and travel expense listings to the State Auditor as provided for by the Official Code of Georgia Annotated Section 50-6-27. All State organizations are required to remit to the State Auditor, in a format prescribed by the State Auditor, a listing of all personnel of such organizations showing name, title or functional area, salary, and travel expense for each individual for inclusion in the statewide salary and travel listing. The Board should ensure that the salary and travel listings are submitted to the Georgia Department of Audits in accordance with State law. Management Response A reporting system has been implemented to begin reporting of all GGHF employee salary, travel and per diem expenses. Originals of these reports have been mailed to the attention of Ms. Joan Pittman.
F-176

----------State of Georaia - - - - - - - - - -
Fndilgs and QuesNoned Costs
For the FISCal Ycar Ended Jmc 30. 1997
GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number FS-977-97-01
For the year under review, our examination included a review of the internal accounting controls utilized by the Georgia Public Telecommunications Commission in maintaining their State Property System. This review also consisted of testing the system for compliance with State laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
(1) Reconciling items noted on the prior year reconciliation of equipment inventory prepared by the Commission were not corrected on the current year inventory records.
(2) Equipment additions were not reconciled to the general ledger expenditure accounts.
(3) Equipment inventory records for additions were updated incorrectly. Testing of current year a~ditions revealed four (4) additions that had been updated onto the equipment inventory records incorrectly by the amount of$57,236.60 (net).
The Commission is required to maintain equipment inventories in accordance with provisions of the State Property Management System Manual. The discrepancies identified above were caused by the Commission's failure to follow guidelines for maintaining equipment inventories.
As a result of the discrepancies identified above, we were unable to determine the validity of the total equipment inventory valuation contained in the inventory records which comprise the General Fixed Assets Account Group.
The Commission should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with provisions of the State Property Management System Manual.
Management Response
We concur with your recommendation and have begun work on establishment of tighter internal controls to ensure that equipment inventories are maintained in accordance with provisions of the State Property Management System Manual.
EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Monitoring of Contract Finding Control Number FS-977-97-02
The Georgia Public Telecommunications Commission has entered into a contractual agreement with the Atlanta-Fulton County Zoo, Incorporated (Zoo Atlanta) with the intent of providing Lottery for Education funds to equip the "Zoo Atlanta Educational Resource Center" construction project with interactive equipment and technology. As the contractor agency, the Commission has certain responsibilities which include, but are not limited to, ensuring that contract funds are expended according to the stipulations in the contract agreement and that Lottery for Education funds are expended in accordance with Official Code of Georgia Annotated (OCGA) Sections 50-27-13 and 20-1-8. Based on our review of the Commission's control procedures for monitoring this contract, the Commission failed to ensure compliance with contract provisions and State law as stated below:
(I) Contract provisions stipulated that funds were to be paid to Zoo Atlanta based on reimbursement requests for actual expenditures and that the Commission would review the reimbursement requests to ensure compliance with OCGA 50-27-13. Zoo Atlanta billed the Commission $2,755,944.00 by invoice dated
F-177

- - - - - - - - - - S t a t e of Georgia----------
Fndngs and Questioned Costs
For the FISCal Year Ended Jme 30, 1997
GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS June 28, 1996. This was the same date Zoo Atlanta signed a contract to have the work performed. The Commission paid $2,643,565.84 to Zoo Atlanta by check dated September 10, 1996. The Commission could not provide documentation that the reimbursement request was for actual expenditures or that a review was performed by the Commission to ensure that the expenditures were in compliance with State law.
(2) Contract provisions and OCGA 20-1-8 provide that Lottery for Education funds appropriated to the Commission in fiscal year 1995 be expended by June 30, 1997, and that unexpended funds as of this date lapse as lottery surplus to the State treasury. The Commission could not provide adequate documentation that all funds paid to Zoo Atlanta had been expended by Zoo Atlanta by June 30, 1997.
(3) Contract provisions provide that equipment purchased be maintained on the Commission's inventory records and reflected as assigned to Zoo Atlanta. In addition, Zoo Atlanta is to certify the status and condition of the equipment to the Commission annually on July 15. The Commission could not provide an inventory listing of equipment purchased by Zoo Atlanta or the required certification for July 15, 1997.
In order to meet the responsibilities outlined in the contract, the Commission should develop and implement policies and procedures to ensure that expenditures are in accordance with State law and that all terms of the contract are met and documented. In addition, the Commission should determine if Zoo Atlanta had properly expended funds as of June 30, 1997, and as a result, whether surplus should be remitted to the State treasury. Management Response The Commission is investigating ways to develop and implement additional policies and procedures relating to contract compliance and monitoring. Meetings are scheduled with those Zoo Atlanta officials and others to ensure that all funds had been properly expended as of June 30, 1997.
F-178

