Single audit report, June 30, 2002

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SINGLE AUDIT RERJRT
JuNE30~2002

EIN 58-0973190
SINGLE AUDIT REIDRT
JuNE 30~ 2002
Prepared by
GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
RUSSELL W. HINTON. State Auditor
DraWings - Huey J. Theus is employed as the Marketing Director for the Georgia Department of Labor. He is a member
of the South Cobb Art Alliance and served as the head of the Art Department at Mount Carmel Christian Church in Decatur, Georgia. His portfolio contains color-lithographed prints, pen and ink drawings and paintings, which have won various awards, including a Georgia State Senate resolution honoring his work.
Cover - The Little White House - Franklin Delano Roosevelt bUilt the Little White House in 1932, while governor of
New York, prior to being inaugurated as preSident in 1933. He first came to Warm Springs in 1924 hoping to find a cure for the infantile paralysis (polio) that had struck him in 1921. On April 12, 1945, FOR suffered a massive stroke while his portrait was being painted and died a short while later. Today. the "Unfinished Portrait" is a focal point of the Little White House.

RUSSELL W. HINTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400

June 4,2003

To the Citizens of the State of Georgia, The Honorable Sonny Perdue, Governor of Georgia
and Members of the General Assembly of Georgia
I am honored to present the Single Audit Report ofthe State ofGeorgia for the fiscal year ended June 30,2002. Organizational units comprising the State ofGeorgia reporting entity are listed in Appendix "A" of this report.
Federal laws and regulations require that the State undergo an annual audit in conformity with the Single Audit Act Amendments of 1996 and the U.S. Office of Management and Budget (OMB) Circular A-133, Audits o/States, Local Governments, and Non-Profit Organizations. Accordingly, the Single Audit Report ofthe State ofGeorgia discloses the results ofthe financial operations ofthe State of Georgia reporting entity, as well as its compliance with requirements applicable to Federal financial assistance programs administered by the State.
In submitting this report, I would like to express my appreciation to all those who made the completion ofthis audit possible. This report is the culmination ofextensive planning, coordination, cooperation, testing and evaluation by many people. I believe the results of this statewide audit provides the users ofthis report valuable information that will serve to better guide the course ofthe State's future.
- - -Respectfully,
k).~
Ru ell W. Hinton, CPA, CGFM Sta e Auditor

Georgia
Table of Contents June 3D, 2002
SECTION A - BASIC FINANCIAL STATEMENTS AND REQillRED SUPPLEMENTARY INFORMATION
Independent Auditor's Report Management's Discussion and Analysis Basic Financial Statements
Statement ofNet Assets Statement ofActivities Balance Sheet - Governmental Funds Reconciliation ofthe Balance Sheet - Governmental Funds Statement ofRevenues, Expenditures, and Changes in Fund Balances -
Governmental Funds Reconciliation ofStatement ofRevenues, Expenditures, and Changes in Fund Balances -
Governmental Funds Statement ofNet Assets - Proprietary Funds Statement ofRevenues, Expenses, and Changes in Fund Net Assets - Proprietary Funds Statement of Cash Flows - Proprietary Funds Statement ofFiduciary Net Assets - Fiduciary Funds Statement ofChanges in Fiduciary Net Assets Combining Statement ofNet Assets - Component Units Combining Statement ofActivities - Component Units Notes to the Financial Statements Required Supplementary Information Employees' Retirement System ofGeorgia - Schedule ofFunding Progress Budgetary Comparison Schedule - Budget Fund Budgetary Comparison Schedule - Budget-To-GAAP Reconciliation Notes to the Required Supplementary Information
AUDITOR'S SECTION
SECTION B - REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
SECTION C - REPORT ON COMPLIANCE WITH REQillREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
SECTION D - FINDINGS AND QUESTIONED COSTS Summary ofAuditor's Results Financial Statement Findings Federal Awards Findings and Questioned Costs

Page
A-3 A-7
A-18 A-20 A-22 A-23
A-24
A-25 A-26 A-30 A-32 A-36 A-3 7 A-38 A-42 A-45
A-91 A-92 A- 94 A-96
B-3
C-3
D-5 D-7 D-45

Ckrgia
Table of Contents
June 30, 2002
AUDITEE'S SECTION
SECTION E - SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS Schedule ofExpenditures ofFederal Awards Schedule ofCluster Programs
SECTION F - AUDITEE'S RESPONSES Summary! Schedule ofPrior Year Findings and Questioned Costs Corrective Action Responses to Current Year Findings and Questioned Costs
APPENDIX" A" Listing ofOrganizational Units Comprising the State ofGeorgia Reporting Entity

E-3 E-47
F-3 F-29
AP-3

RCSSELL \V. HINTON
STATE AUDITOR
(404) 6562174

254 Washington Street. SW.. Suite 214 Atbnta. Geurgia 30334-K400

INDEPENDENT AUDITOR'S REPORT

The Honorable Sonny Perdue Governor of Georgia
and Members of the General Assembly of the State of Georgia

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregated discretely presented component units, each major fund, and the aggregated remaining fund information of the State of Georgia as of and for the year ended June 30, 2002 which collectively comprise the State's basic financial statements as listed in the table of contents. These financial statements are the responsibility of the State's management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of certain organizations. These organizations reflect the following percentages of total assets and revenues or additions of the indicated opinion units:

Opinion Unit Governmental Activities Business-Type Activities Aggregate Discretely Presented Component Units General Fund Georgia State Financing and Investment Commission State Employees' Health Benefit Plan Higher Education Georgia Technology Authority Unemployment Compensation Fund Aggregate Remaining Fund Information

Percent of Opinion Unit's Total Assets
15% 10% 70% 10% 100% 100%
---
---
--87%

Percent of Opinion Unit's Total Revenues/Additions
1% 34% 88%
21% 100% 100%
---
---
---
14%

The financial statements of these organizations and component units were audited by other auditors whose reports have been furnished to us, and our opinions, 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 paragraphs, we conducted our audit in accordance with auditing standards generally accepted in the United States of America 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 financial statements are free of material misstatement. The financial statements of the Employees' Retirement System of Georgia, Georgia General Assembly, Georgia Lottery Corporation, Georgia Ports Authority, 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 financial statements. An audit also includes assessing the accounting principles used and significant estimates

statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the reports of other auditors provide a reasonable basis for our opinions.
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 Phoenix System, is utilized, in whole or in part, by 78 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 basic financial statements. We are therefore not independent with regard to the preparation of accounting entries required to convert the consolidated budgetary financial statements to basic financial statements prepared in accordance with accounting principles generally accepted in the United States of America.
As discussed in Notes 8 and 9 to the basic 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 accounting principles generally accepted in the United States of America. We were unable to determine the effect of these limitations on the financial statements.
As discussed in Note IF to the basic financial statements, the State of Georgia did not maintain adequate systems to document and report cost of state-owned land in conformity with accounting principles generally accepted in the United States of America. We were unable to determine the effect of these limitations on the financial statements.
Apparent misappropriations of Georgia Technology Authority assets and other undocumented expenses were discovered in the Telecom Division operations. The possible outcome of these matters, which have been reported to appropriate state officials, is uncertain at this time. Accordingly, no provisions have been made in the financial statements for the resolution of these matters.
As discussed in Note 1D to the basic 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 accounting principles generally accepted in the United States of America. We were unable to determine the effect of this departure from accounting principles generally accepted in the United States of America on the financial statements.
In our opinion, based on our audit and the reports of other auditors, except for the effects of not maintaining adequate systems to account for leases and land for the governmental activities as described in aforementioned paragraphs, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities of the State of Georgia, as of June 30, 2002, and the respective changes in financial position thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In our opinion, except for the limitation on the scope of our audit of the Georgia Technology Authority as described in an aforementioned paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the Georgia Technology Authority of the State of Georgia, as of June 30, 2002, and the respective changes in financial position and cash flows thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
A-4

In our opinion, based on our audit and the reports of other auditors, except for the effects of maintaining certain pension trust funds on essentially the cash basis of accounting for the aggregated remaining fund information as described in an aforementioned paragraph, the financial statements referred to above present fairly, in all material respects, the respective financial position of the aggregated remaining fund information of the State of Georgia, as of June 30, 2002, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
In our opinion, based on our audit and the reports of other auditors, financial statements referred to above present fairly, in ail material respects, the financial position of the business-type activities, the aggregated discretely presented component units, the general fund, the Georgia State Financing and Investment Commission, the State Employees' Health Benefit Plan, Higher Education, and the Unemployment Compensation Fund of the State of Georgia as of June 30, 2002, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The financial statements of the general fund reflect accounts payable in the amount of $731,810,094 which represents the State of Georgia's liability for teachers salaries earned before June 30, 2002, but not paid until July and August, 2002. State appropriations for the subsequent fiscal year were available for obligation even though the period to which the appropriation applied had not begun. The recognition of this liability at June 30, 2002, however, is not in accordance with generally accepted accounting principles as promulgated by Governmental Accounting Standards Board (GASB) Statement 33 because the subsequent fiscal year had not begun. We believe, however, the omission of this liability would cause the financial statements of the State of Georgia to be misleading.
As discussed in Note 2 to the basic financial statements, the State of Georgia implemented GASB Statement Number 34, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments; Statement Number 35, Basic Financial Statements -and Management's Discussion and Analysis- for Public Colleges and Universities; Statement No. 37, Basic Financial Statements - and Managements Discussion and Analysis - for State and Local Governments: Omnibus; and Statement Number 38, Certain Financial Statement Note Disclosures. This resulted in changes to the format and content ofthe financial statements.
In accordance with Government Auditing Standards, we have also issued a report dated June 4, 2003, on our consideration of the State of Georgia's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grants. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunctions with this report in considering the results of our audit.
The management's discussion and analysis on pages A-7 through A-16, the schedule of funding progress for the Employees' Retirement System of Georgia on page A-91, and the budgetary comparison schedule and accompanying notes on pages A-92 through A-96 are not required parts of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We did not audit the information and express no opinion on it.
A-5

The accompanying Schedule of Expenditures of Federal Awards, located in Section E, is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-I33, Audits of States, Local Governments, and Non-Profit Organizations, and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, based on our audit and the reports of other auditors, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole.

June 4, 2003 and June 9, 2003 as to Note 13b, paragraph 2

~ ... ~~.~ Respectfully submitted,
~~ll W. Hinton, CPA, CGFM
State Auditor

A-6

MANAGEMENT'S DISCUSSION AND ANALYSIS
Management of the State of Georgia provides this Management's Discussion and Analysis of the State of Georgia's Comprehensive Annual Financial Report (CAFR) for readers of the State's financial statements. This narrative overview and am.lysis of the financial activities of the State of Georgia is for the fiscal year ended June 30, 2002. We encourage readers to consider this information in conjunction with the additional information that is furnished in the letter of transmittal, which can be found in the Introductory Section of this report, and with the State's financial statements, which follow this narrative.
Beginning this fiscal year, the State of Georgia is implementing new reporting standards established by the Governmental Accounting Standards Board (GASB). Because these new standards significantly changed the content and structure of the financial statements, this discussion and analysis provides few comparisons with the previous fiscal year. However, in future fiscal years, comparisons will be available to assist the reader in understanding the State's financial position and results of operations.
FINANCIAL HIGHLIGHTS - PRIMARY GOVERNMENT
Government-Wide The assets of the State exceeded its liabilities at the close of the fiscal year by $21.3 billion (reported as "net assets ''), a decrease of $513 million from the previous year. Of this amount, $5 billion (reported as "unrestricted net assets '') may be used to meet the State's ongoing obligations to citizens and creditors. Component units of the State reported net assets of $2 billion for fiscal year ending June 30, 2002.
Fund Level Governmental Funds - As of the close of the current fiscal year, the State's governmental funds reported a combined ending fund balance of $6.5 billion, with $2.5 billion representing the unreserved fund balance and the remaining amount of $4 billion reserved for specific purposes, such as debt service and motor fuel taxes. At the end of the fiscal year, unreserved fund balance for the General Fund was $659 million, or 2.9 percent of total General Fund expenditures.
Proprietary Funds - Net assets at the end of fiscal year 2002 totaled $7 billion, which represents an increase of $4 million during the fiscal year.
Long-term Liabilities Long-term liabilities totaled $6.6 billion at June 30, 2002. Most of these liabilities consist of (1) the net difference between general obligation debt issuances and payments of outstanding debt during the fiscal year, and (2) the calculated amount for unused accumulated annual leave due employees when they retire or terminate employment, totaling $387 million.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the State of Georgia's basic financial statements. The State's basic financial statements include three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains required supplementary information in addition to the basic financial statements.
Government-wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview ofthe State of
A-7

Georgia's finances, in a manner similar to the private sector. These financial statements provide both short-term and long-term information about the State's financial status, which assists in assessing the State's financial condition at the end of the fiscal year. The statements are prepared using the flow of economic resources measurement focus and the accrual basis of accounting. The government-wide financial statements include two statements:
The Statement of Net Assets presents all of the State's assets and liabilities, with the difference between the two reported as "net assets". Over time, increases and decreases in net assets may serve as a useful indicator of whether the State's financial position is improving or deteriorating.
The Statement of Activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in this statement for some items that will not result in cash flows until future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave). This statement also presents a comparison between direct expenses and program revenues for each function of the State.
Both of the above financial statements report three activities:
Governmental Activities - Taxes and intergovernmental revenues principally fund the activities reported within this section. The majority of the State's basic services fall under this activity including general government, education, health and welfare, transportation, public safety, economic development and assistance, culture and recreation, and conservation.
Business- Type Activities - These activities normally are intended to recover all or a significant portion of their costs through user fees and charges to external users of goods and services. These business-type activities of the State include the operations of the Unemployment Compensation Contributions and Benefits Fund (by the Georgia Department of Labor), the self-insured State Employees' Health Benefit Plan (by the Georgia Department of Community Health), the programs of the Higher Education Fund (by the Board of Regents of the University System of Georgia and the Georgia Department of Technical and Adult Education) and the operations of the Georgia Technology Authority, which is primarily responsible for the procurement of technology resources, technology enterprise management and technology portfolio management of certain public information maintained in electronic format for the public.
Discretely Presented Component Units - These are legally separate organizations for which the State has financial accountability. Financial information for these component units is reported separately from the financial information presented for the primary government. For the most part, these entities operate similar to private sector businesses and the business-type activities described above. The State's most significant discretely presented component units are Georgia Development Authority, Georgia Environmental Facilities Authority, Georgia Housing and Finance Authority, Georgia Lottery Corporation, Georgia Ports Authority, Georgia Public Telecommunications Commission, State Road and Tollway Authority, Stone Mountain Memorial Association, Georgia Student Finance Authority, and the Geo. L. Smith II Georgia World Congress Center Authority.
The government-wide financial statements can be found immediately following this discussion and analysis.
Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The State of Georgia, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
The fund financial statements focus on individual parts of the State government, reporting the State's operations in more detail than the government-wide statements. All of the funds of the State of Georgia can be divided into
A-8

three categories: governmental funds, proprietary funds, and fiduciary funds. These fund categories use different accounting approaches and should be interpreted differently.
Governmental Funds - Most of the basic services provided by the State are financed through governmental funds. These funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, the governmental fund financial statements focus on short-term inflows and outflows of spendable resources. They also focus on the balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the government's short-term financing requirements. This approach is known as using the flow of current financial resources measurement focus and the modified accrual basis of accounting. These statements provide a detailed short-term view of the State's finances that assists in determining whether there will be adequate financial resources available to meet the current needs of the State.
Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government's short-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and the governmental activities. These reconciliations are presented on the page immediately following each governmental fund financial statement.
The State of Georgia maintains eight individual governmental funds. The State's two major governmental funds are the General Fund and the capital projects fund containing the Georgia State Financing and Investment Commission (GSFIC). Infonnation for each major fund is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances. Data for the remaining six governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the fonn of combining statements elsewhere in this report.
The basic governmental fund financial statements can be found immediately following the government-wide statements.
Proprietary Funds - The State of Georgia maintains two different types of proprietary funds. When the State charges customers for the services it provides, whether to customers outside the State of Georgia reporting entity (enterpriseJunds) or to other organizations within the reporting entity (internal serviceJunds), these services are reported in proprietary funds.
The State of Georgia uses internal service funds to account a variety of supportive servIces to all state organizations and, upon request, to local governments within Georgia. Examples of these services include purchasing, surplus property, printing, motor pool and building space management, constructing and maintaining State office buildings, and operating parking facilities. The internal service funds benefit both the governmental functions and the business-type functions, and have been proportionately included within the governmental activities and the business type activities in the government-wide financial statements.
Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Like the government-wide financial statements, proprietary fund financial statements use the accrual basis of accounting, thus, no reconciliation is needed between the government-wide financial statements for businesstype activities and the proprietary fund financial statements.
The State of Georgia's proprietary funds include four enterprise funds and six internal service funds. Each of the State's enterprise funds is considered a major proprietary fund for presentation purposes. As previously mentioned, the enterprise funds are the Unemployment Compensation Contributions and Benefits Fund (Georgia
A-9

Department of Labor), the self-insured State Employees' Health Benefit Plan (by the Georgia Department of Community Health), the programs of the Higher Education Fund (by the Board of Regents of the University System of Georgia and the Georgia Department of Technical and Adult Education) and the operations of the Georgia Technology Authority. Conversely, all six internal service funds are combined into a single, aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal services funds is provided in the form of combining statements elsewhere in this report.
The basic proprietary fund financial statements can be found immediately following the governmental fund financial statements.
Fiduciary Funds and Similar Component Units - These funds are used to account for resources held for the benefit of parties outside the state government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of these funds are not available to support the State's own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. They use the accrual basis of accounting.
The State's fiduciary funds are the Pension Trust Funds (fourteen separate retirement plans for employees), the Investment Trust Funds (which account for the transactions, assets, liabilities and fund equity of the external investment pool), Private-Purpose Trust Funds (which account for assets held by the government in a trustee capacity), and Agency Funds (which account for the assets held for distribution by the State as an agent for other governmental units, other organizations or individuals). Individual fund data for the fiduciary funds and similar component units' can be found in the combining statements elsewhere in this report.
The basic fiduciary funds and similar component units' financial statements can be found immediately following the proprietary fund financial statements.
Notes to the financial statements The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found immediately following the fiduciary funds and similar component units' financial statements.
Required Supplementary Information In addition to this Management's Discussion and Analysis, which is required supplementary information, the basic financial statements are followed by a section of required supplementary information. This section includes (l) a budgetary comparison schedule reconciling the statutory and the generally accepted accounting principles (GAAP) fund balances at fiscal year-end, and (2) pension funding information.
Combining Financial Statements The combining financial statements referred to earlier in connection with non-major governmental funds, internal service funds, and fiduciary funds are presented following the required supplementary information. The total columns of these combining financial statements carry to the applicable fund financial statements.
GOVERNMENT-WIDE FINANCIAL ANALYSIS
The State's overall financial position and operations for the past year for the primary government are summarized as follows based on the information included in the government-wide financial statements.
A-IO

Current and Other Non-current Assets
Net Capital Assets Total Assets

State of Georgia Net Assets as of June 30, 2002

Governmental Activities

Business-Type Activities

Total Primary Government

$

10,158,110,478 $

14,515,037,302

24,673,147,780

3,450,118,199 $ 3,226,778,840 6,676,897,039

13,608,228,677 17,741,816,142 31,350,044,819

Non-current Liabilities Other Liabilities
Total Liabilities

6,404,252,307 2,828,955,595 9,233,207,902

Net Assets

Invested in Capital Assets,

net of related debt

9,802,538,431

Restricted

1,399,080,545

Unrestricted

4,238,320,902

Total Net Assets

$ 15,439,939,878 $

239,284,766 606,619,611 845,904,377

6,643,537,073 3,435,575,206 10,079,112,279

3,132,335,897 1,858,882,510
839,774,255 5,830,992,662 $

12,934,874,328 3,257,963,055 5,078,095,157 21,270,932,540

Net Assets As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. The State of Georgia's combined assets (governmental and business-type activities) exceeded liabilities by $21.3 billion at the end of fiscal year 2002.
The largest portion of the State of Georgia's net assets (61 percent) reflects its investment in capital assets (e.g., land, buildings, machinery and equipment, infrastructure), less any related debt used to acquire those assets that is still outstanding. The State uses these capital assets to provide services to citizens; consequentially, these assts are not available for future spending. Although the State's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.
An additional portion of the State's net assets (15 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets may be used at the State's discretion to meet ongoing obligations to citizens and creditors. Internally imposed designations of resources are not presented as restricted net assets.
At the end of the current fiscal year, the State is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities.
Changes in Net Assets The revenues and expenses information, shown in the table on the following page, was derived from the government-wide Statement of Activities and reflects how the State's net assets changed during the fiscal year. The State of Georgia earned program revenues of $16.6 billion and general revenues of $13 billion, totaling $29.6 billion during Fiscal Year 2002. Expenses for the State during Fiscal Year 2002 were $30.1 billion.

A-II

State of Georgia Changes in Net Assets for the Year Ended June 30, 2002

Revenues: Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions General Revenues: Taxes Grants and Contributions Unrestricted Investment Income Unclaimed Property Other Total Revenues
Expenses: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreatoin Conservation Interest and Other Charges on Long-Term Debt Georgia Technology Authority Higher Education Fund State Employees' Health Benefit Fund Unemployment Compensation Total Expenses
Increase (Decrease) in Net Assets Before Transfers and Special Items
Transfers Special Item - Contract Settlement
Change in Net Assets
Net Assets, July 1 - Restated
Net Assets, June 30

Governmental Activities

Business-Type Activities

3,916,116,562 S 7,397,204,233
534,744,839
12,896,370,809 410,988
74,383,601 40,658,447
5,606,469 24,865,495,948

1,342,660,093 S 3,333,378,946
65,457,496
28,396,024
4,769,892,559

1,133,810,869 7,558,466,707 10,100,531,383 1,458,959,302 1,693,449,110
714,286,586 216,505,961
81,753,497 319,094,008

23,276,857,423

1,588,638,525 (2,181,905,850)

(593,267,325)

16,033,207,203

$

15,439,939,878 $

217,334,346 4,286,201,112 1,503,455,678
861,474,035 6,868,465,171
(2,098,572,612)
2,181,905,850 (2,900,000) 80,433,238
5,750,559,424 5,830,992,662 $

Total Primary Government
5,258,776,655 10,730,583,179
600,202,335
12,896,370,809 410,988
102,779,625 40,658,447
5,606,469 29,635,388,507
1,133,810,869 7,558,466,707 10,100,531,383 1,458,959,302 1,693,449,110
714,286,586 216,505,961
81,753,497 319,094,008 217,334,346 4,286,201,112 1,503,455,678 861,474,035 30,145,322,594
(509,934,087)
(2,900,000) (512,834,087) 21,783,766,627 21,270,932,540

Governmental Activities Governmental activities reduced the State's net assets by $593 million. Furthermore, governmental revenues account for approximately 84 percent of total revenue. Approximately 52 percent of revenue came from taxes, while 32 percent resulted from grants and contributions (including federal aid). Charges for various goods and services provided 16 percent of the revenues. The State's expenses cover a range of services. The largest expenses were for education and health and welfare, which combined accounted for 76 percent of total governmental activity expenses. In fiscal year 2002, governmental activity expenses exceeded program revenues, resulting in the use of$13 billion in general revenues (mostly taxes).

A-12

General Revenues Utilized to Fund Governmental Activities

Expenses Net of Program Revenues: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Interest and Other Charges on Long-Term Debt
Total Governmental Activities Expenses
General Revenues: Taxes Grants and Contributions Unrestricted Investment Income Unclaimed Property Other Transfers
Decrease in Governmental Activities Net Assets

Governmental Activities

$

709,758,587

(6,588,342,722)

(2,961,429,562)

(520,868,839) (1,247,058,260)

(381,926,284) (47,824,333)

(72,006,368) (319,094,008)

(11,428,791,789)

12,896,370,809 410,988
74,383,601 40,658,447
5,606,469 (2,181,905,850)
$ =======(5=9=3=,2=6=7=,3=2=5=)

Business-Type Activities Business-type activities increased the State of Georgia's net assets by $80 million. Charges for services accounted for 28 percent of revenues and Higher Education and State Employees' Health Benefit Plan accounted for 84 percent of expense.
Overall The State's net assets decreased by $ 512 million during the current fiscal year. The economic information presented later in this discussion and analysis provides insight into the conditions of the State that have caused this to occur.
FINANCIAL ANALYSIS OF THE STATE'S INDIVIDUAL FUNDS
As noted earlier, the State uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.
Governmental Funds The focus of the State's governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the State's financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year.
A-13

As of the end of fiscal year 2002, the State of Georgia's governmental funds reported combined ending fund balances of $6.5 billion, a decrease of $419 million in comparison with the prior fiscal year. Approximately onethird of this total amount ($2.5 billion) constitutes unreserved fund balance, which is available for spending at the State's discretion. The remainder of fund balance is resenJed to indicate that it is not available for new spending because it has already be committed 1) to liquidate contracts and purchase orders ($1 billion), 2) to pay debt service ($228 million), 3) to provide and maintain an adequate system of public roads and bridges in the State ($823 million) or for a variety of other restricted purposes ($1.9 billion).
The General Fund is the chief operating fund of the State. At the end of the current fiscal year, unreserved fund balance of the General Fund was $659 million, while total fund balance reached $4.5 billion. As a measure of the General Fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Unreserved fund balance represents 2.9 percent of total General Fund expenditures, while total fund balance represents 19.6 percent of that same amount.
The fund balance of the State's General Fund decreased by $356 million, primarily as a result of lower tax collections and slowing of the economy. By the end of the year, fund balance had declined 7.3 % from the prior year.
The capital projects fund, in total, has a fund balance of $1.8 billion, most of which is designated for future capital outlay. The State has five capital projects funds, with one being considered a major fund for presentation purposes for fiscal year 2002. The major capital projects fund, as mentioned earlier, is the Georgia State Financing and Investment Commission (GSFIC); the total fund balance for GSFIC is $1.7 billion. The total net decrease in fund balance during the current year in the capital projects fund was $156 million.
BUDGET FUND BUDGETARY IDGHLIGHTS
The final budget exceeded original appropriations by approximately $8.6 billion. Of this increase, $2.4 billion was funded by funds carried forward from the prior year. The State's Supplementary Appropriations Act added $422 million, with the remainder of the funds being federal and other revenues amended into the budget by the State organizations that anticipated earning the funds.
During the year, however, funds available were approximately $3.2 billion less than budgetary estimates and expenditures were approximately $4.9 billion less than budgetary estimates, resulting in an excess of funds available over expenditures of approximately $1.7 billion.
Proprietary Funds The State's proprietary funds provide the same type of information found in the government-wide financial statements, but in greater detail.
Fiduciary Funds At June 30, 2002, assets held in trust for pension and other employee benefits totaled $51.3 billion, which represents a $2.7 billion reduction from June 30,2001. This change reflects a decline in investments of the pension and other employee benefit trusts resulting primarily from the net depreciation in the fair value of investments.
CAPITAL ASSETS AND DEBT ADMINISTRAnON
Capital Assets The State of Georgia's investment in capital assets for its governmental and business-type activities as of June 30, 2002, amounts to $26.6 billion (net of accumulated depreciation of $8.9 billion), leaving a net book value of $17.7 billion. Investment in capital assets includes land, buildings and building improvements, improvements other than
A-14
_.. -_ ..._---

buildings, personal property (machinery and equipment), infrastructure and construction in progress. Infrastructure assets are items that are normally immovable and of value only to the state, such as roads, bridges, streets and sidewalks, drainage systems, lighting systems, and similar items.
The most significant change during the year was a change in accounting for capital assets resulting in the inclusion of infrastructure assets and governmental fund depreciation, which heretofore had not been recorded. The inclusion of infrastructure assets increased capital assets by $16.5 billion.
The total increase in the State of Georgia's investment in capital assets for the current fiscal year was $897 million, or 5.3 percent (a 5 percent increase for governmental activities and a 6.7 percent increase for businesstype activities).
State of Georgia Capital Assets, net of depreciation as of June 30, 2002

Land

$

Buildings and Building Improvements

Improvements Other Than Buildings

Machinery and Equipment

Software

Library Collections

Works of Art and Collections

Infrastructure

Construction in Progress

Total

$

Governmental Activities
335,224,453 $ 1,417,261,290
26,213,459 303,666,649 33,446,616
6,239,808 10,742,800,838
1,650,184,189
14,515,037,302 $

Business-Type Activities
138,383,333 $ 2,372,012,599
44,739,681 394,441,539
18,866,006 141,331,791
10,520,262 65,216,199 41,267,430
3,226,778,840 $

Total Primary Government
473,607,786 3,789,273,889
70,953,140 698,108,188
52,312,622 141,331,791
16,760,070 10,808,017,037
1,691,451,619
17,741,816,142

Additional information on the State's capital assets can be found in Note 5 of the notes to the financial statements of this report.
Debt Administration At the end of the current fiscal year, the State had total bonded debt outstanding of $6.1 billion. Of this amount, $6 billion comprises debt backed by the full faith and credit ofthe government (general obligation debt), $15,505 represents bonds that are past due, but have not been presented for redemption to date (general state bond debt) and long-term notes payable.
The most current bond ratings for Moody's Investors Service, Fitch Investors Service, L.P., and Standard and Poor's Corporation are Aaa, AAA and AAA, respectively. Under the State's Constitution the highest aggregate annual debt may not exceed 10 percent of the previous fiscal year's revenue collections.

A-15

General Obligation Bonds General State Bond Debt Contracts Payable Long-Term Notes
Total

State of Georgia Outstanding Debt as of June 30,2002

Governmental Acthities

B usiness-Type Activities

Total Primary Government

$

6,058,295,000 $

15,505

54,670,212

2,631,842

6,115,612,559 $

$
2,345,608 2,345,608 $

6,058,295,000 15,505
54,670,212 4,977,450 6,117,958,167

The State of Georgia's total debt increased by $804 million (15.1 percent) during the current fiscal year. The key factor in this increase was a $1.2 billion general obligation bond issuance for the State of Georgia.
Additional information on the State of Georgia's long-term debt can be found in Note 10 of the notes to the financial statements of this report.
ECONOMIC FACTORS
Downturns in the U.S. economy during the current fiscal year had a similar impact on the State. These effects lingered on into fiscal year 2003. For example, on May 7,2003, the Georgia Department of Revenue announced that net revenue collections for the first 10 months of fiscal year 2003 decreased approximately 2.3%, when compared to the same period in fiscal year 2002. This announcement, however, also noted that April 2003 collections increased a modest 1.9% from collections one year ago.
A Georgia Department of Labor news release, dated May 2003, listed Georgia's April 2003, unemployment rate at 4.4%, which is a decrease from a rate of 4.8% in April of 2002. This news release, however, also stated that the State's short-term unemployment outlook was not encouraging, especially in the retail trade sector.
During its' 2003 session, the General Assembly responded to the decline in State revenues by passing House Bill 121, which authorized Georgia's fiscal year 2003 Amended Budget. The bill included "Austerity Adjustment" line items that reduced total budgeted State funds by approximately $107 million. Governor Sonny Perdue signed this bill into law on May 13,2003. The Governor, before signing the Bill, however, used line-item veto authority and expenditure controls to further reduce the budget by $15.7 million.
Requests for Information
This financial report is designed to provide a general overview of the State of Georgia's finances for all of Georgia's citizens, taxpayers, customers, and investors and creditors. This financial report seeks to demonstrate the State's accountability for the money it receives. Questions concerning any of the information provided in this report or requests for additional information should be addressed to: Georgia Department of Audits and Accounts, 254 Washington Street, Suite 214, Atlanta, Georgia 30334.

A-16

BASIC FINANCIAL 9rATEME~

Georgia.
Statement of Net Assets
June 30, 2002
Assets Cash and Cash Equivalents Investments Accounts Receivable (Net of Allowances for
Uncollectibles) Interest and Dividends Notes and Loans Taxes Other Internal Balances Due From Primary Government Due From Component Units Intergovernmental Receivables Inventories Prepaid Items Other Assets Restricted Assets Cash and Cash Equivalents Investments Receivables Loans (Net) Interest and Dividends Other Advances to Component Units Deferred Charges Capital Assets (Net of Accumulated Depreciation) Total Assets
Liabilities Accounts Payable and Other Accruals Contracts Payable Claims an Judgments Payable Salaries/Withholdings Payable Benefits Payable Due to Primary Government Due to Component Units Accrued Interest Payable Undistributed Local Government Sales Tax Unclaimed Bonds and Interest Deferred Revenue Funds Held for Others Customer Deposits Liabilities Payable from Restricted Assets Other Liabilities Noncurrent Liabilities: Due within one year Due in more than one year
Total Liabilities

PRIMARY GOVERNMENT

Governmental Activities

Business-Type Activities

Total

Component Units

$ 2,128,211,387 S 2.443,230,659 $ 4,571,442,046 $ 475,959,620

5,678,825,314

617,602,520

6,296.427,834

224,816,278

43,442,409
717,275,973 149.416,438 30,113,693
18,911,879 1,266,802,589
50,447,895 67,699,204
4,464,300

46,950,749
197,679,674 (30,113,693)
44,577 85,668,143 29,778,951 59,276,619

43.442,409 46,950,749 717,275,973 347,096,112
0 0 18,956,456 1,352,470,732 80,226,846 126,975,823 4,464,300

10.490,126 951,354,542
108.410,017
3,378,986
6,510,711 7,206,551 6.419,745 58,175,930

0

419,703.476

0

606,453,002

0

709,245,348

0

6,409,850

0

39,271,138

2,499,397

2,499,397

0

18,003,959

14,515,037,302

3,226,778,840

17,741,816,142

879,523,381

$ 24,673,147,780 $ 6,676,897,039 $ 31,350,044,819 $ 4,531,332,660

$ 1,163,657,480 $

76,542,182 $ 1,240,199,662 $ 130,468,061

53,359,840

8,545,070

61,904,910

7,489,637

353,034,255

353,034,255

11,928,736

45,749,651

57,678,387

3,438,401

855,574,584

191,750,927

1,047,325,511

0

20,434,328

3,378,986

3,378,986

113,380,201

393,753

113,773,954

5,374,232

58,000,000

58,000,000

547,656

547,656

113,225,683

236,590,619

349,816,302

163,646,703

66,272,679

40,314,593

106,587,272

764,658

764,658

0

290,279,329

35,830,837

6,732,816

42,563,653

22,140,346

455,148,236 5,949,104,071 $ 9,233,207,902 $

81,375,183 157,909,583 845,904,377 $

536,523,419 6,107,013,654 10,079,112,279 $

89,436,176 1,760,510,477 2,493,217,690

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

A-18

~1a
Statement of Net Assets
June 30, 2002
Net Assets Invested in Capital Assets, Net of Related Debt Restricted for: Bond Covenants/Debt Service Construction Disaster Assistance Distance Learning and Telemedicine Guaranteed Revenue Debt Common Reserve Fund Hazardous Waste Trust Fund Loan and Grant Programs Lottery for Education Motor Fuel Tax Funds Pennanent Trusts:
Nonexpendable Expendable Underground Storage Trust Fund Unemployment Compensation Benefits Other Purposes Unrestricted
Total Net Assets

PRIMARY GOVERNMENT

Governmental Activities

Business-Type Activities

Total

Component Units

$

9,802,538,431 S 3,132,335,897 $ 12,934,874,328 $

664, I96.388

6,328,261
47,175,605 35,838,966
373.966,931 823,036,353

20,199,886

6.328.261 20,199,886 47,175,605 35,838,966
373.966,931 823.036.353

32,846,022 31,600,000
22.300,043

71,527,535
41.206.894 4,238,320,902

104,4 I6.029 197,383,520
1.536,782,865 100,210
839,774,255

104,416,029 197,383,520 71,527,535 1,536,782,865 41,307.104 5,078.095. I 57

8,505,191 1,278,667,326

$ 15,439,939,878 $ 5,830,992,662 $ 21,270,932,540 $ 2,038,114,970

The notes to the financial statements are an integral part of this statement. A-19

Gnrgia.
Statement of Activities For the Fiscal Year Ended June 30,2002

Functions/Programs Primary Government
Governmental Activities: General Government Education Health and Welfare Transportation Public Safety Economic Development and Assistance Culture and Recreation Conservation Interest and Other Charges on Long-Term Debt Total Governmental Activities
Business-Type Activities: Georgia Technology Authority Higher Education Fund State Employees' Health Benefit Plan Unemployment Compensation Fund Total Business-Type Activities
Total primary government
Component Units Development Authority Environmental Facilities Authority Housing and Finance Authority Lottery Corporation Ports Authority Public Telecommunications Commission Road and Tollway Authority Stone Mountain Memorial Association Student Finance Authority World Congress Center Authority Nonmajor Component Units
Total Component Units

Expenses

Charges for Services

Program Revenues Operating Grants and
Contributions

Capital Grants and Contributions

$ 1,133,810,869 $ 7,558,466,707 10,100,531,383 1,458,959,302 1,693,449,110 714,286,586 216,505,961 81,753,497 319,094,008
23,276,857,423

1,678,008,179 $ 3,542,798
1,333,912,408 405,920,739 324,424,891 41,600,890 123,999,888 4,706,769
3,916,116,562

162,975,535 $ 951,434.026 5,805,189,413
22,768,637 115,303,303 289,811,219 44,681,740
5,040,360
7,397,204,233

2,585,742 15,147,161 509,401,087 6,662,656
948,193
534,744,839

217,334,346 4,286,20 1,112 1,503,455,678
861,474,035 6,868,465,171 $ 30,145,322,594 $

218,943,726 1,009,852,663
113,863,704 1,342,660,093 5,258,776,655 $

100,210 1,251,733,230 1,606,088,531
475,456,975 3,333,378,946 10,730,583,179 $

65,457,496
65,457,496 600,202,335

$

3,406,899 $

5,439,028 $

25,485,649

28,952,830

82,749,908

55,330,906

2,330,458,000

2,326,420,000

96,933,000

104,668,000

35,646,317

3,904,893

113,854,643

21,805,927

9,453,063

11,475,605

70,794,365

7,577,151

76,419,132

49,589,446

204,111,561

85,180,754

$ 3,049,312,537 $ 2,700,344,540 $

$ 34,442,425 24,652,240
8,357,580
3,515,845 105,233
28,751,560 99,824,883 $

45,106,938
12,219,000 340,333
10,753,769 68,420,040

General Revenues: Taxes Grants and Contributions not restricted to specific programs Unrestricted Investment Income Unclaimed Property Other Payments from the State of Georgia
Special Item - Contract Settlement Transfers
Total General Revenues,Special Items, and Transfers Change in Net Assets
Net Assets - Beginning - Restated Net Assts - Ending
The notes to the financial statements are an integral part of this statement.
A-20