---------State of GeorfJia - - - - - - - - -
Fndhgs and Quesfioned Costs
For the Hscal Year Ended Jme 30. 1997 NORTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8504-97-01 For the year under review, the Northwest Georgia Regional Educational Service Agency did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Agency has decided not to pursue the recording of General Fixed Assets on the fmancial statements.
F-179

--------State of Georftia - - - - - - - -
Fndilgs and QucsHoned Costs
For the FISCal Year Ended Jme 30. 1997
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number FS-8524-97-0 1
As of June 30, 1997, the North Georgia Regional Educational Service Agency failed to have its bank balances fully collateralized as provided for by the Official Code of Georgia Annotated Section 45-8-12 which states, in part, as follows:
"The collecting officer or officer holding public funds may not have on deposit at any time in any depository for a time longer than ten days a sum of money belonging to the public body when such depository has not given bond to the public body as set forth in this code section... The aggregate of the face value of such surety bond, and the market value of securities pledged, shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance."
This noncompliance occurred because of management's failure to adequately monitor the collateralization of balances at individual banks. The Agency should implement procedures to monitor the collateralization of bank balances to ensure compliance at all times with State laws governing deposits and investments.
Management Response
We concur with this finding. During Fiscal Year 1997, North Georgia RESA entered into an agreement with Regions Bank to provide for the collateralization of bank balances to ensure compliance with State laws. In the future, North Georgia Regional Educational Service Agency will transfer, on a monthly basis, amounts in excess of $100,000 from Gilmer County Bank and deposit into Regions Bank.
GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8524-97-02
For the year under review, the North Georgia Regional Educational Service Agency did not maintain a General Fixed Assets Account Group within the formal accounting records. This condition resulted in the general purpose financial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group.
Management Response
We concur with this finding. It is not cost effective for North Georgia RESA to implement the General Fixed Assets Account Group, within its General Ledger, at this time. North Georgia RESA's Board of Control does not currently require this account to be maintained. North Georgia RESA does maintain a listing of all equipment with a purchase value greater than $1,000.
F-180

- - - - - - - - - S t a t e of Geor5ia - - - - - - - - -
Fndilg.s and Que.sHoned Co.st.s
For the FISCal Year Ended Jme 30. 1997
PIONEER REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number FS-8544-97-01 In the year under review, the Agency did not provide for adequate separation of duties in the bank reconciliation, cash receipt and check writing functions. This deficiency was a result of management's decision to limit the number of administrative staff responsible for these functions. Management should periodically review this decision to determine if employee duties can be reassigned to achieve a higher degree of internal control with the existing staff. Management Response We concur with this finding. Due to budgetary restraints our board of control is unable to hire additional staff that is required to separate these duties. GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8544-97-02 In the year under review, the Agency did not maintain a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location, and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. Due to our limited staff and the additional time to record the fixed assets, our board of control has decided not to pursue the recording of fixed assets on our Financial Statements.
F-181

- - - - - - - - - - S t a t e of Georgia----------
Fndngs and QuesNoned Costs
For the Hscal Year Ended Jme 30. 1997 METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8564-97-01 For the year under review, the Agency did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. Due to budgetary constraints in fiscal year 1997, the Agency was unable to hire the additional staff required to clear this finding. In fiscal year 1998 a bookkeeper, Carmen Motley was hired and a physical inventory was taken updating the inventory of equipment owned by the Agency. The General Fixed Assets Account Group was setup by the accountant, Alfred Brown, and the appropriate entries were made. This finding should be resolved in the next fiscal year end audit.
F-182

---------State of GeorfJia - - - - - - - - -
Fndi1gs and Quesnoned Costs
For the Ftseal Year Ended Jme 30. 1997
NORTHEAST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS INVENTORIES Inadequate Resale Inventory Procedures Finding Control Number FS-8584-97-01 For the year under review, the inventory procedures of the Agency were insufficient to provide for adequate control over the resale inventory. The Agency failed to reconcile the year-end physical count of the resale inventory to the accounting records. This deficiency was the result of management's failure to implement proper control procedures over resale inventory that are necessary to adequately safeguard and report the resale inventory of the Agency. The Agency should establish appropriate controls to ensure that the resale inventory is reconciled with the accounting records annually and that needed adjustments, if any, are recorded on a timely basis. Management Response We concur with this finding. I have met with the supervisors of this department and directed that they give leadership to reconciling the year-end resale physical inventory count to accounting records. This directive wiii be followed up as part of the employee performance evaluation process. GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8584-97-02 For the year under review, the Agency did not maintain a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose financial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of the General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location, and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this fmding. This requirement takes the RESAs resources beyond capacity. When personnel resources become available, the finding wiii be addressed.
F-183