Governmental Activities

Net (Expense) Revenue and

Changes in Net Assets

Primary Government

Business-Type

Activities

Total

Component Units

S 709,758,587 S (6,588,342,722) (2,961,429,562) (520,868,839) (1,247,058,260) (381,926,284) (47,824,333) (72,006,368) (319,094,008)
(11,428,791,789)

S 709,758,587 $ (6,588,342,722) (2,961,429,562) (520,868,839) (1,247,058,260) (381,926,284) (47,824,333) (72,006,368) (319,094,008)
(11,428,791,789)

1,709,590 (1,959,157,723)
102,632,853 (272,153,356) (2,126,968,636) (2,126,968,636)

1,709,590 (1,959,157,723)
102,632,853 (272,153,356) (2,126,968,636) (13,555,760,425)

(2,032,129) (83,016,544)
2,766,762 4,038,000 (19,954,000) 23,043,511 92,048,716 (2,022,542) 59,701,369 26,724,453 79,425,478 180,723,074

12,896,370,809 410,988
74,383,601 40,658,447
5,606,469
(2,181,905,850) 10,835,524,464
(593,267,325) 16,033,207,203 $ 15,439,939,878 $

28,396,024
(2,900,000) 2,181,905,850 2,207,401,874
80,433,238 5,750,559,424 5,830,992,662 $

12,896,370,809 410,988
102,779,625 40,658,447
5,606,469 0
(2,900,000) 0
146,555,529
(512,834,087)
21,783,766,627 21,270,932,540 $

22,233,024
42,341,172
7,817,686 202,580,614
274,972,496 94,249,422
1,943,865,548 2,038,114,970

A-21

Balance Sheet Governmental Funds June 30. 2002

Assets Cash and Cash Equivalents Investments Receivables (Net of Allowances for Uncollectibles)
Taxes Interest and Dividends Other Due from Other Funds Due from Component Units Intergovernmental Receivables Inventories Prepaid Items Advances to Component Units Other Assets

General Fund

Georgia State Financing and
Investment Commission

Nonmajor Funds

Total

$ 1,691,164,002 $

121,117,191 $

2,772,970,709

1,731,044,969

717,275,973 41,814,674 136,989,504 34,000,000 16,848,005
1,265,679,589 41,143,901 67,407,921
4,464,300

1,627,735 2,063,874 2,499,397

233,116,673 $ 2,045.397,866

3,718,669

4,507,734,347

654,107

717,275.973 43,442,409 137,643,611 34,000,000 18,911,879 1,265,679,589 41,143,901 67,407,921
2,499.397 4,464,300

Total Assets

$ 6,789,758,578 S 1,858,353,166 $

237,489,449 $ 8,885,601,193

Liabilities and Fund Balances Liabilities:
Accounts Payable and Other Accruals Due to Other Funds Due to Component Units Salaries/Withholdings Payable Benefits Payable Contracts Payable Undistributed Local Government Sales Tax Funds Held for Others Deferred Revenue Other Liabilities
Total Liabilities
Fund Balances: Reserved for Advances Reserved for Debt Service Reserved for Disaster Assistance Reserved for Encumbrances Reserved for Guaranteed Revenue Debt Common Reserve Fund Reserved for Hazardous Waste Trust Fund Reserved for Inventories Reserved for Lottery for Education Reserved for Midyear Adjustment Reserved for Motor Fuel Tax Funds Reserved for Revenue Shortfall Reserved for Tobacco Settlement Funds Reserved for Underground Storage Trust Fund Reserved for Other Speci fie Purposes Unreserved, Designated
Designated for Capital Outlay Designated for Liability Trust Fund Designated for Property Tax Relief Designated for Other Specific Purposes Unreserved, Undesignated, Reported in General Fund Capital Projects Funds
Total Fund Balances

$ 1,139,597,888 $ 16,996,941 3,378,986 11,908,426
855,574,584 8,883,290
58,000,000 66,272,679 121,882,702
3,110,101
$ 2,285,605,597 $

19,407,670 $ 44,426,987 63,834,657 $

184,425 $

1,159,189,983 16,996,941 3,378,986 11,908,426
855,574,584 53,310,277 58,000,000 66,272,679 121,882,702 3,110,101

184,425 $ 2,349,624,679

$

$

2,499,397 $

6,328,261 1,092,341,164
47,175,605 35,838,966 45,983,100 373,966,931 140,054,792 823,036,353 700,273,960 185,855,202 71,527,535 322,917,655

12,404,000 249,000,000
170,000

1,792,019,112

397,279,457

$ 4,504,152,981 $ 1,794,518,509 $

$ 228,453,750
1,577,448

2,499,397 228,453,750
6,328,261 1,092,341,164
47,175,605 35,838,966 45,983,100 373,966,931 140,054,792 823,036,353 700,273,960 185,855,202 71,527,535 324,495,103

1,792,019,112 12,404,000
249,000,000 170,000

7,273,826

397,279,457 7,273,826

237,305,024 $ 6,535,976,514

Total Liabilities and Fund Balances The notes to the financial statements are an integral part of this statement.

$ 6,789,758,578 $ 1,858,353,166 $

237,489,449 $ 8,885,601,193

A-22

- - - - - - - ' , ._,.,~. ~.

- _ ".~~

.._-_.-

- - - - - _.. -

.. - . _ ' - - - - - -

_n. _ _ _ _._ _._

Reconciliation of the Balance Sheet - Governmental Funds To the Statement of Net Assets June 3D, 2002

Total Fund Balances for Governmental Funds

$

Amounts reported for governmental activities in the Statement of Net Assets are different because:

Capital Assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. These assets consist of: Land Buildings and Building Improvements Improvements Other Than Buildings Equipment Infrastructure Construction in Progress Works of Art Software Library Books Accumulated Depreciation

311,869,189 1,756,131,658
37,138,632 656,924,145 16,342,241,597 1,650,028,436
5,000,233 66,209,462
3,200,000 (6,556,011,031 )

Certain long-term assets are not current available financial resources and, therefore, are not reported in the funds. (Note 10 )

Other long-term assets are not available to pay for current period expenditures and, therefore, are deferred in the funds.

Certain liabilities are not accrued in governmental funds until they are due and payable, but must be recognized in the Statement of Net Assets.

Internal service funds are used by management to charge the costs of certain activities to individual funds. The majority of assets and liabilities of the internal service funds are included in governmental activities in the Statement of Net Assets.

Certain long-term liabilities are not due and payable in the current period and, therefore, are not reported in the funds.
General Obligation Bonds General State Bonds Capital Leases Compensated Absences Long-Term Notes Contracts Payable Arbitrage Rebate

(6,058,295,000) (15,505)
(5,911,447) (240,002,333)
(2,631,842) (54,670,2 I2) (38,398,397)

Net Assets of Governmental Activities

$

6,535,976,514
14,272,732,321 2,631,842 9,608,114
(146,648,593 ) 1,165,564,416
(6,399,924,736) 15,439,939,878

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

Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Fiscal Year Ended June 30, 2002

Revenues: Taxes Licenses and Permits Intergovernmental - Federal Sales and Services Fines and Forfeits Interest and Other Investment Income Rents and Royalties Contributions and Donations Penalties and Interest on Taxes Unclaimed Property Lottery Proceeds Other
Total Revenues
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 Accrued Interest on Bonds Retired in Advance Discount on Bonds Retired in Advance Other Debt Service Charges
Total Expenditures
Excess (Deficiency) of Revenues Over (Under) Expenditures
Other Financing Sources (Uses): Proceeds from Issuance of General Obligation Bonds Proceeds from Disposition of General Capital Assets Proceeds from Capital Leases Proceeds from Other Financing Arrangements Transfers In Transfers Out
Net Other Financing Sources (Uses)
Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Financing Uses
Fund Balances, July 1 (Restated)

General Fund

Georgia State Financing and
Investment Commission

Nonmajor Funds

Total

$ 12,896,370,809 $ 448,262,755
8,189,311,370 1,678,090,064
257,484,265 172,338,485
15,616,765 214,162,798
6,457,440 40,658,447 726,202,000 75,381,036
$ 24,720,336,234 $

S
72,162,140 15,000,000
4,570 87,166,710 $

$
357,475 58,159
279

12,896,370,809 448,262,755
8,189,311,370 1,678,090,064
257,484,265 244,858, 10O
15,674,924 229,162,798
6,457,440 40,658,447 726,202,000 75,385,885

415,913 $ 24,807,918,857

$

839,626,474 $

7,567,494,226

10,090,828,968

1,716,885,005

1,686,970,829

708,073,548

235,249,403

86,890,618

$ 22,932,019,071 $

$
761,271,668 6,719,417
767,991,085 $

12,313 $ 798
538,024

839,638,787 7,567,495,024 10,090,828,968 1,716,885,005 1,686,970,829
708,073,548 235,249,403
86,890,618 761,809,692

449,258,159 314,200,690
1,002,342 (4,428,967)

449,258,159 314,200,690
1,002,342 (4,428,967) 6,719,417

760,583,359 $ 24,460,593,515

$ 1,788,317,163 $ (680,824,375) $ (760,167,446) $

347,325,342

$

$

3,965,808

2,354,002

54,670,212

654,202,255

(2,859,870,706)

$ (2,144,678,429) $

1,229,428,392 $
5,398,422 (710,520,739) 524,306,075 $

$ 853,564,714

1,229,428,392 3,965,808 2,354,002 54,670,212
1,513,165,391 (3,570,391,445)

853,564,714 $ (766,807,640)

$ (356,361,266) $ (156,518,300) $

4,860,514,247

1,951,036,809

93,397,268 $ 143,907,756

(419,482,298) 6,955,458,812

Fund Balances, June 30

$ 4,504, I52,981 $ 1,794,518,509 $

The notes to the financial statements are an integral part of this statement. A-24

, '---""~'~""-'

----,

._--~,-.,.,.

----"

237,305,024 $ 6,535,976,514
-----

Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund BaLances GovernmentaL Funds to the Statement of Activities For the Fiscal Year Ended June 30, 2002
Net Change in Fund Balances - Total Governmental Funds
Amounts reported for governmental activities in the Statement of Activities are different because:
Capital outlays are reported as expenditures in governmental funds. However. in the Statement of Activities, the cost of those assets is is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital outlay net of losses Depreciation expense
Capital outlays reported as expenditures in governmental funds were capitalized and transferred to other funds
Revenues reported on the accrual basis in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds until available.
Bond proceeds provide current financial resources to governmental funds; however, issuing debt increases long-term liabilities in the Statement of Net Assets.
Some capital additions were financed through capital leases. In governmental funds, a capital lease arrangement is considered a source of financing, but in the Statement of Net Assets. the lease obligation is reported as a liability.
Repayment of long-term debt is reported as an expenditure in governmental funds, but the repayment reduces the long-term liabilities in the Statement of Net Assets. In the current year, these amounts consisted of: Bond Principal Retirement Accrued Interest Capital Lease Payments
Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of the majority of the internal service funds is reported in governmental activities.
Inventories accounted for using the purchases method are reported in the governmental funds, thus reporting an expenditure in the funds.
Because some revenues will not be collected in the next year, they are not considered available revenues and are deferred in the governmental funds.
Some items reported in the Statement of Activities do not require the use of current financial resources and therefore, are not reported as expenditures in governmental funds. This adjustment combines the net changes in the following balances: Compensated Absences Long-Term Notes Contracts Payable Arbitrage Rebate
Change in Net Assets of Governmental Activities
The notes to the financial statements are an integral part of this statement.
A-25

$

(419,482.298)

2,006,114.128 (1,161,852,727)
449,200,000 (7,433,506) 4,674,815

844.261,401 (94,385.066)
(58,159) (1,229,428,392)
(2,354,002)
446,441,309 (76,629,1 19)
2,334.646 4,147,596

(11,376,808) 58,159
(54,670,212) (2,126,380)

(68,115,241)

$ ====(;";5=93;",;,~26;,,,;7~,3~2=:;5)

Georgia
Statement of Net Assets Proprietary Funds June 30, 2002
Assets Current Assets: Cash and Cash Equivalents Investments
Accounts Receivable (Net of Allowances for Uncollectibles)
Due From Other Funds Due From Component Units Intergovernmental Receivables Inventories Prepaid Items Noncurrent Assets: Cash and Cash Equivalents Investments Notes Receivable Capital Assets:
Land Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Library Collections Works of Art and Collections Infrastructure Construction in Progress Accumulated Depreciation
Total Assets

Georgia Technology Authority

Business-Type Activities - Enterprise Funds

State

Higher

Employees'

Unemployment

Education

Health Benefit

Compensation

Fund

Plan

Fund

$

38,410,578 $ 514,705,672 $ 367,267,796 $ 1,521,122,080

20,970,213

144,812,375

298,017,661

4,663,621 16,452,003
44,577
1,874,596 518,798

160,356,143
83,062,059 27,886,990 58,757,821

19,413,006

13,245,018 2,606,074

1,227,916 153,802,271 46,950,749

62,776,789 36,482,688
(48,400,280)

138,383,333 3,474,202,249
115,720,097 962,536,112
496,323,550 10,850,502
111,137,823 41,267,430 (2,175,181,764)

$

133,793,583 $ 4,366,80 I ,328 $

684,698,463 $ 1,536,973,172

The notes to the financial statements are an integral part of this statement. A-26
- - - _..,,""----

.-.._----_._.- .. _----

Total

Governmental Activities Internal Service Funds

5; 2,441,506,126 $ 463,800,249

83,310,138 431,223,967

197,677,788 16,452,003 44,577 85,668,133 29,761,586 59,276,619

9,142,871 2,480,422
9,321,359 291,283

1,227,916 153,802,271 46,950,749

739,867,000

138,383,333 3,474,202,249
115,720,097 1,025,312,901
36,482,688 496,323,550
10,850,502 111,137,823 41,267,430 (2,223,582,044)

23,355,264 305,949,015
4,954,083 24,704,504
1,239,575
155,753 (117,372,902)

$ 6,722,266,546 $ 1,518,622,332

A-27

Georgia
Statement of Net Assets Proprietary Funds (continued) June 30. 2002
Liabilities Current Liabilities:
Accounts Payable and Other Accruals Due to Other Funds SalariesfWithholdings Payable Benefits Payable Accrued Interest Payable Contracts Payable Funds Held for Others Deferred Revenue Customer Deposits Claims and Judgments Payable Compensated Absences Payable - Current Capital Leases/Installment Purchases Payable - Current Notes Payable - Current Other Current Liabilities Noncurrent Liabilities: Deferred Revenue Compensated Absences Payable Capital Leases/Installment Purchases Payable Notes Payable
Total Liabilities
Net Assets Invested in Capital Assets, Net of Related Debt Restricted for:
Distance Learning and Telemedicine Permanent Trusts: Nonexpendable
Expendable Unemployment Compensation Benefits Other Purposes Unrestricted

Georgia Technology Authority

Business-Type Activities - Enterprise Funds

State

Higher

Employees'

Unemployment

Education

Health Benefit

Compensation

Fund

Plan

Fund

$

7,291,917 $

54,596,614 $

13,903,496 $

718.892

34,000,000

82,767

45,663,389

3,495

29,277,958

162,472,969

393,753

2,900,000

5,645,070

40,314,593

200,709,292

35,881,327

190,307

1,200,174 3,090,727

71,996,608 4,906,249 181,425 6,732,816

2,979,162 6,740,914

150,000 67,119,016 78,524,732
2,164,182

231,577

$

24,679,414 $ 608,700,836 $ 246,492,864 $

190,307

$

41,027,556 $ 3,091,308,341 $

-$

20,199,886

100,210 47,786,517

104,416,029 197,383,520
364,992,602

438,205,599

1,536,782.865

Total Net Assets

$ 109,114,169 $ 3,758,100,492 $

Adjustment to reflect the consolidation ofInternal Service Fund activities related to Enterprise Funds. Net Assets of Business-Type Activities

438,205,599 $ 1,536,782,865

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

----,_._------_..

A-28

__ --_ _._--_

__..

..

.._-_....... -------

Total

Governmental Activities Internal Service Funds

$

75,982,334 $

5,027,345

34,718,892

93,582

45,749,651

20,310

191,750,927

393,753

8,545,070

49563

40,314,593

236,590,619

951,095

0

764,658

0

353,034,255

73,196,782

1,845,195

7,996,976

181,425

6,732,816

150,000 70,329,755 85,265,646
2,164,182

2,482,376

$

880,063,421 $

364,268,379

$ 3,132,335,897 $
20,199,886
104,416,029 197,383,520 1,536,782,865
100,210 850,984,718

242,985,292
3,458,400 907,910,261

$ 5,842,203,125 $ 1,154,353,953

$

(11,210,463)

$ 5,830,992,662

A-29

Statement of Revenues, Expenses, and Changes in Fund Net Assets Proprietary Funds For the FiscaL Year Ended June 30, 2002

Georgia Technology Authority

Business-Type Activities -

State

Higher Education
Fund

Employees' Health Benefit
Plan

Operating Revenues: Grants and Contributions/Premiums Rents and Royalties Sales and Services Other
Total Operating Revenues
Operating Expenses: Personal Services Services and Supplies Benefits Claims and Judgments Depreciation
Total Operating Expenses
Operating Income (Loss)
Nonoperating Revenues (Expenses): Grants and Contributions Interest and Other Investment Income Interest Expense Other
Total Nonoperating Revenues (Expenses)
Income (Loss) Before Contributions, Transfers and Special Item
Capital Contributions
Special Item
Transfers: Transfers In Transfers Out
Net Transfers
Change in Net Assets
Net Assets, July 1 (Restated)

$

S 968,402,274 $ 1,606,088,531

218,911,804 31,922

1,009,852,663 99,256,895

$ 218,943,726 $ 2,077 ,511,832 $ 1,606,088,531

$

50,135,401 $ 2,548,013,792 $

3,255,168

145,532,403

1,494,260,612

456,015,330

1,044,185,180

16,188,931

203,696,742

$ - - -2-1'1-,8-56-,7'3-5- $ 4,245,971,146 $ $-_-:...:..::7..,0.:8:6..,.9:9.~1=-- $ (2,168,459,314) $

1,503,455,678 102,632,853

$

-$

184,074,061 $

1,237,120

12,156,481

(621,157)

(3,659,321)

(265,710)

(38,820,166)

350,253 $

153,751,055 $

$

7,437,244 $ (2,014,708,259) $

---'---'--

$ - - - -3'4-,6-43-,6'3-0- $

170,864,800 $

$---",-(,2-,-9,0-0,,-0,0-0,)- $

$

15,002,423
15,002,423 117,635,276

$

35,412,874 $ 2,066,181,986 $

(15,348,100)

(3,364,978)

(31,358,156)

$

20,064,774 $ 2,062,817,008 $

(31,358,156)

$

59,245,648 $ 218,973,549 $

86,277,120

49,868,521

3,539,126,943

351,928,479

Net Assets, June 30

$

109,114,169 $ 3,758,100,492 $

Adjustment to reflect the consolidation ofintemal Service Fund activities related to Enterprise Funds.