---------State of Georgia---------
Fndi1gs and QuesNoned Costs For the Hscal Year Ended Jme 30. 1997
WEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8604-97-01 For the year under review, the West Georgia Regional Educational Service Agency did not maintain a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose fmancial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. This deficiency occurred because of management's decision to not include a General Fixed Assets Account Group within the formal accounting records. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response West Georgia RESA concurs with this finding as we have stated on several occasions before. However, until such a time as the Department of Education or legislature sees fit to provide us with the support and fmancial assistance to accomplish the task of inventory and research through our acquisition records we will continue to have to live with this finding.
F-184

---------State of GeorfJia - - - - - - - - -
Fndhgs and Que.sHoned Costs
For the FISCal Year Ended Jme 30. 1997 OCONEE REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8664-97-01 For the year under review, the management of the Oconee Regional Educational Service Agency did not establish a General Fixed Assets Account Group within the formal accounting records. This condition results in the general purpose fmancial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. The management of a General Fixed Assets Account Group is not an accessible accounting procedure at the present time due to this function being inoperative in our accounting system that is provided and maintained by the State Department. With future upgrades to our system this should be a feasible accounting function that would bring our accounting procedures into conformity with Generally Accepted Accounting Principles.
F-185

--------State of GeortJ1a--------
Fndi1gs and Que.sHoned Costs
For the FISCal Vcar Ended Jmc 30. 1997 CHATTAHOOCHEE-FLINT REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8724-97-01 For the year under review, the management of the Chattahoochee-Flint Regional Educational Service Agency did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose fmancial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. Chattahoochee-Flint RESA at the present time does not believe it to be cost beneficial to establish a Fixed Assets Account.
F-186

---------State of GeorfJia - - - - - - - - -
Fndilgs and QucsNoned Costs
For the FISCal Year Ended Jme 30, 1997 HEART OF GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8764-97-01 For the year under review, the management of the Heart of Georgia School Systems Regional Educational Service Agency did not maintain a system-wide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose fmancial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. Due to the financial limitations and the inability of the current accounting system, the Heart of Georgia RESA is not able to establish accounting controls and procedures to provide for maintenance of the General Fixed Assets Account Group.
F-187

---------State of Georgia---------
Fndi1gs and Quc.sNoned Costs
For the fiSCal Year Ended Jme 30. 1997 FIRST DISTRICT REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8804-97-01 For the year under review, management of the First District Regional Educational Service Agency did not maintain a systemwide General Fixed Assets Account Group within the formal accounting records as required by generally accepted accounting principles. This condition results in the general purpose fmancial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. The subsidiary records should include an inventory of equipment owned by the Agency, and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. At present, Georgia Department of Education has not implemented a General Fixed Assets Account Group in our accounting system. We will work with the Department in resolving this finding.
F-188

---------State of Georgia---------
Fndilgs and Questioned Costs
For the Fiscal Year Ended Jme 30. 1997 SOUTHWEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS Uncollateralized Deposits Finding Control Number FS-8844-97-01 As of June 30, 1997, the Agency failed to have its bank balances fully collateralized as provided for by the Official Code of Georgia Annotated Section 45-8-12 which states, in part, as follows:
"The collecting officer or officer holding public funds may not have on deposit at any time in any depository for a time longer than ten days a sum of money belonging to the public body when such depository has not given bond to the public body as set forth in this code section...The aggregate of the face value of such surety bond, and the market value of securities pledged, shall be equal to not less than 110 percent of the public funds being secured after the deduction of the amount of deposit insurance". This noncompliance occurred because of management's failure to adequately monitor the collateralization of balances at individual banks. The Agency should implement procedures to monitor the collateralization of bank balances to ensure compliance at all times with State laws governing deposits and investments. Management Response We concur with this finding. Bank balances at individual banks will have securities pledged up to 110 percent of public funds to ensure compliance at all times with State laws governing deposits and investments.
F-189

---------State of GeorfJia - - - - - - - - -
Fndilgs and Qucsfioned Costs
For the FISCal Year Ended Jme 30. 1997 OKEFENOKEE REGIONAL EDUCATIONAL SERVICE AGENCY
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Finding Control Number FS-8884-97-01 For the year under review, it is noted that management of the Okefenokee Regional Educational Service Agency had chosen not to maintain a system-wide General Fixed Assets Account Group within the normal accounting records as required by general accepted accounting principles. This condition results in the general purpose fmancial statements of the Agency being incomplete and not in accordance with generally accepted accounting principles. Appropriate action should be taken by the Agency to establish accounting controls and procedures to provide for maintenance of a General Fixed Assets Account Group. These subsidiary records should include an inventory of equipment owned by the Agency and should include, but may not be limited to, date acquired, acquisition cost, estimated replacement cost, location and description. Detailed records should be maintained of all additions and deletions to the General Fixed Assets Account Group. Management Response We concur with this finding. Okefenokee RESA implemented a procedure to correct the deficiencies noted in the audit report. We studied the most appropriate way to accomplish this task. We have always maintained an inventory of our equipment that includes a description of the item, date acquired, cost and location with records of additions and deletions. Our new procedure is to provide the Department of Audits an actual total value of these assets from year to year starting in FY 98. Adopting this procedure should eliminate the deficiencies indicated in audit fmding number FS-8884-97-01.
F-190

Appendix ~' OraaniEationa[ <Units

- - - - - - - - S t a t e of Georf}ia - - - - - - - -

Usmg of OrganizaHonal Lnits Comprisilg the State of Georgia Rcpormg Entitv
For the FISCal Ycar Ended Jmc 30. 1997

ORGANIZATIONAL UNIT

CONTROL NUMBERS

Administrative Services, Department of

401

Agricultural Exposition Authority, Georgia

926

Agriculture, Department of

402

Agrirama Development Authority, Georgia

940

Audits and Accounts, Department of(*)

404

Aviation Hall of Fame, Georgia

483

Banking and Finance, Department of

406

Boxing Commission, State

494

Building Authority, Georgia

Regular(*)

900

Hospital (*)

903

Markets(*)

904

Penal(*)

905

Children and Youth Services, Department of

461

Community Affairs, Department of

428

Correctional Industries Administration, Georgia

921

Corrections, Department of

467

Defense, Department of

411

Development Authority, Georgia(*)

914

Education, Department of

414

Education Authority, Georgia

Schools(*)

906

University (*)

907

Environmental Facilities Authority, Georgia(*)

928

Financing and Investment Commission, Georgia State (*)

409

Forestry Commission, State

420

Games Commission, State

496

General Assembly, Georgia (*)

445

GeorgiaNet Authority

941

GolfHall ofFame, Georgia

958

Governor, Office of the

422

Higher Education Assistance Corporation, Georgia (*)

918

Highway Authority, Georgia

924

Housing and Finance Authority, Georgia (*)

923

Housing Trust Fund for the Homeless (*)

959

Human Resources, Department of

427

Industry, Trade and Tourism, Department of

429

Insurance, Department of

408

International and Maritime Trade Center Authority (*)

974

Investigation, Georgia Bureau of

471

Jekyll Island State Park Authority

910

Judicial Branch

430

Labor, Department of

440

Lake Lanier Islands Development Authority

913

Law, Department of

442

Lottery Corporation, Georgia(*)

973

Medical Assistance, Department of

419

Music Hall of Fame Authority, Georgia

929

Natural Resources, Department of

462

(*) Audits of these organizational units performed by other auditors.
AP-3

---------State of Georgia---------

Usmg of OrganizaHonallt\its Comprisng
the State of Georgia Reportilg Entitv
For the FISCal Year Ended Jme 30.1997

ORGANIZATIONAL UNIT

CONTROL NUMBERS

North Georgia Mountains Authority

912

Pardons and Paroles, State Board of

465

Pension Funds

District Attorneys Retirement System

946

Employees' Retirement System of Georgia

Regular(*)

416

Defined Contribution Plan (*)

NIA

Legislative Retirement System (*)

N/A

Public School Employees' Retirement System (*)

468

State Employees' Assurance Department (*)

NIA

Trial Judges and Solicitors Retirement System (*)

N/A

Firemen's Pension Fund

950

Judges of the Probate Court Retirement Fund

949

Peace Officers' Annuity and Benefit Fund of Georgia

947

Sheriffs' Retirement Fund of Georgia

951

Superior Court Clerks' Retirement Fund of Georgia (*)

948

Superior Court Judges Retirement System

945

Teachers' Retirement System of Georgia(*)

482

Personnel Board, State - Merit System of Personnel Administration

460

Ports Authority, Georgia(*)