Change in Net Assets of Business-Type Activities

The notes to the financial statements are an integral part of this statement. A-30

438,205,599

Enterprise Funds
Unemployment Compensation
Fund

Total

Governmental Activities Internal Service Funds

S

487,123,984 $ 3,061,614,789 $

116,092,432

0

33,498,347

1,228,764,467

66,967,218

37,920

99,326,737

235,638

$ 487,161,904 $ 4,389,705,993 $ 216,793,635

$

$ 2,601,404,361 $

2,095,808,345

861,474,035

1,905,659,215

0

219,885,673

$ 861,474,035 $ 6,822,757,594 $

$ (374,312,131) $ (2,433,051,601) $

45,901,643 83,446,623 18,227,000 97,179,943 20,795,660
265,550,869
(48,757,234)

$

$

184,074,061 $

102,158,775

130,554,799

(4,280,478)

(39,085,876)

$

102,158,775 $

271,262,506 $

$ (272,153,356) $ (2,161,789,095) $

$

$

205,508,430 $

$

$

(2,900,000) $

(1,628,502) (113)
(43,747,528)
(45,376,143)
(94,133,377)
2,829,335

$

$ 2,101,594,860 $

49,310,500

(50,071,234)

(46,301,707)

$

0 $ 2,051,523,626 $

3,008,793

$ (272,153,356) $

92,342,961 $

(88,295,249)

1,808,936,221

1,242,649,202

$ 1,536,782,865 $

$ 1,154,353,953 (11,909,723) 80,433,238

A-31

Statement of Cash Flows Proprietary Funds For the Fiscal Year Ended June 30, 2002
Cash Flows from Operating Activities: Cash Received from Customers Cash Received from Grants and Required Contributions/Premiums Cash Paid to Vendors Cash Paid to Employees Cash Paid for Benefits Cash Paid for Claims and Judgments Cash Paid for Scholarships, Fellowships and Loans Other Operating Items (Net)
Net Cash Provided by (Used in) Operating Activities
Cash Flows from Noncapital Financing Activities: Transfers from Other Funds Transfers to Other Funds Other Noncapital Items (Net)
Net Cash Provided by Noncapita1 Financing Activities
Cash Flows from Capital and Related Financing Activities: Capital Contributions Proceeds from Sale of Capital Assets Acquisition and Construction of Capital Assets Principal Paid on Capital Debt Interest Paid on Capital Debt
Net Cash Used in Capital and Related Financing Activities
Cash Flows from Investing Activities: Purchase ofInvestrnents (Net) Interest and Dividends Received
Net Cash Provided by (Used In) Investing Activities
Net Increase (Decrease) in Cash and Cash Equivalents
Cash and Cash Equivalents, July 1
Cash and Cash Equivalents, June 30
The notes to the financial statements are an integral part of this statement. A-32
... ,-,----

Georgia Technology Authority

Business-
Higher Education
Fund

$ 203,547,865 $ 1,035,138,108 978,067,239
(142,251,164) (1,982,455,746) (51,241,943) (2,155,589,871 )

(176,775,810) 261,036,941

$

10,054,758 $ (2,040,579,139)

$

35,412,874 $ 2,066,292,172

(15,348,100)

(854,580)

100,210

107,767,326

$

20,164,984 $ 2,173,204,918

---'--'----

$

$

10,848,889

4,314,563

(5,724,836)

(192,060,344)

(4,001,013)

(7,794,172)

(285,061)

(3,668,397)

(10,010,910) $ (188,359,461)

$ (15,195,107) $ 1,237,120
$ ----"(-1-3-',-9-5-7-,"9-8-7-')- $

223,177,091 17,285,669
240,462,760

$

6,250,845 $ 184,729,078

32,159,733

331,204,510

$

38,410,578 $ ===51=5,9=33=,5=88=

Type Activities - Enterprise Funds

State

Employees'

Unemployment

Health Benefit

Compensation

Plan

Fund

Total

Governmental Activities Internal Service Funds

$

-$

1,604,441,341

(445,847,045)

(3,240,463)

(1,051,471,561)

$ 485,727,079
(861,330,615)

1,238,685,973 $ 3,068,235,659 (2,570,553,955) (2,210,072,277) (1,912,802,176)
(176,775,810)
261,036,941

$ 103,882,272 $ (375,603,536) $ (2,302,245,645) $

113,719,704 114,556,904 (82,282,144) (44,889,612) (21,364,000) (95,926,010)
1,436
(16,183,722)

$

$

2,641,844

$

2,641,844 $

$ 2,101,705,046 $ (16,202,680) 110,509,380
$ 2,196,011,746 $

53,108,902 (50,100,109)
179,959
3,188,752

$

$

$

10,848,889 $

2,829,335

4,314,563

16,844

(197,785,180)

(7,604,967)

(11,795,185)

(3,953,458)

(113)

$

$

$ (198,370,371) $

(4,758,901)

$ (202,609,358) $ 15,159,131
$ (187,450,227) $

$ 102,158,775
102,158,775 $

5,372,626 $ 135,840,695
141,213,321 $

(75,766,167) 54,362,005
(21,404,162)

$ (80,926,111) $ (273,444,761) $ (163,390,949) $ (39,158,033)

448,193,907

1,794,566,841

2,606,124,991

122,468,171

$ 367,267,796 $ 1,521,122,080 $ 2,442,734,042 $

83,310,138

A-33

Statement of Cash Flows Proprietary Funds (continued) For the Fiscal Year Ended June 30, 2002
Operating Income
Adjustments to Reconcile Operating Income to Net Cash Provided by (Used in) Operating Activities:
Depreciation Expense Other Changes in Assets and Liabilities:
Decrease (Increase) in Accounts Receivable Increase in Due From Other Funds Increase in Due From Component Units Increase in Intergovernmental Receivables Increase in Inventories Decrease (Increase) in Prepaid Items Decrease in Notes Receivable Decrease in Other Assets Increase (Decrease) in Accounts Payable and Other Accruals Decrease in Due to Other Funds Increase in SalarieslWithholdings Payable Decrease in Benefits Payable Increase in Claims and Judgments Payable Increase in Contracts Payable Increase (Decrease) in Deferred Revenue Increase in Customer Deposits Increase (Decrease) in Compensated Absences Payable Increase (Decrease) in Other Liabilities
Net Cash Provided by (Used) in Operating Activities
Noncash Investing, Capital, and Financing Activities: Net Decrease in Fair Value oflnvestrnents

Business-

Georgia Technology Authority

Higher Education
Fund

$

7,086,991 $ (2,168,459,314)

16,188,931

203,696,742

3,686,160 (16,452,003)
(44,577)
(752,128) 4,150,389
4,933,494 (35,396) 78,027

(25,150,248)
(827,359) (2,115,858) 1,328,286
98,540 (116,568,602)
18,719,562 (5,903,246)

(2,585,441)
(1,184,636) (5,015,053)

41,270,898
10,116,492 3,214,968

$

10,054,758 $ (2,040,579,139)

$====-:..-:: $ =====

The notes to the financial statements are an integral part of this statement. A-34

Type Activities - Enterprise Funds

State

Employees'

Unemployment

Health Benefit Plan

Compensation Fund

Total

Governmental Activities Internal Service Funds

$ 102,632,853 $ (374,312,131) $ (2,433,051,601) $ (48,757,234)

(1,380,067)
10,168,285 3,495
(7,286,381 ) (267,123) 11,210

1,008,592 (2,443,417)
143,420

219,885,673 0
(21,835,563) ( 16,452,003)
(44,577) (2,443,417) (1,579,487) 2,034,531 1,328,286
98,540 (101,323,403)
(35,396) 18,801,084 (13,189,627)
0 0 38,418,334 0 8,943,066 (1,800,085)

20,795,660 640,589
2,300,031 8,009,022
146,032
(545,752) 322,886
793,904 (2,781,022)
(97,856)
1,253,933 21,890
945,490 85,795
682,910

$ 103,882,272 $ (375,603,536) $ (2,302,245,645) $ (16,183,722)

$

(156,708) $====-::-:: $

(156,708) $ (55,990,507)

A-35

Gnrgla.

Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2002

Assets Cash and Cash Equivalents Receivables
Interest and Dividends Other Investments. at Fair Value Certificates of Deposit Investment Accounts Repurchase Agreements Stocks U, S, Government Securities and Corporate Obligations Real Estate/Mortgages Mutual Funds Pooled Investments Capital Assets Land Buildings Software Machinery and Equipment Accumulated Depreciation
Total Assets

Pension Trust

Investment Trust

Private Purpose Trust

$

I 10.985,622 $ 2.445.509.938 $

290,430,439 167.727,102

11.229.120 $ 32,225

67,607,888 784,459,000 20,506,429,276

16,822,229,281 7.496,075 7,608,614
12,515,292,767

2,136,271,315

49,000 414,020 1,525,000 964,278 (150,000)

$ 51,283,068,362 $ 4,581,781,253 $

8,011,273
132,755 (83,992) 19,321,381 $

Agency

Total

171,139,195 $ 2,738.863,875

1.821,151

290.430.439 169,580.478

4,396,404

4,396,404 67,607,888 784,459,000 20,506,429,276

222,647,776

16,822,229,281 7,496,075 7,608,614
14,882,223,131

49,000 414,020 1,525,000 1,097,033 (233,992)

400,004,526 $ 56,284,175,522

Liabilities Accounts Payable and Other Accruals Salaries/Withholdings Payable Due to Other Funds Funds Held for Others Deferred Revenue Compensated Absences Payable
Total Liabilities
Net Assets Held in Trust for:
Pension Benefits Poo 1 Participants Other Purposes

$

16,461,008 $

133,173

1,123,010

5,682

$

17,722,873 $

$

$

$

16,461,008

66

133,239

1,123,010

400,004,526

400,004,526

5,682

97,179

97,179

0$

97,245 $

400,004,526 $

417,824,644

$ 51,265,345,489 $

$ 4,581,781,253

$ 19,224,136

$ 51,265,345,489 4,581,781,253 19,224,136

Total Net Assets

$ 51,265,345,489 $ 4,581,781,253 $

19,224,136 $

0 $ 55,866,350,878

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

A-36

Statement of Changes in Fiduciary Net Assets Fiduciary Funds For the Fiscal Year Ended June 30, 2002

Pension Trust

Investment Trust

Private Purpose Trust

Total

Additions: Contributions!Assessments Employer Plan Members Other Contributions Fines and Bond Forfeitures Insurance Company Premium Taxes Other Fees Interest and Other Investment Income Dividends and Interest Net Appreciation (Depreciation) in Fair Value of Investments Less: Investment Expense Net Gain (Loss) on Disposal of Investment Securities Pool Participant Deposits Other Transfers from Other Funds Miscellaneous
Total Additions

$

961.325,420 $

483,451,904

17.557,273 15,230,901 2,000,897

1.674.930.741 (3,753.385,920)
(40,636,244) (17,259,745)

2.693,635 1,030,887

$

(653,060,251) $

$
107,693.322 4,409,643 (971,726)
5,933.037.864
6,044,169, I 03 $

$ 63,446,506

96JJ25,420 546,898,410

17.557.273 15.230.901 2,000,897

1.419.204

1,784,043.267 (3,748.976,277)
(41.607,970) (17.259,745) 5.933,037,864

4,311

2,693,635 1.035,198

64.870,021 $ 5,455,978,873

Deductions: General and Administrative Expenses Benefits Pool Participant Withdrawals Refunds
Total Deductions

$

29,418,470 $

$

1,938,747,402

5,578,286,227

55,238,771

$ 2,023,404,643 $ 5,578,286,227 $

2,081,836 $ 78,681,701

31,500,306 2,017,429,103 5,578,286,227
55,238,771

80,763,537 $ 7,682,454,407

Change in Net Assets Held in Trust for: Pension Benefits Pool Participants Other Purposes
Net Assets, July 1 (Restated)

$ (2,676,464,894) $

$ 465,882,876

53,941,810,383

4,115,898,377

-$ ( 15,893,516)

(2,676,464,894) 465,882,876 (15,893,516)

35,117,652

58,092,826,412

Net Assets, June 30

$ 51,265,345,489 $ 4,581,781,253 $

19.224,136 $ 55.866,350,878

The notes to the financial statements are an integral part of this statement. A-37

Gevrgia.
Combining Statement of Net Assets Component Units June 30, 2002

Assets Current Assets:
Cash and Cash Equivalents Investments Receivables Acconnts (Net)
Interest and Dividends Due from Primary Govemmellt Intergovernmental Receivables Inventories Prepaid Items Other Current Assets Noncurrent Assets: Investments Receivables (Net)
Notes and Loans Other Restricted Assets Cash and Cash Equivalents Investments Receivables
Loans (Net) Interest and Dividends Other Deferred Charges Capital Assets: Land Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Works of Art and Collections Infrastructure Construction in Progress Accumulated Depreciation Other Noncurrent Assets
Total Assets

Development Authority

Envirollmental Facilities Authority

Housing and Finance Authority

Lottery Corporation

Ports Authority

45.690 3,284
1,906,573

172.575.906 137.759.902
3,535,565 5,408.143 1.940,336

20.426.1 08 7,711,039
492.573

87.193,071

673.762,191 7,193,563
44,648

63,292,072 133,472.625
116,114,516 24,813,767 709,245,348
6,409,850 15,263,261
800.000 3,865,000 3,483,570

89,148,618

(19,663) 2,548,029
1,004,748,620

(3,946,261 ) 5,223,438
1,106,666,906

15.372.498 (5,264,498)
60,629.000

21.249,290 6.442,300
22,499,000

3,981,000
500.000 210,774,000

3,288,000 245,000 28,000
12,414,410
6,112,000
3,609,058 2,758,942

2,130,000 14,110,000
188,000
(13,772,000)
288,648,000 $

110,759,000 114,869,000 125,904,000 141,060,000
137,321,000 31.796,000 (254,544,000)
1,664,000
487.475,000

The notes to the financial statements are an integral part of this statement. A-38

Public Telecommunications
Commission

Road and Tollway Authority

Stone Mountain Memorial Association

Student Finance Authority

World Congress
Center Authority

l'\onmajor Component
Units

Tota]

11,980,746 2,521,065
641.241
19,435

16,716.219 11,905.108
1.401.776
8,247

176.917 17,007,735
21.571
5,944 33,919

285.425,509 341.541,787

1,278,948 26,127,162 54,227,788
(48,645,735) 49,150,651

39,271,138 1,740,698
10.415,915 5,063,23 I 2.484.921 4,154,039
1,135,841
(6,848,876) 48,232.525
763.649,088

7,183,097 72,769,183 21,924,038 26,904,789
121,823
204,165 (48,846,984)
241.087
97,747,284

1.568.355 3,081,294
735.993 2.465.264
284.203 151,654 217,417
56,926,655
4,191,655 1,818,175
(3.415,869) 68,024,796

20.912.151 345,035
5,106,815
437.120 1,829,145 39,713,0]9
6,860,830 26,564,506
37,282,886 209,402,736
35,797,675 10,796,939
(78,646,479) 316,402,379

73.010,698 $ 43.304.014

355.034.589 124.816.278

7,726.055 217,573
1,154.447 6,359,057 3,456,052
321.434

102.298,017 10.490,126 3,378,986 6,510,71 I 7.206.551 6.419.745 245,417

5,505,530

120,925,031

951,3 54.542 6,112,000

419,703,476 606.453,001

709.245.348 6.409,850
39,271,138 18.003,959

10,884,801 94,279,389
5,390,588 20,565,317
79,225 10,731,213 5,023,297 (28,359,816)
21,434

178,604,647 532,697,356 191.501,212 277,165,265
188,000 201,048 149,188,064 37,023.462 (487,045,683) 57,930,513

259,671,318 $ 4,531,332,660

A-39

Georg1a.
Combining Statement of Net Assets Component Units (continued) June 30, 2002

Liabilities Current Liabilities:
Accounts Payable and Other Accruals Due to Primary' Government Salaries/Withholdings Payable Accrued Interest Payable Contracts Payable Deferred Revenue Compensated Absences Payable Current Capital Leasesllnstallment Purchases Payable - Current Notes and Loans Payable - Current Revenue Bonds Payable - Current Grand Prizes Payable - Current Other Cnrrent Liabilities Current Liabilities Payable from Restricted Assets: Accrued Interest Payable Deferred Revenue Bond Anticipation Notes Payable - Current Revenue Bonds Payable - Current Other Noncurrent Liabilities: Deferred Revenue Compensated Absences Payable Capital Leases/Installment Purchases Payable Notes and Loans Payable Revenue/Mortgage Bonds Payable Grand Prizes Payable Advances from Primary Government Customer Deposits Other Noncurrent Liabilities
Total Liabilities
Net Assets Invested in Capital Assets, Net of Related Debt Restricted for: Bond Covenants/Debt Service Construction Loan and Grant Programs Other Purposes Unrestricted
Total Net Assets

Development Authority

Environmental Facilities Authority

Housing and Finance Authority

Lottery Corporation

Ports Authority

803.413 5,031,924

3,228,1 53 103.537
1,513,563
10,178,114

25.856.159 999
3.765.018
125,945,560

5.680.000

20.382.857

76,221.000
15,046,000 8.000

1,955.113 35.285
328,245 7.440.000
273.000 1,900,000

33,489,301

61,361,203

821,925,366

186,170,000

225,000 1,233,357
5,226,000 24,571,000

13,598,030 52,922,668

82,064,570 $

997,875,959 $

1.564,000 279,009,000 $

3,248,000 46,435,000

-$
36,225,950

24.985 5,010,573 22,300,043 895,348,449

4,202,309 $ 104,588,638

2,656,000 $

380,736,000 6,368,000

500,000 6,483,000

53,936,000

36.225.950

922,684,050 $

108,790,947

9,639,000 $

441,040.000

The notes to the financial statements are an integral part of this statement. A-40

Public Telecommunications
Commission

Road and Tollway Authority

Stone Mountain Memorial Association

Snldent Finance Authority

World Congress
Center Authority

Nonmajor Component
Units

Total

22.970
553,814 492.100 1.903.1 II

1.007.89 I 16.744.468
6.153
41.446.212 8.053.536

603.716 2,207,325

10.674.562 3.218.583 259.888,788 5.845.000
230.037
414,555,449

5.783,036 $

761.670,679

685.550 3.541.746
95.651

577,737
8,849,492 9,000,000 1.598.840

2.302.478 3.914
277.324 16,873.786
121.525
5,112.359 5.310,000

1,367.121

2,499,397 6,822,344 $

178,300.000

20,026,069 $

6,860,830 279,487
216,808,824

17.830.567 $ 4.379
2.809,862 49,637
1.239.784 333,405 120.961 34,402
150.649
799.800 144,913 281,182
23,799,541 $

130.468.061 20.434.328
3.438.401 5,374,232 7.489.637 163.646.703
947.030 2.024.072 55.785,538 15,633.536 15.046,000 22,140,346
15.786.921 3.218,583 259.888.788 11,155,000
230.037
225.000 4.003.994 2,352.238 38,996,483 1.500,713,018 186,170,000 2,499,397 6,860.830 18,689.517
2,493,217,690

28,877,727
414,150 14,075,738

16,405,071 $ 15.302

80,260,111 $

2,593,961

(14,441,964)