916

Public Safety, Department of

466

Public Service Commission

470

Public Telecommunications Commission, Georgia

977

Rail Passenger Authority

960

Regents of the University System of Georgia, Board of

472

Colleges and Universities

Research Universities

Georgia Institute of Technology

503

Georgia State University

509

Medical College of Georgia

512

University of Georgia

518

Regional Universities

Georgia Southern University

539

Valdosta State University

551

State Universities

Albany State University

521

Armstrong Atlantic State University

524

Augusta State University

527

Clayton College and State University

528

Columbus State University

530

Fort Valley State University

533

Georgia College and State University

536

Georgia Southwestern State University

542

Kennesaw State University

543

North Georgia College and State University

545

Savannah State University

548

(*) Audits of these organizational units performed by other auditors.
AP-4

---------State of Georffia - - - - - - - - -

Usting of Organizational Units Comprising the State of Georgia Reporting Entitv
For the Fiscal Year Ended June 30. 1997

ORGANIZATIONAL UNIT

CONTROL NUMBERS

Colleges and Universities (continued) State Universities (continued) Southern Polytechnic State University State University of West Georgia Associate Degree Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Dalton College Darton College DeKalb College East Georgia College Floyd College Gainesville College Gordon College Macon College Middle Georgia College South Georgia College Waycross College Other Georgia Military College Skidaway Institute of Oceanography
Regional Educational Service Agencies Central Savannah Regional Educational Service Agency Chattahoochee-Flint Regional Educational Service Agency Coastal Plains Regional Educational Service Agency First District Regional Educational Service Agency Griffin Regional Educational Service Agency Heart of Georgia Regional Educational Service Agency Metropolitan Regional Educational Service Agency Middle Georgia Regional Educational Service Agency North Georgia Regional Educational Service Agency Northeast Georgia Regional Educational Service Agency Northwest Georgia Regional Educational Service Agency Oconee Regional Educational Service Agency Okefenokee Regional Educational Service Agency Pioneer Regional Educational Service Agency Southwest Georgia Regional Educational Service Agency West Georgia Regional Educational Service Agency
Removal of Hazardous Materials, Agency for Revenue, Department of Sapelo Island Heritage Authority Secretary of State Seed Development Commission, Georgia Soil and Water Conservation Commission, State Sports Hall of Fame Authority Sports Hall of Fame Board Stone Mountain Memorial Association (*)

550 554
557 561 562 563 569 570 571
572
573 575 576 581 584 587 589
968 593
8684
8724
8864 8804 8624 8764 8564 8644 8524 8584 8504 8664 8884 8544 8844 8604 497 474 942 478 919 480 944 495 911

(*) Audits of these organizational units performed by other auditors.
AP-5

State of GeorfJl'I-------

Lismg of Organizanonalltlits Comprisilg the State of Georgia Rcpormg EnNtv
For the Hscal Ycar Ended Jmc 30. 1997

ORGANIZATIONAL UNIT

CONTROL NUMBERS

Student Finance Authority, Georgia(*)

917

Student Finance Commission, Georgia

476

Subsequent Injury Trust Fund Board of Trustees

489

Superior Court Clerks' Cooperative Authority, Georgia(*)

955

Technical and Adult Education, Department of

415

State Technical Institutes

Albany Technical Institute

820

Altamaha Technical Institute

821

Athens Area Technical Institute

822

Augusta Technical Institute

824

East Central Technical Institute

825

Carroll Technical Institute

826

Chattahoochee Technical Institute

827

Columbus Technical Institute

828

Coosa Valley Technical Institute

829

DeKalb Technical Institute

830

Flint River Technical Institute

847

Griffin Technical Institute

831

Heart of Georgia Technical Institute

833

Lanier Technical Institute

834

Macon Technical Institute

835

Middle Georgia Technical Institute

836

Moultrie Area Technical Institute

837

North Georgia Technical Institute

838

North Metro Technical Institute

839

Ogeechee Technical Institute

844

Okefenokee Technical Institute

818

Pickens Technical Institute

840

Sandersville Technical Institute

817

South Georgia Technical Institute

842

Southeastern Technical Institute

843

Swainsboro Technical Institute

845

Thomas Technical Institute

846

Valdosta Technical Institute

848

Walker Technical Institute

849

West Georgia Technical Institute

819

Tollway Authority, State

927

Transportation, Department of

484

Treasury and Fiscal Services, Office of

486

Veterans Service, State Department of

488

Workers' Compensation, State Board of

490

World Congress Center Authority, George L. Smith II, Georgia

922

(*) Audits of these organizational units performed by other auditors.
AP-6