10,664,829

45,404,766

31,023,757
21,452.147 31,600,000
62.991 15,454,660

117,416,467 $
7,528.050 110,927.260

664,196,388
32,846,022 31,600,000 22,300,043
8.505,191 1,278,667,326

$

43,367.615 $

1,978,409 $

90.924,940 $

47,998,727 $

99.593,555 $

235,871,777 $ 2,038,114,970

A-41

Georg1a
Combining Statement of Activities Component Units For the Fiscal Year Ended June 30, 2002

Expenses
Program Revenues: Charges for Services Operating Grants and Contributions Capital Grants and Contributions
Total Program Revenues
Net (Expenses) Revenue
General Revenues: Taxes Unrestricted Investment Income Payments from the State of Georgia Other
Total General Revenues
Change in Net Assets
Net Assets, July 1 (Restated)
Net Assets, JUlle 30

Development Authority

$

3,406,899

Environmental Facilities Authority

Housing and Finance Authority

25,485,649 $

82,749,908

Lottery Corporation
2,330,458,000 $

Ports Authority
96,933,000

$

5,439,028

28,952,830 $ 34,442,425 45,106,938

55,330,906 $ 24,652,240

2,326,420,000 $

104,668,000 12,219,000

$

5,439,028

108,502,193 $

79,983,146 $ 2,326,420,000

116,887,000

2,032,129 $

83,016,544

(2,766,762) $

(4,038,000) $

19,954,000

$ 29,238

$ 1,702,408

$ 12,968,431

2,135,948

$

29,238

3,838,356

12,968,431

2,061,367 $

86,854,900 $

10,201,669

34,164,583

835,829,150

98,589,278

$ 8,757,000
81,000 8,838,000 $ 4,800,000 $ 4,839,000

1,431,000 3,091,000 4,522,000 24,476,000 416,564,000

$

36,225,950 $

922,684,050 $

108,790,947 $

9,639,000 $

441,040,000

The notes to the financial statements are an integral part of this st:-lement A-42

Public Teleconununications
Commission
35.646.317

Road and Tollway Authority
113.854.643

Stone Mountain Memorial Association
9.453.063 $

Student Finance Authority
70.794.365

World Congress
Center Authority
76,419.132

~onmajor
Component Units
204,111.561

Total 3,049,312.537

$

3.904.893 $

21,805,927

8,357.580

340.333

$

12.602.806

21.805.927 $

(23.043.511 ) $

(92,048,716) $

11,475,605
11,475,605 $ 2,022,542

7,577,151 $ 3,515.845
11,092.996 $ (59,701,369)

49.589.446 105,233
49,694,679 (26,724.453) $

85.180.754 $ 28.751.560 10.753,769
124,686,083
(79,425.4 78)

2,700,344,540 99.824.883 68.420.040
2.868.589.463
(180,723,074)

191.924 22.205,363
334

10.014,276 39271.138

767,630 4,141

210.108 51,068,332

22,397.621 $

49,285.414 $

771,771 $

51,278.440

$

(645,890) $

(42,763,302)

2,794,313

(8.422,929)

44,013,505

44,741,711

88,130,627

56.421.656

18.683.678 2.826,048
46,072 21.555.798 $ (5,168,655) 104,762,210

3,549,346 $ 3.443,109 90,035,781 2.459.191
99.487.427 $
20,061,949
215,809,828

22.233.024 42,34\.172 202,580,614
7,817,686
274,972.496
94,249.422
1,943,865,548

$

43,367,615 $

1,978.409 $

90,924,940 $

47,998.727 $

99,593,555 $

235,871,777 $ 2,038,114,970

A-43

(This page intentionally left blank)

Notes to the FinanciaL Statements Index
Note 1 Summary of Significant Accoonting Policies Note 2 Accounting Changes Note 3 Deposits and Investments Note 4 Receivables Note 5 Capital Assets Note 6 Risk Management Note 7 Construction and Other Significant Commitments Note 8 Operating Leases Note 9 Capital Leases Note 10 Long-Term Liabilities Note 11 Interfund Balances Note 12 Nonmonetary Transactions Note 13 Contingencies Note 14 Subsequent Events Note 15 Retirement Systems Note 16 PosternployITlent Benefits Note 17 Deficit Fund BalancelNet Assets
A45

Page A-46 A-57 A-59 A-67 A-68 A- 71 A- 72 A-72 A-75 A-76 A-78 A-80 A-81 A-81 A-82 A-87 A-87

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 1. Summary of Significant Accounting Policies
A. Basis of Presentation
With the exception of the departures from generally accepted accounting principles (GAAP) disclosed in the following paragraphs, the financial statements ofthe State of Georgia have been prepared in conformity with GAAP as applied to government units. The Govemmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and fmancial reporting principles, which are set forth in the GASB's Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification).
During fiscal year ended June 30, 2002, the State implemented the following new accounting standards issued by the GASB: Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysisfor State and Local Governments; Statement No. 35, Basic Financial Statements - and Management's Discussion and Analysis -for Public Colleges and Universities; Statement No. 37, Basic Financial Statements - and Management's Discussion and Analysis - for State and Local Governments: Omnibus; and Statement No. 38, Certain Financial Statement Disclosures. The new standards also require reformatting ofthe fmancial statements and restating of beginning balances.
B. Financial Reporting Entity
In evaluating how to define the govemment for fmancial reporting purposes, management has considered both the organizations that comprise 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.

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 financial benefits or impose specific financial burdens on the primary government. In addition, organizations that are fiscally dependent upon the primary government were considered as potential component units.
As required by GAAP, these financial statements present the government and its component units, entities for which the government is considered to be financially 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:
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 offarmers' 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.

The decision to include a potential component unit in the reporting entity was made by applying the criteria set forth in Section 2100 ofthe GASB Codification ofGovernmental Accounting and Financial Reporting Standards. This Section defines a component unit as a legally separate

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,

A-46

Notes to the Financial Statements
For the Year Ended June 30. 2002
Note 1. Summary of Significant Accounting Policies (continued)
administrative and recreational facilities for students, faculty, officers and employees of any institution under control of the Board ofRegents. The Board consists offive State officials designated by statute and one member appointed by the Governor.
Georgia Technology Authority (Enterprise Fund) is an instrumentality of the State of Georgia and a public corporation. The authority is responsible for the procurement oftechnology resources, technology enterprise management and technology portfolio management, as well as the centralized marketing, provision, sale and leasing, or execution of license agreements, for access on line or in volume, of certain public information maintained in electronic format to the public. State officials appoint the eleven members of the authority. 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 (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 of Georgia (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 who is appointed by the Governor. The system administers five blended defined benefit pension plans: the Employees' Retirement System Fund, the District Attorneys' Retirement Fund, the Georgia Judicial Retirement System, the Legislative Retirement System, and the Superior Court Judges Retirement Fund. The State provides a substantial amount offunding for these retirement systems in the form of employer contributions and administrative expenses.

Georgia Military College (Higher Education Fund) 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 financial data of the primary government. The discretely presented component units are as follows:
Georgia Education Authority (Schools) 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 is a body corporate and politic. This commission is a public charitable organization created for the purpose ofproviding 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 nine members appointed by the Governor.
Georgia Regional Transportation Authority is a body corporate and politic. The purpose of the authority is to manage land transportation and air quality within certain areas of the State. The Governor appoints the fifteen members of the authority.
Georgia Agricultural Exposition Authority 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 Governor appoints the nine Board members. The Authority has a separate management report, but separate audited fmancial statements are not required or issued for it.
Georgia Agrirama Development Authority is a body corporate and politic. The purpose of this authority is to utilize all funds for the purpose of beautifying, improving, developing, maintaining, administering, managing and promoting an agricultural museum in or around

A-47

Notes to the Financial Statements For the Year Ended June 30, 2002

Note 1. Summary of Significant Accounting Policies (continued)
Tifton, Georgia; this museum is designated as the State Museum of Agriculture. Of the fifteen members of the Board, four are State officials designated by statute and the Governor appoints eight members. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Georgia Development Authority 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 is a body corporate and politic. The authority provides assistance to local governments in constructing, extending, rehabilitating, repairing, replacing and renewing environmental facilities by providing fmancial and technical assistance. The Board consists of three State officials designated by statute and eight members appointed by the Governor.
Georgia GolfHall ofFame Authority is a body corporate and politic. The authority was created to construct, operate and manage a facility and related attractions to house the Georgia Golf Hall of Fame. The authority is governed by the fifteen members appointed by State officials to the Golf Hall of Fame Board. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Georgia Higher Education Assistance Corporation 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 of the Georgia Student Finance Commission. The Board consists of four State officials designated by statute and eleven members appointed by the Governor.
Georgia Highway Authority 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 three members of the Authority are State officials designated by statute. The Authority has a separate management report, but separate audited fmancial statements are not required or issued for it.

Georgia Housing and Finance Authority 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 Governor appoints the sixteen members of the Board.
Georgia International and Maritime Trade Center Authority 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. State officials appoint eight of the twelve members of the Board.
Georgia Lottery Corporation 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 ofwhich 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 is a body corporate and politic whose purpose is to construct, operate and maintain the Music Hall of Fame, as well as promoting music events at the facility and throughout the State. The Governor appoints the sixteen members of the Board. The Authority has a separate management report, but separate audited fmancial statements are not required or issued for it.
Georgia Ports Authority is a body corporate and politic. The purpose of the authority is to develop and improve the harbors or seaports of the 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 twelve members, all of which are appointed by the Governor.
Georgia Rail Passenger Authority 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. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Georgia Seed Development Commission 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 often members who are accountable as

A-48

Notes to the FinanciaL Statements For the Year Ended June 30, 2002
Note 1. Summary of Significant Accounting Policies (continued)
trustees. Of the ten members serving on the Board, six members are State officials or are appointed by State officials. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Georgia Student Finance Authority 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. State officials comprise four of the fifteen members of the Board, and the Governor appoints the remaining eleven.
Geo. L. Smith II Georgia World Congress Center Authority 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 Worid Congress Center to promote trade shows, conventions and political, musical, educational, entertainment, recreational, athletic or other events. The Governor appoints the fifteen members of the Board.
Georgia Sports Hall ofFame Authority is a body corporate and politic. This authority was created to construct and maintain a facility to house the Georgia Sports Hall ofFame 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. State officials appoint the eighteen members of the Board. The Georgia State Financing and Investment Commission must approve the issuance ofbonds. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Jekyll Island State Park Authority 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. The Authority has a separate management report, but separate audited fmancial statements are not required or issued for it.
Lake Lanier Islands Development Authority is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the authority is to 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. The Authority has a separate management report. but separate audited financial statements are not required or issued for it.
North Georgia Mountains Authority is a body corporate and politic and an instrumentality and public corporation of the State responsible for the construction and management of recreation, accommodation and tourist facilities and services. The Governor appoints the nine members of the Board. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
OneGeorgia Authority is a body corporate and politic and an instrumentality and public corporation of the State. The purpose of the authority is to promote the health, welfare, safety and economic society of the rural citizens ofthe State through the development and retention of employment opportunities in rural areas and the enhancement of the infrastructures that accomplish that goal. The six members of the Authority are State officials designated by statute. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Sapelo Island Heritage Authority 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 Board consists offour State officials designated by statute and one member appointed by the Governor. The State has assumed the obligation to provide financial support for real property acquisition. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
Southwest Georgia RailroadExcursion Authority is a body corporate and politic and an instrumentality and public corporation of the State. The authority was created for the purposes of construction, fmancing, operation, and development of rail passenger excursion projects utilizing any state owned railway in southwest Georgia. The thirteen member Board is appointed by officials of counties and municipalities within the service area. The Georgia State Financing and Investment Commission must approve the issuance of bonds. The Authority has a separate management report, but separate audited financial statements are not required or issued for it.
State Road and Tollway Authority 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

A-49

Notes to the Financial Statements For the Year Ended June 3D, 2002
Note 1. Summary of Significant Accounting Policies (continued)
related thereto. The Board consists of three State officials designated by statute and two members appointed by State officials.
Stone Mountain Memorial Association is a body corporate and politic and an instrumentality and public corporation of the State. The Authority is responsible for the preservation and protection of Stone Mountain as a Confederate memorial and public recreational area. The Board consists ofone State official designated by statute and eight members appointed by the Governor.
Superior Court Clerks' Cooperative Authority is a body corporate and politic and an instrumentality and public corporation ofthe 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 ofthe State. Ofthe seven members of the Board, the Governor appoints three. The nature of this organization is such that it would be misleading to exclude it from the reporting entity.
Fiduciary component units are required by GAAP to be reported as fiduciary funds ofthe primary government rather than as discrete component units. In accordance with GAAP, fiduciary funds and component units that are fiduciary in nature are excluded from the government-wide fmancial statements.
Georgia Class Nine Fire Department Pension Fund (Pension Trust Fund) is a multiple-employer, defmed benefit pension plan established for the purpose of paying retirement and death benefits to volunteer firefighters ofthe State of Georgia. The Board of Trustees of the Georgia Firefighters' Pension Fund also serves as the Board of Trustees of this pension fund. Benefit provisions and vesting requirements are established by State statute.
Georgia Firefighters' Pension Fund (Pension Trust Fund) 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 (Pension Trust Fund) 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 (Pension Trust Fund) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the peace officers ofthe State of Georgia. The Board ofCommissioners 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 (Pension Trust Fund) is a single-employer, defined 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. The Employees' Retirement System Board of Trustees and two other Governor's appointees not on the Employees' Retirement System Board administer this retirement fund.
Sheriffs' Retirement Fund of Georgia (Pension Trust Fund) is a multiple-employer, defined 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 (Pension Trust Fund) is a multiple-employer, defined benefit pension plan established for the purpose of paying retirement, death and disability benefits to the Superior Court Clerks ofthe 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 (Pension Trust Fund) 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.

A-50

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 1. Summary of Significant Accounting Policies (continued)
The State's significant discretely presented component units issue their own separate audited financial statements. These financial statements can be obtained from their respective administrative offices or from the Georgia Department of Audits and Accounts, 254 Washington Street, S.W., Atlanta, Georgia 30334.
c. Government-Wide and Fund Financial
Statements
Government Wide Financial Statements
The Statement of Net Assets and Statement of Activities display information about the primary government and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. Governmental activities, which normally are fmanced through taxes, intergovernmental revenues, and other non-exchange revenues are reported separately from business-type activities, which are fmanced in whole or in part by fees charged to external parties for goods or services. Likewise, the primary government is reported separately from its discretely presented component units.
The Statement of Net Assets presents the reporting entity's non-fiduciary assets and liabilities, with the difference reported as net assets.
The Statement of Activities demonstrates the degree to which the direct expenses ofa given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable within a specific function. Program revenues include (a) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not meeting the definition of program revenues are instead reported as general revenue.
Fund Financial Statements
Separate fmancial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide statements. Major individual governmental funds and major individual proprietary funds are reported as separate columns in the fund fmancial statements. All remaining governmental and proprietary funds are aggregated and reported as nonmajor funds.

D. Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements and the proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting with the exception ofthe following individual pension trust funds which are reported essentially on the cash basis:
Class Nine Fire Department Pension Fund Firefighters' Pension Fund Judges of the Probate Courts Retirement Fund Peace Officers' Annuity and Benefit Fund of Georgia Sheriffs' Retirement Fund of Georgia
Under the accrual basis ofaccounting, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenues as soon as all eligibility requirements imposed by the provider have been met.
Governmental fund financial statements are reported using the current financial resources measurement focus and 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 that are susceptible to accrual include income taxes, sales and use taxes, federal grants and shared revenues. Expenditures generally are recorded when the related fund liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due or when amounts have been accumulated in the debt service fund for payments to be made early in the subsequent fiscal year.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. Revenues and expenses not meeting this defmition are reported as nonoperating revenues and expenses.
As allowed by GASB Statement No. 20, the State's proprietary funds follow FASB Statements and Interpretations issued on or before November 30, 1989,

A-51

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 1. Summary of Significant Accounting Policies (continued)
Accounting Principles Board Opinions, and Accounting Research Bulletins, unless those pronouncements conflict with GASB pronouncements.
The State reports the following major governmental funds:
The General Fund is used to account for all financial 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.
The Georgia State Financing and Investment Commission accounts for the construction ofprojects for state agencies fmanced through the issuance of public debt, including educational facilities for county and independent school systems.
The State reports the following major enterprise funds:
The State Employees' Health Benefit Plan is a selfinsured 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.
The Georgia Technology Authority is primarily responsible for the procurement of technology resources, technology enterprise management and technology portfolio management, as well as the centralized marketing, provision, sale and leasing, or execution of license agreements, for access on line or in volume, of certain public information maintained in electronic format to the public.
The Unemployment Compensation Fund accounts for the collection ofemployers' unemployment insurance tax and the payment of unemployment insurance benefits.
The Higher Education Fund accounts for the operations of State colleges and universities and State technical colleges.
Additionally, the State reports the following fund types:
Governmental Fund Types: Debt Service Funds - 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 - Used to account for the acquisition or construction of capital facilities.
Permanent Funds - Used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that benefit the State or its citizenry.
Proprietary Fund Types: Internal Service Funds - 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 costreimbursement basis. The predominant participant in internal service fund activity is the primary government.
Fiduciary Fund Types: Pension Trust Funds -Used to account for the Employees' Retirement System in the primary government and the eight individual retirement plans that meet the defmition of a component unit of the State.
Investment Trust Funds - Used to account for external portions of government-sponsored investment pools.
Private Purpose Trust Funds - Used to report resources of all other trust arrangements in which principal and income benefit individuals, private organizations, or other governments.
Agency Funds - Used to report assets and liabilities for deposits and investments entrusted to the State as an agent for others.
Discretely Presented Component Units: The combining component unit financial statements are presented in order to provide information on each of the major component units included in the component unit's column ofthe government-wide statements. The component unit fmancial statements are reported using the economic resources measurement focus and the accrual basis of accounting. The information is presented in order to be consistent with the government-wide statements, and is less detailed than the presentation in each component unit's separately issued fmancial statements. The component units follow all GASB pronouncements, and all FASB pronouncements issued on or before November 30, 1989, except those that conflict with a GASB pronouncement.

A-52

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 1. Summary of Significant Accounting Policies (continued)
E. 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 revenues and expenditures. The budget represents departmental appropriations recommended by the Governor and adopted by the General Assembly prior to the beginning 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 capital projects funds and certain debt service funds that are not subject to appropriation. The budget includes certain proprietary funds, the Higher Education Fund, 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.
F. Assets, Liabilities, and Net Assets/Fund Balances
Cash and Cash Equivalents Cash and cash equivalents include currency on hand and demand deposits with banks and other financial institutions. Cash and cash equivalents also include short-term, higWy liquid investments with maturity dates within three months of the date acquired, with the exception of the Higher Education Fund, which reports 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 ofGeorgia 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 ofTreasury 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 ofTreasury 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. The pooled investment funds "Georgia Fund I" and "Georgia Extended Asset Pool" are also available on a voluntary basis to organizations outside of the State reporting entity.
Authorized pool investments are limited to the following in accordance with State statutes:
I) 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; 7) Obligations of other political subdivisions ofthe State; and 8) Commercial paper issued by domestic corporations.
Authorized investments are subject to certain restrictions.
Pooled cash and cash equivalents and investments are grouped into portfolios for investment purposes according to the operating needs of the State of Georgia and other pool contributors.
The Primary Liquidity Portfolio is a stable net asset value investment pool that follows Standard and Poor's criteria for AAAm rated money market funds. The pool is not registered with the Securities and Exchange Commission (SEC) as an investment company, but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. The pool's primary objectives are safety of capital, investment income, liquidity and diversification while maintaining principal. Net asset value is calculated weekly to ensure stability. The pool distributes earnings (net of management fees) on a monthly basis and values participants' shares sold and redeemed at

A-53

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 1. Summary of Significant Accounting Policies (continued)
the pool's share price, $1.00 per share. Investments are directed toward short-term instruments such as U. S. Treasury obligations, securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, banker's acceptances, corporate obligations and repurchase agreements.
The Secondary Liquidity Portfolio consists ofcertificates of deposit with average investment duration of .17 years.
The Georgia Extended Asset Pool is part of the Extended Term Portfolio. It is a variable net asset value investment pool that follows Standard and Poor's criteria for AAAf rated funds. The pool is not registered with the SEC as an investment company. The pool's primary objective is the prudent management of public funds on behalf of the State of Georgia and local governments seeking income higher than money market rates. Net Asset Value (NAV) is calculated daily to determine current share price. NAV is calculated by taking the closing fair value of securities owned plus other assets and subtracting liabilities. The remainder is then divided by the total number of shares outstanding to compute NAV per share (current share price). The pool distributes earnings (net ofmanagement fees) on a monthly basis and determines participant's shares sold and redeemed based on the current share price, which at June 30, 2002, was $2.02 per share. Investments consist generally of securities issued or guaranteed as to principal and interest by the U. S. Government or any of its agencies or instrumentalities, bankers' acceptances and repurchase agreements. The average investment duration at June 30, 2002, was 1.31 years.
The Extended Term Portfolio includes three other funds: two consisting generally of repurchase agreements and certain U. S. Government Securities with average investment durations at June 30, 2002, of 1.39 and 1.69 years; and a third fund consisting generally ofrepurchase agreements and certain U.S. Government Securities which include mortgagebacked securities such as collateralized mortgage obligations and adjustable rate mortgages. These mortgage-backed securities are reported as U. S. Government Securities in the disclosure of custodial credit risk (see Note 3). Investments in this third fund are transacted by an external investment management finn under direction of an investment advisory agreement executed between the Office of Treasury and Fiscal Services and the investment management firm. The agreement directs the investment firm to utilize the Merrill Lynch 1-3 year Treasury Index in managing the average duration of the overall portfolio, excluding cash, to within plus or minus six months of the duration of the Index. The

average investment duration for this fund on June 30,2002, was 1.59 years. The agreement also places limitations on individual security purchases and holdings. As of June 30, 2002, the State had $70,273,395 invested in U. S. agency mortgage-backed securities.
Other organizations of the State of Georgia reporting entity invest in a variety of financial 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 of other organizations are stated at fair value at June 30, 2002.
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 of the 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, 2002, the Department held surety bonds in the amount of$20,8l2,926, and cash bonds in the amount of $14,023,403. These bonds are not recorded on the Combined Balance Sheet.
Securities are held pursuant to statutes that require licensed insurance companies to deposit securities with the Department ofInsurance 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, 2002, securities valued at $204,712,471 were held by the Department ofInsurance. These securities are not recorded on the Combined Balance Sheet.
Construction contracts awarded by the Department of Transportation 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

A-54

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 1. Summary of Significant Accounting Policies (continued)
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 financial statements. AtJune 30, 2002, $2,103,127 in escrow deposits was administered by the Department of Transportation.
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 I-D) have been met. Estimates of allowances for uncollectible receivables have not been made for the majority of receivables included within the financial statements.
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.
Advances Noncurrent portions oflong-term interfund loans receivable are reported as advances and are offset equally by a fund balance reserve account that indicates that they do not constitute expendable available fmancial resources and therefore are not available for appropriation.
Inventories Inventories of supplies and materials are determined by physical count and/or perpetual inventory records and are valued at cost, weighted average cost, moving average cost, or lower ofweighted average cost or market, using the firstinlfirst-out (FIFO) method, depending on the individual organization's preference. The costs ofgovernmental fundtype 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 of the 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. 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 of net current assets. The fund balance reserve is based on values established by the U. S. Department of Agriculture.
Prepaid Items Payments made to vendors and local government organizations for services that will benefit periods beyond June 30, 2002, are recorded as prepaid items.
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.
Capital Assets Capital assets of governmental funds are recorded as expenditures at the time of purchase and capitalized in the governmental activities column of the government-wide Statement of Net Assets. Capital assets of the State's proprietary funds and component units are capitalized in the fund in which they are utilized.
Capital assets are stated at historical cost or, in some instances, estimated historical cost. Donated capital assets are stated at fair market value at the time of donation. All land and non-depreciable land improvements are capitalized regardless of cost. Buildings and Improvements Other Than Buildings are capitalized when the cost or value exceeds $100,000. Machinery and Equipment is capitalized when costs or value exceeds $5,000. The State's bridges and roadways included in the state highway system are capitalized regardless of cost. All other infrastructure assets are capitalized when project costs exceed $1,000,000, except for infrastructure assets reported by the Higher Education Fund, which are capitalized when costs are greater than $100,000. The cost ofnormal maintenance and repairs that do not add to the value of the asset or materially extend assets lives is not capitalized.
The State holds certain assets such as works of art, historical documents, and artifacts that have not been capitalized or depreciated because the collections are protected and preserved for exhibition, education, or research and are considered to have inexhaustible useful lives.
Major outlays for construction of bridges and roadways in the state highway system are capitalized as projects are constructed. All other major construction projects are capitalized when projects are completed. Interest incurred

A-55

Notes to the Financial Statements For the Year Ended June 30, 2002

Note 1. Summary of Significant Accounting Policies (continued)
during construction is not capitalized in governmental funds. Interest incurred during the construction ofproprietary fund assets is included in the capitalized value of the asset, with the exception of construction projects funded through the Stone Mountain Memorial Association (discretely presented component unit).
All depreciable capital assets are depreciated on the straightline basis over the following useful lives:

Infrastructure Buildings and Building Improvements Improvements Other Than Buildings Machinery and Equipment Software Library Collections

10-100 years 5-40 years 15-50 years 3-20 years 3-10 years 10 years

Due to the lack of complete and accurate inventory records applicable to State-owned land, and the lack of historical cost values for certain parcels of land, the amount reported as land does not represent a comprehensive valuation of the assets owned by the State of Georgia.
Certain capital assets acquired through capital leases in prior years have not been recorded on the fmancial statements at the net present value of the minimum lease payments as is required by GAAP.
Compensated Absences 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 ofemployment. Funds are provided in the appropriation offunds each fiscal year to cover the cost of annual leave of terminated employees. The State's obligation for accumulated unpaid annual leave is reported as a liability in the governmentwide and proprietary fund fmancial statements.
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 are entitled to additional service credit in the Employees' Retirement System of Georgia. No liability is recorded for nonvesting accumulating rights to receive sick pay benefits.

Deferred Revenue In the government-wide statements, proprietary fund statements, and fiduciary fund statements, deferred revenue is recorded when cash or other assets are received prior to being earned. In the governmental fund statements, deferred revenue is recorded when revenue is either unearned or unavailable.
Mortgage Loans Under Repurchase Agreements At June 30, 2002, mortgage loans totaling $13,598,030 have been transferred and assigned to lenders under repurchase agreements by the Georgia Development Authority (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 of the 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.
Long-Term Obligations Long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities column or business-type activities column on the government-wide statement of net assets and on the proprietary fund statement ofnet assets in the fund financial statements. Bond discounts, premiums and issuance costs are deferred and amortized over the life ofthe bonds using a method that approximates the effective interest method or the straight-line method. Bonds payable are reported net of the unamortized bond premium or discount and, when applicable, the deferred amount on refunding. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt.
In the fund fmancial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other fmancing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.
Net Assets Net assets are reported as invested in capital assets, net of related debt, restricted or unrestricted. "Invested in capital assets, net of related debt" consists of capital assets, net of

A-56

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 1. Summary of Significant Accounting Policies (continued)
accumulated depreciation and reduced by outstanding balances for bonds, notes, and other debt that are attributed to the acquisition, construction, or improvement of those assets.
Restricted net assets result when constraints placed on net asset use are either externally imposed by creditors, grantors, contributors, and the like, or imposed by law through constitutional provisions or enabling legislation.
Unrestricted net assets consist of net assets that do not meet the definition of the two preceding categories. Unrestricted net assets often are designated, indicating they are not available for general operations. Such designations have internally imposed constraints on resources. but can be removed or modified.
Fund Balances In the fund fmancial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally segregated by outside parties for use for a specific purpose. Designations of fund balance represent tentative plans for future use of fmancial resources. Unreserved, undesignated fund balance is the amount of fund balance remaining from operations of the current and prior years, net of amounts established as reserved and designated.
F. Interfund Activity and Balances
As a general rule, the effect of interfund activity has been eliminated from the government-wide fmancial statements with the exception of activities between governmental activities and business-type activities. In the fund financial statements, transfers represent flows of assets without equivalent flows of assets in return or a requirement for repayment. In addition, transfers are recorded when a fund receiving revenue provides it to the fund which expends the resources. Transfers and balances between funds are made to accomplish various provisions of law.

Interfund payables and receivables have been eliminated from the statement of net assets except for amounts due between governmental and business-type activities. These amounts are reported as internal balances on the statement of net assets.
G. Fiscal Reporting Periods
The fiscal year end for the primary government and component units is June 30, except for the Stone Mountain Memorial Association, whose fiscal year end is December 31. On the government-wide Statement of Net Assets, amounts due to/from component units do not reconcile due to this difference in fiscal year ends.
Note 2. Accounting Changes
As mentioned in Note 1, the State implemented several new accounting standards during the fiscal year:
GASB Statement Nos. 34, 35 and 37 establish newfmancial reporting standards for governments and public higher education institutions. The new requirements represent significant changes in the financial reporting model used by state governments and public institutions, including numerous changes to the reporting funds and financial statement formats. In addition, the former fixed asset and long-term debt account groups have been eliminated. The data previously reported in these account groups are now reported in the government-wide statements. As a result of the fund reclassifications, numerous adjustments were required to the prior period balances.
GASB Statement No: 38 requires that certain note disclosures accompany fmancial statements prepared in conformity with GASB Statement No. 34.
The provisions of the new reporting standards have been incorporated into the fmancial statements and accompanying notes. The following tables summarize the changes in fund equities as previously reported on the Combined Balance Sheet. These changes resulted primarily from the implementation of these GASB Statements.

A-57

Georgia.
Notes to the Financial Statements June 30, 2002
Note 2. Accounting Changes (continued)
GOVERNMENTAL FUNDS AND ACTIVITIES Major Funds:
General Fund Georgia State Financing and Investment Commission
Nonmajor Funds: Debt Service Fund Capital Projects Funds Permanent Fund
Total Governmental Funds
Adoption of GASB Statement No. 34 Capital Assets, net of depreciation Infrastructure (DOT), net of depreciation Long-Term Liabilities Other Liabilities Inventory Adjustment Revenue Recognition Internal Service Funds Less: Amount shown in Business-Type Activities
TOTAL GOVERNMENTAL FUNDS AND ACTIVITIES
PROPRIETARY FUNDS AND BUSINESS-TYPE ACTIVITIES Major Funds: Georgia Technology Authority
Higher Education Fund State Employees' Health Benefit Plan Unemployment Compensation Fund
Nonmajor Funds: Internal Service Funds Plus: Amount shown in Business-Type Activities
TOTAL PROPRlETARY FUNDS AND BUSINESS-TYPE ACTIVITIES
FIDUCIARY FUNDS Pension Trust Funds Private Purpose Trust Funds Investment Trust Funds Trust and Agency Funds
TOTAL FIDUCIARY FUNDS
General Fixed Assets Account Group
General Long-Term Debt Account Group
TOTAL PRlMARY GOVERNMENT
DISCRETELY PRESENTED COMPONENT UNITS Adoption ofGASB Statement No. 34 Capital Assets, net of depreciation Long-Term Liabilities Other Adjustments
TOTAL DISCRETELY PRESENTED COMPONENT UNITS
,------,,-.,"

June 30, 2001 As Previously
Reported

Fund Reclassifications

Other

June 30, 2001 (Restated)

5,190,624,353 $ 1,643,231,446

(47,581,351) $

(282,528,755) $ 307,805,363

4,860,514,247 1,951,036,809

135,253,964 8,640,292
6,977. 750,055

13,500 (47,567,851)

135,253,964 8,640,292 13,500
25,276,608 $ 6,955,458,812

2,947,654,790 (5,548,544,874)
1,269,592,252

85,646,354 10,487,444,433
(36,271,432) (105,946,695)
(2,334,646) 8,150,519 (26,943,050) (699,260)

3,033,301,144 10,487,444,433 (5,584,816,306)
(105,946,695) (2,334,646) 8,150,519
1,242,649,202 (699,260)

6,977,750;055 $ (1,378,865,683) $ 10,434,322,831 $ 16,033,207,203

$

41,733,201 $

$

8,135,320 $

49,868,521

6,143,390,243

600, I 53, 187

(3,204,416,487)

3,539,126,943

352,047,498

(119,019)

351,928,479

1,808,936,221

1,808,936,221

1,269,592,252

(1,269,592,252)

699,260

0 699,260

$ 7,806,763,194 $ 1,139,497,156 $ (3,195,700,926) $ 5,750,559,424

$

$ 53,928,971,587 $

35,358,957

4,115,898,377

18,613,001,487

(18,613,001,487)

12,838,796 $ (241,305)

53,941,810,383 35,1 17,652
4,115,898,377 0

$ 18,613,001,487 $ 39,467,227,434 $

12,597,491 $ 58,092,826,412

$ 3,531,963,532 $ (3,531,963,532) $ (5,565,331,816) $ 5,565,331,816 $

$

0

$

0

$ 31,364,146,452 $ 41,261,227,191 $ 7,251,219,396 $ 79,876,593,039

$ 43,284,700,133 $ (41,265,401,816) $

$ 2,019,298,317

4,626,082 (451,457)

(65,117,887) (6,739,640) (7,749,867)

(60,491,805) (7,191,097) (7,749,867)

$ 43,284,700,133 $ (41,261,227,191) $

(71,857,527) $ 1,943,865,548

A-58 ,-----

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 3. Deposits and Investments
A. 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 anyone or more ofthe following securities as enumerated in OCGA 50-17-59:
I) Bonds, bills, notes, certificates of indebtedness, or other direct obligations of the United States or of the 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 ofthe State of Georgia, providing that the statute that created the authority authorized the use of the 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 ofindebtedness, 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 that 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 $629,816,874, and the bank balances were $1,486,923,089. 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 financial 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, 2002:

Risk Category
I 2 3

Bank Balance

$

394,180,751

151,458,636

941,283,702

$ ==~1:=,4=8::;6,=92=3f:,0=89=

A-59

Notes to the FinanciaL Statements For the Year Ended June 3D, 2002
Note 3. Deposits and Investments (continued)
Component Units
At year-end, the component units' deposits were classified as follows:

Risk Categories

2

3

Bank Balance

Funds Held by Primary
Government

Carrying Amount

Environmental Facilities Authority $

1,039,010 $

$

$

1,039,010 $ 309,628,751 $

7,900,620

Georgia Housing and Finance Authority

42,435,620

85,063,531

127,499,151

15,80 I,442

127,769,554

State Road and Tollway Authority

104,997

6,034,731

6,139,728

28,016,974

6,304,726

All Other Component Units

24,416,125

23,250,170

30,175,573

77,841,868

147,997,050

54,229,988

$ 67,995,752 $ 23,250,170 $ 121,273,835 $ 212,519,757 $ 501,444,217 $ 196,204,888

B. Investments
Investments are stated at fair value, and are summarized and classified as to risk in the following three categories: (l) 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. The carrying amounts and risk categories applicable to the State's investments are listed below:

A-60

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 3. Deposits and Investments (continued)

Primary Government
Type of Investment Commercial Paper Investment Accounts Municipal Bonds Repurchase Agreements Stocks U.S. Government Securities and
Corporate Obligations
Unclassified Real EstatefMortgages Mutual Funds Other Unemployment Compensation Funds
Pooled with the U.S. Treasury Total Investments

Risk Categories 2

$

14,152.886 S 196,917,237 $

67,607,887

5,000

5,074,655,618

27 ,685,172,398

63,725,298

31,400,556.960

247,693,878

$

64,242,150,749 $ 508,336,413 $

3

Carrying Amount

$

211,070,123

67,607,887

5,000

5,074,655,618

27,748,897,696

699,636 699,636 $

31,648,950,474 64,751,186,798

8,320,002 17,672,237 25,012.103

1,521,107.081 $ ====6::6f:,3::2:=3,::29::8:f,2:2:1=

A-61

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 3. Deposits and Investments (continued)

Component Units
Proprietary Fund Types Georgia Housing and Finance Authority
Lottery Corporation State Road and Tollway Authority

Type of Investment

Risk Categories

2

3

Carrying Amount

Corporate CMO

$ 13,067,139 $

$

$

13,067,139

Mortgage-Backed Securities

43,364,441

43,364,441

U.S. Government Securities and Corporate Obligations
$

32354.926 88,786,506 $

32,354,926
$ =====,0,= $ ==8=8=,7=8::::6,:::50=6=

U.S. Government Securities and

Corporate Obligations

$ 155,764,000 $ = = = = = $ 55,010,000 $ ==2::::10=,7=7::::4,=00:::0=

Repurchase Agreements

$ 323,765,571 $

$

$

323,765,571

U.S. Government Securities and Corporate Obligations

297,436,610

$ 621,202,181 $

297,436,610

$

$ ====6=21=,=20=2=,1=8=1=

All Other Component Units

Repurchase Agreements

$

Stocks

U.S. Government Securities and Corporate Obligations

$

530,721 $ 260
9,864,358 10,395,339 $

32,220,567 $

$

56,132,601 88,353,168 $

6,112,080 6,112,080 $

32,751,288 260
72,109,039 104,860,587

Unclassified Other

3,310,000

$ ==10::::8=,1::::7::::0,=58=7=

A-62

Notes to the Financial Statements For the Year Ended June 30, 2002
Note 3. Deposits and Investments (continued)
c. 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 $21,699,039,683 at June 30, 2002, and the collateral value was equal to 104.6%. The loaned securities are classified as category 1 investments based on the custodial arrangements for the collateral securities. Loaned securities are included in the accompanying Statement ofNet Assets since the State maintains ownership. The related collateral securities are not recorded as assets on the Statement ofNet Assets, and a corresponding liability is not recorded, since the State does not pledge or trade the collateral securities.

A-63

Notes to the Financial Statements For the Year Ended June 30, 2002
Note 3. Deposits and Investments (continued)
D. Investment Pools
Separate reports on the State's external investment pools are not issued. Condensed financial statements, inclusive ofexternal and internal participants for the fiscal year ended June 30, 2002, and related categorization of investments are as follows:

Georgia Fund I Statement orNet Assets
June 30. 2002

Cash and Cash Equivalents Investments
Net Assets

$

4,581,757,232

3,658,999,734

=========== $

8,240,756,966

Distribution of Net Assets

External Participant Account Balances

$

4,355,623,915

Internal Participant Account Balances

3,885,133,051

========= $

8,240,756,966

Georgia Fund I Statement of Changes in Net Assets For the Fiscal Year Ended June 30, 2002

Additions Pool Participant Deposits Investment Income Less: Investment Expense
Total Additions

$ 20,038,611,489 206,024,092 (1,442,538)
$ 20,243,193,043

Deductions Pool Participant Withdrawals Net Increase
Net Assets

20,679,585,134

$

(436,392,091 )

July 1,2001

8,677,149,057

June 30, 2002

$ ===8=,24=0:::,7=5:::6,=96=6=

Because the State does not maintain separate bank accounts for Georgia Fund 1, a separate risk categorization for the Fund's deposits cannot be presented. The carrying amount of Georgia Fund I deposits as of June 30, 2002, was $44,563,662. This amount is included in the categorization of deposits of the Primary Government. Investments ofGeorgia Fund I are categorized below. These amounts are included in the categorization of investments of the Primary Government.

Type of Investment

Risk Categories

2

3

Carrying Amount

Commercial Paper

$

$

166,714,419 $

$

166,714,419

Repurchase Agreements

3,014,571,273

3,014,571,273

U.S. Government Securities and Corporate Obligations

5,014,907,612

$ 8,029,478,885 $

166,714,419 $

5,014,907,612 0 $ 8,196,193,304

A-64

Notes to the Financial Statements
For the Year Ended June 30. 2002
Note 3. Deposits and Investments (continued)
D. Investment Pools
Georgia Extended Asset Pool Statement of Net Assets June 30, 2002

Cash and Cash Equivalents Investments

s

146,709,848

1,047,290,682

S ==1=1'=94=,0,=0=0,=53=0=

Distribution of Net Assets

External Participant Account Balances

$

Internal Participant Account Balances

226,157,339 967,843,191

$ ==1=1'=94=,0=0::::0,=53::0=

Georgia Extended Asset Pool Statement of Changes in Net Assets For the Fiscal Year Ended June 30, 2002

Additions

Pool Participant Deposits

$

272,690,547

Investment Income Total Additions

48,274;013

s

320,964,560

Deductions

Pool Participant Withdrawals

),006,934

Net Increase

$

311,957,626

Net Assets

July 1,2001

882,042,904

June 30, 2002

$ ====1=,=19=4=,0=0=0=,5=3=0=

Investments of Georgia Extended Asset Pool are categorized below. These amounts are included in the categorization of investments of the Primary Government.

Type of Investment

Risk Categories

2

3

Carrying Amount

Commercial Paper

$

$

26,285,978 $

$

26,285,978

Repurchase Agreements

146,709,848

146,709,848

U.S. Government Securities and Corporate Obligations

1,021 ,004,704

$ 1,167,714,552 $

====== 26,285,978 $

$

1,021,004,704 1,194,000,530

A-65

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 3. Deposits and Investments (continued)
D. Investment Pools
Regents Investment Pool Statement orNet Assets
June 30, 2002

Cash and Cash Equivalents Interest Receivable
Net Assets

$

125,452,768

811,729

$ =====1:::26=,2::6=4,=49:::7=

Distribution of Net Assets External Participant Account Balances Internal Participant Account Balances

$

20,207,451

106,057,046

$

126,264,497

==:::::i::=:::::i::==

Regents Investment Pool Statement or Changes in Net Assets For the Fiscal Year Ended June 30, 2002

Additions

Investment Income

Interest

5,153,962

Fair Value Decreases Less: Investment Expense

(6,302597) (466,276)

Total Additions

$ _ _..(.;.;,1,6,;;.;1;,.;.4;.;.,9.;;.,11;;.;,.)

Deductions

Pool Participant Withdrawals

$

42,944,485

Capital Transactions

( 16,093,052)

Total Deductions

26,851,433

Net Decrease

$

(28,466,344)

Net Assets

July 1,2001 June 30, 2002

154,730,841 $ ==1=2=6,=2=64=,4=9=7=

Because the State does not maintain separate bank accounts for Regents Investment Pool, a separate risk categorization for the Pool's deposits cannot be presented. The carrying amount of Pool deposits as ofJune 30, 2002, was $4,301,796. This amount is included in the categorization of deposits of the Primary Government. Investments of Regents Investment Pool are categorized below, These amounts are included in the categorization of investments of the Primary Government.

Type of Investment

Corporate Bonds

$

Repurchase Agreements

Risk Categories 2

$

16,990,805 $

80,000

Carrying

3

Amount

$

16,990,805

80,000

Stocks
U.S. Government Securities and Corporate Obligations
$

54,909,126

54,909,126

49,982,770

0$

121,962,701 $ =====0=$

49,982,770 121,962,701

A-66

Notes to the Financial Statements For the Year Ended June 30, 2002
Note 4. Receivables

Receivables as ofJune 30, 2002, consisted ofthe following:

Gross Receivables

Allowance For
Uncollectibles

Allowance For Possible Loan Losses

Allowance For Service Repavments

Deferred Loan Fees

Net Total Receivables

Governmental Activities:

General Fund

$ 2,178,199,817 $

(16,440,077) $

$

$

- $ 2,161,759,740

Georgia State Financing and

Invesunent Commission

1,627,735

1,627,735

Nonmajor Governmental

654,107

654,107

Total Governmental Funds

$ 2,180,481,659 $

(16.440,077) $

$

$

$ 2,164.041,582

Internal Service Funds

9,440.985

(300,000)

9,140,985

Long-Tenn Lease Receivable

2,631.842

2.631,842

Receivables from Fiduciary Funds

L123,000

L123,000

Total Governmental Activities

$ 2,193.677,486 $

(16,740,077) $

$

$

2,176,937.409

Business-type Activities:

Georgia Technology Authority

$

4,663.621 $

$

$

$

$

4.663,621

Higher Education Fund

295.633,216

(5.264,265)

290,368.951

State Employees' Health Benefit Plan

23,570.562

(4,157,556)

19,413,006

Unemployment Compensation Fund

34,008.011

(18.156,919)

15,851,092

Internal Service Funds

1,886

1,886

Total Business-type Activities

$

357.877,296 $

(27.578,740) $

$

$

$

330,298,556

Component Units

$ 1.875,895327 $

(6328,049) $

(2,000384) $

(35,678,532) $

(196,630) $ 1.831,691,732

A-67

Notes to the FinanciaL Statements For the Year Ended June 30, 2002

Note 5. Capital Assets

Primary Government

Capital asset activity for the year ended June 30, 2002, was as follows:

Governmental Acthities: Capital Assets Not Being Depreciated: Land Works of Art and Collections Construction in Progress Total capital assets, not being depreciated

Balance (Restated) July I, 2001

Increases

Decreases

Balance June 30, 2002

$

315,266,194 $

6,229,798

J ,164,480,295

$

1,485,976,287 $

22,368,600 $ 10,010
965,331,178 987,709,788 $

(2,410,341) $
(479,627,284) (482,037,625) $

335,224,453 6,239,808
1,650,184,189 1,991,648,450

Capital Assets Being Depreciated: Infrastructure Buildings hnprovements Other Than Buildings Machinery and Equipment Software Library Collections
Total Capital Assets Being Depreciated

$ 15,951,774,892 $ 2,044,379,972 35,941,211 732,615,409 66,209,462 3,200,000
$ 18,834,120,946 $

1,325,213,903 $ 33,256,555 6,151,504 105,732,873
1,470,354,835 $

(934,747,198) $ (15,555,854)
(157,399,944)
(1,107,702,996) $

16,342,241,597 2,062,080,673
42,092,715 680,948,338
66,209,462 3,200,000
19,196,772,785

Less Accumulated Depreciation For: Infrastructure Buildings hnprovements Other Than Buildings Machinery and Equipment Software Library Collections
Total Accumulated Depreciation

$ (5,460,490,459) $ (1,073,697,498) $

(599,676,546)

(45,765,298)

(14,263,445)

(1,615,811)

(396,742,277)

(54,212,706)

(25,388,967)

(7,373,879)

(3,200,000)

$ (6,499,761,694) $ (1,182,665,192) $

934,747,198 $ 622,462
73,673,293
1,009,042,953 $

(5,599,440,759) (644,819,382) (15,879,256) (377,281,690) (32,762,846) (3,200,000)
(6,673,383,933)

Total Capital Assets Being Depreciated, Net

$ 12,334,359,252 $

287,689,643 $

(98,660,043) $ 12,523,388,852

Governmental activity capital assets, net

$ 13,820,335,539 $

1,275,399,431 $

(580,697,668) $ 14,515,037,302

A-68

Notes to the FinanciaL Statements For the Year Ended June 30, 2002

Note 5. Capital Assets (continued)

Primary Government
Business-type Activities: Capital Assets Not Being Depreciated: Land Works of Art and Collections Construction in Progress Total capital assets, not being depreciated
Capital Assets Being Depreciated: Infrastructure Buildings Improvements Other Than Buildings Machinery and Equipment Software Library Collections Works of Art and Collections
Total Capital Assets Being Depreciated
Less Accumulated Depreciation For: Infrastructure Buildings Improvements Other Than Buildings Machinery and Equipment Software Library Collections Works of Art and Collections
Total Accumulated Depreciation
Total Capital Assets Being Depreciated, Net
Business-type activity capital assets, net

Balance (Restated) July 1,2001

Increases

Decreases

Balance June 30, 2002

$

137,245,942 S

1,137,391 S

9,817,296

10,000

4,444,898

36,822,532

$

151,508,136 $ _ _..-;3;.7.~,.9;.6.:9;..,;9;;2.;3;.... S

$

138,383,333

9,827,296

41,267,430

S

189,478,059

$

105,258,507 S

5,879,316 $

3,281,011,949

195,055,959

114,279,547

1,782,531

902,950,446

168,164,090

36,482,688

471,148,457

26,571,411

1,022,206

1,000

$

4,912,153,800 $ _ _..3.;9;.7,;,.4.~5.;4..:,;3..0.;7.;....S

$ (1,865,659)
(341,981) (45,121,324)
(1,396,318)
(48,725,282) $

111,137,823 3,4 74,202,249
115,720,097 1,025,993,212
36,482,688 496,323,550
1,023,206 5,260,882,825

$

(42,753,896) $

(1,018,780,009)

(65,260,838)

(570,110,047)

(10,320,144)

(331,950,980)

(306,047)

- ...... $

(2,039,481,961) $

~.;..;.-'-~

$ _--.,;;;.:2.;;,.8.,;7.=2.,..6..7;..1;;,.8;;.3;;9.;,_ $

========= $

3,024,179,975 $

(3,167,728) $ (84,267,963)
(6,061,632) (95,445,588)
(7,296,538) (24,397,373)
(24,193) (220,661,015) $
176,793,292 $
214,763,215 $

$ 858,322 342,054 34,003,963
1,356,593
36,560,932 $
(12,164,350) $
(12,164,350) $

(45,921,624) (1,102,189,650)
(70,980,416) (631,551,672)
(17,616,682) (354,991,760)
(330,240) (2,223,582,044)
3,037,300,781
3,226,778,840

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

therefore, the table above does not represent a comprehensive valuation ofthe assets owned by the State of Georgia.

A-69

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 5. Capital Assets (continued)

Primary Government

Current period depreciation expense was charged to functions of the primary government as follows:

General government
Education Health and Welfare Transportation Public Safety Economic Development Culture and Recreation Conservation Capital Outlay

$

7,641,907

1,917,807 16,365,997

1,087,620,714

36,428,802

9,643,750

143,251 54,451

2,036,048

$

1,161,852,727

Component Units

Capital asset activity for the year ended June 30, 2002, was as follows:

Balance (Restated) July 1,2001

Increases

Decreases

Balance June 30, 2002

Capital Assets Not Being Depreciated: Land Works of Art and Collections Construction in Progress
Total capital assets, not being depreciated
Capital Assets Being Depreciated: Infrastructure Buildings Improvements Other Than Buildings Machinery and Equipment Software
Total Capital Assets Being Depreciated
Less Accumulated Depreciation For: Infrastructure Buildings Improvements Other Than Buildings Machinery and Equipment Software
Total Accumulated Depreciation
Total Capital Assets Being Depreciated, Net
Component Units capital assets, net

$

150,221,245 $

201,048

55,815,637

$

206,237,930 $

$

129,687,064 $

532,736,485

174,046,166

281,569,531

$

1,118,039,246 $

$

(55,386,526) $

(141,028,745)

(63,993,353)

(197,968,313)

$

(458,376,937) $

$

659,662,309 $

$

865,900,239 $

28,383,402 $
41,707,014 70,090,416 $
19,501,000 $ 5,562,857 17,539,056 10,894,051
188,000 53,684,964 $
(3,418,335) $ (12,541,425) (5,926,315) (22,020,482)
(43,906,557) $
9,778,407 $
79,868,823 $

$
(60,499,189) (60,499,189) $

178,604,647 201,048
37,023,462 215,829,157

$ (5,601,986)
(84,000) (15,298,317)
(20,984,303) $

149,188,064 532,697,356 191,501,222 277,165,265
188,000 1,150,739,907

$ 2,740,733
30,000 12,467,078
15,237,811 $
(5,746,492) $
(66,245,681) $

(58,804,861) (150,829,437)
(69,889,668) (207,521,717)
(487,045,683)
663,694,224
879,523,381

A-70

Notes to the Financial Statements For the Year Ended June 30. 2002
Note 6. Risk Management
A. Public Entity Risk Pool
The Department of Community Health 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 Department of Community Health 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 Department of Community Health.
A reconciliation of total claims liabilities for fiscal years ended June 30, 2002, and 2002, is shown below:

Unpaid Claims and Claim Adjustments July 1
Incurred Claims and Claims Adjustment Expenses Provisions for Insured Events of the Current Year
Payment' - Claims and Claim Adjustment Expenses Attributable to Insured Events of the Current Year and of Prior Years

Fiscal Year Ended June 30. 2002

$

169.759.350

1.044,185,180

(1.051.471,561)

Fiscal Year Ended June 30. 2001
193.156.776
902.398.771
(925,796,197)

Unpaid Claims and Claim Adjustments June 30

$

162.472.969 $

169,759.350

B. Board of Regents Employee Health Benefits Plan

The Board of Regents of the University System of Georgia maintains a program of health 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 ofRegents and its organizational units. All units of the University System of Georgia share the risk ofloss for claims of the 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 ofRegents.

A reconciliation of total claims liabilities for fiscal years ended June 30, 2002, and 2001, is shown below:

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

Fiscal Year Ended June 30. 2002

Fiscal Year Ended June 30, 2001

$

35.179.138 $

28.400,000

170,457.218

183,300.197

(176,358.398)

(176,521.059)

Unpaid Claims and Claim Adjustments June 30

$

29,277.958 $ ===35:.;:17::9.::13::8=

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

A-71

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 6. Risk Management (continued)
assets. 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 years ended June 30, 2002, and 200 I, 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

Fiscal Year Ended June 30. 2002

$

351,780,322

97,179,943

(95.926,010)

Fiscal Year Ended June 30. 2001 436,113,210
40.708,467
( 125,041.355)

Unpaid Claims and Claim Adjustments June 30

$

353.034,255 $

351.780,322

At June 30, 2002, the Department of Transportation had contractual commitments of $2,073,594,611 for construction of various highway projects. Funding of these future expenditures is expected to be provided from federal grants, motor fuel tax funds and general obligation bond proceeds.
Note 8. 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 ofthe 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.
Totallease payments for the State's governmental activities, business-type activities, and component units were $68,090,707, $24,926,584, and $5,703,623, respectively for the year ended June 30, 2002. Future minimum commitments for operating leases as of June 30, 2002, are listed below. Amounts are included for renewable leases for which the option to renew for the subsequent fiscal year has been exercised.

Note 7. 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 ofbond sale proceeds and cash supplements (provided by the department or agency involved) to acquire and construct capital projects. At June 30, 2002, the undisbursed balance remaining on these agreements approximates $1,677,931,895.

A-72

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 8. Operating Leases (continued)

Fiscal Year Ended June 30 2003 2004 2005 2006 2007
2008-2012 2013-2017 2018-2022 2023-2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052 2053-2057 2058-2062
Total Minimum Commitments

Governmental ActivitIes

Business-Type ActivitIes

Component Units

$

77.814,458 $

20,860,825 $

5,305,983

21,753,695

4,673,681

4,653,157

21,317,834

2,349,682

4,501,415

19,646,392

558,623

4,311,620

18,024,326

67,562

3,361,590

48,413,882

13,132

17,869,448

16,360,773

13,132

5,497,689

15,050,265

13,132

16,414,158

13,132

17,898,708

13,132

41,940

41,940

41,940

41,940

41,940

41,940

$

272,946,131 $

28,576,033 $

45,500,902

A-73

Notes to the Financial Statements For the Year Ended June 30. 2002
Note 8. Operating Leases (continued)
B. Lessor
The State leases certain of its facilities for use by others for terms varying from I to 65 years, with the majority ofleases controlled by the State Properties Commission. These leases are accounted for as operating leases; revenues for services provided and for use of facilities are recorded when earned. Total revenues from rental of facilities for the State's

governmental actiVIties and component units were $40,583,728, and $20,868,793, respectively for the year ended June 30, 2002. Minimum future revenues and rentals to be received under operating leases as of June 30, 2002, are as follows:

Fiscal Year Ended June 30
2003 2004 2005 2006 2007 2008-2012 2013-2017 2018-2022 2023-2027 2028-2032 2033-2037 2038-2042 2043-2047 2048-2052

Govenunental Activities

Component Units

s

13,058,980 $

13,034,614

13,186,402

13,440,534

13,048,184

60,686,668

39,531,834

32,652,443

3.040,429

3,040,429

3,040,429

3,040,428

2,664,193

23,900

8,289,420 6,557,420 6,211,420 4,615,420 8,840,100 12,771,487 12,952,713 11 ,503,100
1,600 1,600 1,600 1,600

Total Minimum Commitments

$======== 213,489,467 $

71,747,480

A-74

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 9. Capital Leases
The State acquires certain property and equipment through multi-year capital leases with varying tenns 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 financial reporting purposes.

As noted in the Summary of Significant Accounting Policies (Note I), capital lease transactions have not been consistently recorded in confonnity with GAAP. Capital assets in prior years have not been recorded at the net present value of the minimum payments nor has the long-tenn liability applicable to capital leases been consistently recorded. Also, the State does not record expenditures and other financing sources in the governmental fund types when capitalized leases are entered into as required by GAAP. At June 30, 2002, future commitments under capital leases were as follows:

Fiscal Year Ended June 30
2003 2004 2005 2006 2007 2008-2012 2013-2017 2018-2022 2023-2027 2028-2032

Governmental Activities

Business-Type Activities

Component Units

$

2,593.201 S

12,883,415 $

2,198,022

2,369.109

10,725,964

1,735,105

1,228,635

9,925,828

719,833

358,087

9,538,716

26,390

86,197

7,148,254

4,985

3,811

36.361,531

36,854,438

31,805,447

5,572,560

3,416,666

Total Capital Lease Payments

$

Less: Interest

6,639,640 $ (728,193)

164,232,819 $ (70,970,197)

4,684,335 (308,025)

Present Value of Capital Lease Payments $ ====5::,9=1::1,=4=47= $ ===9;,;;3,:;,2;:6;;2;,;;,6;:22;:: $ ====4=,3=76~,~31=0=

A-75

Notes to the Financial Statements
For the Year Ended June 30. 2002

Note 10. Long-Term Liabilities

Primary Government

Changes in long-tenn liabilities for the fiscal year ended June 30, 2002 is shown in the table below:

Balance

July 1, 2001

Balance

Amounts Due

(Restated)

Increases

Decreases

June 30, 2002

Within One Year

Governmental activities: Compensated Absences Payable Capital Lease Obligations Contracts Payable Notes and Loans Payable General State Bond Debt General Obligation Bonds Payable Other

237,067,594 $ 9,088,745
2,690,001 15,505
5,311.335,000 36,272,018

132,783.269 $ 2.354.002
54.670,212
1.196.160.000 7,959,473

(125,520.959) $ (5,531.300)
(58,159)
(449.200,000) (5,833,094)

244.329.904 $ 5,911.447
54,670,212 2,631,842
15,505 6,058,295,000
38.398.397

$ 5,596,468,863 $ 1.393,926,956 $ (586.143,512) $ 6,404,252.307 $

36,903.185 2.061.320 13.936.324 61.402 15.505
396,820,000 5'50,500
455,148,236

Business-type activities: Compensated Absences Payable Capital Lease Obligations Notes and Loans Payable Other

$ 129,786,063 37,322,839 266,918

96,765,400 $ 68.341,974
2.155,441 150,000

(83,024,926) $ (12,402.191)
(76,751)

143,526,537 93,262,622
2.345,608 150,000

$

167,375,820 $

167,412.815 $

(95,503,868) $

239,284,767 $

73.196,782 7.996,976 181.425
81J75,I83

The governmental funds in which the leases are recorded will liquidate the capital lease obligations for governmental activities, The compensated absence liabilities will be liquidated by the applicable funds that account for the salaries and wages of the related employees,
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, 2002, were $15,505 with accumulated interest of $11,475.
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:

Purpose

Interest Rates

Amount

General Government
General Government Refunding

1.25% - 7.70% $
4.25% - 6.30% $

5,582,665,000
475,630,000 6.058,295,000

A-76

Notes to the Financial Statements
For the Year Ended June 30, 2002

Note 10. Long-Term Liabilities (continued)

Annual debt service requirements to maturity for general obligation bonds are as follows:

Year

Principal

2003

$

396,820,000 $

2004

433,815,000

2005

448,325,000

2006

467,680,000

2007

468,035,000

2008-2012

2,017,710,000

2013-2017

1,288,060,000

2018-2022

537,850,000

Interest 334,982,464 $ 312,053.355 286,729,431 260,365,680 233,657,603 788,152,421 292,106,682
55,118,805

Total 731,802,464 745,868,355 735,054,431 728,045,680 70 1,692,603 2,805,862,421 1,580,166,682 592,968,805

$

6,058,295,000 $

2,563,166,441 $

8,621,461,441

Component Units

Changes in long-term liabilities for the year ended June 30, 2002, was as follows:

Compensated Absences Payable Capital Lease Obligations Notes and Loans Payable Prizes Payable Revenue/Mortgage Bonds Payable Other

Balance July \, 2001 (Restated)
4,654,557 $ 6,037,898 48,879,894 205.674,000 1,157,381.451 30,358,748

Increases 2,425,900 $ 207.846
107.606,830
503,487,183 9,593,325

Decreases (2.129,433) $ 0.869,434)
(61.704,703 ) (4,458,000)
(133.367,080) (7,927,070)

Balance

Amounts Due

June 30, 2002

Within One Year

4.951.024 $

947.030

4,376,310

2,024.072

94,782,021

55,785,538

201,216.000

15,046,000

1,527,501,554

26,788,536

32,025,003

3,750,259

$ 1,452,986,548 $

623,321,084 $ (211,455,720) $

1,864,851,912

104,341,435

The State Road and Tollway Authority issued bond anticipation notes during fiscal year 2002. Subsequent to June 30, 2002, the State Road and Tollway Authority liquidated a portion of the temporary notes with proceeds from the issuance of transportation revenue bonds, and as a result, reported a long-term note in the amount of $41,446,212.
The Georgia Development Authority reported two longterm notes payable to banks with a combined outstanding balance at June 30, 2002 of $40,938,648. One note issecured by LIBOR mortgage loans financed through the note, is payable in semi-annual payments of$384,615 that includes interest at LIBOR plus one percent, and has an outstanding balance at June 30, 2002, of$8,076,923, The other note is secured by various fixed rate mortgage loans financed through the note, bears interest at a rate of 6.8% per annum, and has an outstanding balance at June 30, 2002, of $32,861,725.

Housing and Finance Authority for financing the purchase of single family mortgage loans for eligible persons and families of low and moderate income within the State of Georgia; and revenue bonds issued by the State Road and Tollway Authority for the financing of certain construction projects within the State's highway system. The significant revenue and mortgage bonds outstanding at June 30, 2002 consists of the following:

Interest Rates
Bonds Outstanding Unamortized
Premium Deferred Amount
for Refunding
Net

Georgia Housing and Finance Authority

State Road and Tollway
Authority

2.00% - 9.25%

5.50% - 6.00%

$

821,870,175 $

421,420.000

55,191

10,525,569

821,925,366 $

(3,491,584) 428,453.985

Revenue/mortgage bonds outstanding at June 30, 2002, consisted of: mortgage bonds issued by the Georgia
A-77

Notes to the Financial Statements For the Year Ended June 30,2002

Note 10. Long-Term Liabilities (continued)

Annual debt service requirements to maturity:

Georgia Housing and Finance Authority

Vear

Principal

Interest

Total

State Road and Tollway Authority

Principal

Interest

Toral

2003

S

2004

2005

2006

2007

2008-2012

2013-2017

2018-2022

2023-2027

2028-2032

2033-2036 Future Accretion Capital Appreciation Bonds

34,633,000 19,615,000 21,589,000 23,258,000 27,437,000 141,592,000 161,016.000 158,329,000 143,569.000 106,988.000 3,200,175
(19.356.000)

44,203,000 S 43,244.000 42,269,000 41,21MOO 40,007,000 179,086,000 140,676,000 98,150,000 55.175,000 15.610,000
89,000

78.836.000 S 62.859,000 63.858,000 64,474.000 67.444,000 320.678.000 301,692.000 256,479.000 198,744.000 122.598.000 3,289.175

14,400.000 $ 18,295.000 19.025.000 19,820,000 20,760.000 120.215,000 104,110,000 104,795,000

19.356.000

23.560,544 S 20,257,147 19,520,553 18.698,514 17.766.962 72,213.089 43.879.354 13,588,569

37.960,544 38,552.147 38,545,553 38.518,514 38.526.962 192,428,089 147.989.354 118.383,569

$

821,870.175 $ 719,081,000 $ 1,540,951,175 $

421,420,000 $ 229,484.732 $

650,904.732

Various series of bonds under Resolution I and 3 at Georgia Housing and Finance Authority include capital appreciation bonds that require no payments of principal or interest until maturity. Capital appreciation bonds accrete to their maturity values at effective yields ranging from 7.10% to 11.25%.

Note 11. Interfund Balances

Due TolFrom Other Funds at June 30, 2002, consist of the following:

Receivable Fund General Fund Georgia Technology Authority Georgia Technology Authority Georgia Technology Authority Georgia Technology Authority Internal Service Funds Internal Service Funds Internal Service Funds

Payable Fund State Employees' Health Benefit Plan General Fund Higher Education Fund Internal Service Fund Fiduciary Funds General Fund Higher Education Fund Fiduciary Funds

Due From

$

34,000,000 $

15,704,881

653,530

93,582

10

1,292,060

65,362

1,123,000

$

52,932,425 $

Due To 34,000,000 15,704,881
653,530 93,582 10
1,292,060 65,362
1,123,000 52,932,425

Interfund receivables and payables are recorded for billing for services provided between agencies and risk management liabilities. All interfund receivables and payables are considered short tenn in nature.

A-78

Notes to the Financial Statements For the Year Ended June 30,2002

Note 11. Interfund Balances (continued)

Interfund transfers at June 30, 2002, consist of the following:

Receiving Fund

Paying Fund

General Fund
General Fund General Fund General Fund General Fund Georgia State Financing and
Investment Commission Nonmajor Governmental Funds Nonmajor Governmental Funds
Nonmajor Governmental Funds Georgia Technology Authority Higher Education Fund Higher Education Fund Internal Service Funds Fiduciary Funds

Georgia State Financing and Investment Commission
Georgia Technology Authority Higher Education Fund State Employees' Health Benefit Plan Internal Service Funds
General Fund General Fund Georgia State Financing and
Investment Commission Higher Education Fund Internal Service Funds General Fund Georgia Technology Authority General Fund General Fund

To

From

$

597,363,212 $

597,363,212

11,765,100

11,765,100

2,826,954

2,826,954

31,358,156

31,358,156

10,888,833

10,888,833

5,398,422 739,869,163

5,398,422 739,869,163

113,157,527 538,024
35,412,874 2,062,598,986
3,583,000 49,310,500 2,693,635

113,15 7,527 538,024
35,412,874 2,062,598,986
3,583,000 49,310,500
2,693,635

$

3,666,764,386 $ 3,666,764,386

Transfers are used to move revenues from the fund that statutes require to collect them to the fund that statutes require to expend them and to use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations,

A-79

Notes to the Financial Statements For the Year Ended June 30, 2002
Note 12. Nonmonetary Transactions
Primary Government
The State of Georgia received donated goods for its use and for distribution to other qualifying organizations outside
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 Preventive Health Services - Sexually Transmitted Disease Control Grants Project Grants and Cooperative Agreements for Tuberculosis Control Programs

the State reporting entity under the following programs:

Value of Inventory Received

Value of Inventory Reported at June 30, 2002

$

34,013,482

$

$

7,839,456

$

2,108,175 2,218,855

$

17,770,925

$

$

268,923

$

$

131,835

$

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 ofFederal 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, 200 1, is not reported on the combined balance sheet. The changes in Federal surplus personal property inventory during the fiscal year ended June 30, 2002, were as follows:

Balance July 1,2001

$

2,812,197

Additions Property Received

12,553,749

$

15,365,946

Deductions Property Donated and Other Distributions

11,061,383

Balance June 30, 2002

$

4,304,563

A-80

Notes to the Financial Statements
For the Year Ended June 30,2002
Note 12. Nonmonetary Transactions (continued)
The Federal government provides food stamps to lowincome households. The amount of food stamps a household receives depends on the household's size and financial 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 $593,187,975.
Note 13. Contingencies
A. Grants and Contracts
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.
B. Litigation
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 financial condition of the State, with the following exceptions:
Primary Government A civil suit was filed against the Department of Education and the Office ofTreasury and Fiscal Services to compel the Defendants to change the calculation and distribution of school transportation funding to the DeKalb County School District. The Plaintiffs allege that the State Board of Education's attendance zone/routing survey system of calculating State fmancial aid is contrary to the applicable statute and violates a State Board of Education policy directing supplemental flat grants for children attending schools other than that of their geographic assignment pursuant to M-to-M or magnet school programs. Plantiffs were seeking an entitlement of $63,000,000. Previous similar federal litigation was resolved in favor of the State. On September 17, 2002, the Superior Court of Fulton County entered an order concluding that the state board zonal routing system of calculating state financial aid is violative of the applicable statute and has ordered payment of$104,550,528 to DeKalb County. The State appealed the trial court's decision to the Georgia Supreme Court. On

June 9, 2002, the Georgia Supreme Court ruled in favor of the defendants, but the time for filing motion for re-hearing has not expired.
A suit has been filed against the Georgia State Financing and Investment Commission involving a third-party action by the construction manager for the Georgia World Congress Center phase IV expansion project for indemnity from the caissons and pilings subcontractor's claim based upon differing site conditions. The presently-asserted claim is for approximately $2,500,000, but similar yet-unasserted claims may bring the total for claims and proposed change orders to approximately $19,000,000. The parties are currently in negotiation, and the Georgia State Financing and Investment Commission expects to settle all claims.
A company engaged in general construction and construction management services has filed a claim arising out of the design and construction of the Columbus Performing Arts Center. The plaintiff is suing the Georgia State Financing and Investment Commission, the Project architect, and the Project structural engineer, asserting various claims for negligence and breach of contract. The plaintiff asks for relief of $8,925,521, plus costs and attorneys' fees. The Georgia State Financing and Investment Commission is reviewing the complaint.
C. Guaranteed Loans
Component Units 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 State's rate of annual losses (defaults) exceeded five percent (5%). In the event of future adverse loss experience, the State could be liable for up to (1) 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.
Note 14. Subsequent Events
Primary Government
General Obligation Bonds Issued The State issued General Obligation Bonds in the amount of $295,955,000 on August 1,2002 (Series 2002e and 2002 D); and in the amount of $240,670,000 on November 1, 2002 (Series 2002E and 2002F).
Proceeds from these bonds will be used for the purpose of financing various capital outlay projects.

81

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 15. Retirement Systems
Georgia Defined Contribution Plan
Plan Description The Georgia Defined Contribution Plan ("GDCP") is a single-employer, defined contribution plan established by the Georgia General Assembly in July 1992 for the purpose ofproviding retirement allowances for State employees who are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System (ERS) Board of Trustees. ERS issues a publicly available financial report that includes the financial statements and disclosures applicable to GDCP. The report may be obtained at the ERS offices.
Membership As of June 30, 2002, participation in GDCP was as follows:

Active plan members Terminated employees entitled to benefits
but not yet receiving benefits
Total
Employers

32,540 70,225 102,765
310

Summary of Significant Accounting Policies The financial statements of GDCP are prepared on the accrual basis of accounting. Contributions from the members are recognized in the period in which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.

District Attorneys' Retirement Fund
Plan Description The District Attorneys' Retirement Fund ("DARF") is a single-employer, defined benefit pension plan established by the Georgia General Assembly in 1949 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 1, 1995. ERS issues a publicly available financial report that includes the financial statements and disclosures applicable to DARF. The report may be obtained at the ERS offices.
Benefits Persons appointed as district attorney emeritus shall receive an annual benefit of $15,000 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.
Summary of Significant Accounting Policies The financial statements of DARF are prepared on the accrual basis of accounting. Contributions from the employer and members are recognized in the period in which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
Funding Policy Member contributions were five percent (5.0%) of their annual 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.
Employees' Retirement System of Georgia
Plan Description Employees' Retirement System of Georgia ("ERS") is a single-employer, 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. ERS issues a publicly available financial report that includes the applicable fmancial statements and required supplementary information. The report may be obtained at the ERS offices.

A-82

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 15. Retirement Systems (continued)
On November 20, 1997, the Board created the Supplemental Retirement Benefit Plan ("SRBP") of ERS. SRBP was established as a qualified governmental excess benefit plan in accordance with Section 415 of the Internal Revenue Code ("IRC") as a portion of ERS. The purpose of the SRBP is to provide retirement benefits to employees covered by ERS whose benefits are otherwise limited by IRC Section 415. Beginning January 1,1998, all members and retired former members in ERS are eligible to participate in the SRBP whenever their benefits under ERS exceed the limitation on benefits imposed by IRC Section 415.
Benefits The benefit structure of ERS 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 provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provlslOns.
Under both the old and new plans, a member may retire and receive normal retirement benefits after completion of ten (10) years of creditable service and attainment of age sixtyfive (65). Additionally, there are certain provisions allowing for retirement after twenty-five (25) years of creditable service regardless of age.
Retirement benefits paid to members are based upon the monthly average of the member's highest twenty-four (24) consecutive calendar months multiplied by the number of years of creditable service multiplied by the applicable benefit factor. Post-retirement cost-of-living 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.
Summary of Significant Accounting Policies The fmancial statements ofERS are prepared on the accrual basis of accounting. Contributions from the employer and members are recognized in the period in which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the

terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales pnce.
Funding Policy Member contributions under the old plan are four percent (4.0%) of annual compensation up to $4,200 plus six percent (6.0%) of annual compensation in excess of$4,200. Under the old plan, the State pays member contributions in excess of one and one-fourth percent (1.25%) of annual compensation. Under the old plan, these State contributions are included in the members' accounts for refund purposes and are used in the computation of the members' earnable compensation for the purpose of computing retirement benefits. Member contributions under the new plan are one and one-fourth 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.
Annual Pension Cost The required contribution for 2002 was determined as part of the June 30, 200 I, actuarial valuation using the entry age actuarial cost method. The actuarial assumptions included (a) seven percent (7%) investment rate of return, (b) projected salary increases due to inflation of three and onehalf percent (3.5%) per year, and (c) projected salary increases due to seniority/merit raises offive and two-tenths percent (5.2%) to nine percent (9.0%) per year. The actuarial value of assets was determined using techniques that smooth the effects ofshort-term volatility in the market value of investments over a five-year period. ERS' actuarial funding excess is being amortized as a level percentage of projected payroll on an open basis. The employer contributions are projected to liquidate the actuarial accrued funding excess within forty (40) years based upon the actuarial valuation at June 30, 2001.
Three-Year Trend Information for ERS (in thousands):

Fiscal Year Ended
June 30 1999 2000 2001

Annual Pension Cost (APC) 304,461 302,332 315,505

Percentage ofAPC
Contributed 100% 100% 100%

Net Pension Obligation
0 0 0

A-83

Notes to the FinanciaL Statements For the Year Ended June 30,2002
Note 15. Retirement Systems (continued)
Georgia Judicial Retirement System
Plan Description The Georgia Judicial Retirement System ("GJRS") is a system created to serve the members and beneficiaries ofthe Trial Judges and Solicitors Retirement Fund, the Superior Court Judges Retirement System and the District Attorneys' Retirement System (collectively the "Predecessor Retirement Systems"). As ofJune 30,1998, any person who was an active, inactive or retired member or beneficiary of the Predecessor Retirement Systems was transferred to GJRS in the same status effective July 1,1998. All assets of the Predecessor Retirement Systems were transferred to GJRS as of July 1,1998.
GJRS is a multiple-employer cost-sharing defined benefit pension plan established by the Georgia General Assembly for the purpose of providing retirement allowances for trial judges and solicitors of certain courts in Georgia, and their survivors and other beneficiaries, superior court judges of the State of Georgia, and district attorneys of the State of Georgia. GJRS is administered by the ERS Board of Trustees and three (3) other trustees not on the ERS Board. ERS issues a publicly available financial report that includes the fmancial statements and required supplementary information applicable to GJRS. The report may be obtained at the ERS offices.
Benefits The normal retirement for GJRS is age sixty (60) with sixteen (16) years of creditable service; however, a member may retire at age sixty (60) with a minimum often (10) years of creditable service.
Retirement benefits paid to members are computed as sixtysix and two-thirds percent (66 2/3%) of annual salary plus one percent (I %) for each year of credited service over sixteen (16) years, not to exceed twenty-four (24) years. Early retirement benefits paid to members are computed as the pro rata portion of the normal retirement benefit, based on service not to exceed sixteen (16) years. Death, disability, and spousal benefits are also available.
Summary of Significant Accounting Policies The fmancial statements of GJRS are prepared on the accrual basis of accounting. Contributions from the employer and members are recognized in the period in

which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
Funding Policy Members are required to contribute seven and one-half percent (7.5%) oftheir annual 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 GJRS Board ofTrustees. The State's contributions to GJRS for the years ending June 30, 2002, and 2001 were (in thousands) $1,576 and $1,113, respectively, and were equal to the required contributions for each year.
Legislative Retirement System
Plan Description
Organization and Purpose Legislative Retirement System ("LRS") is a singleemployer, defined 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 ofTrustees. ERS issues a publicly available financial report that includes the applicable fmancial statements and required supplementary information. The report may be obtained at the ERS offices.
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 (4 legislative 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 rt:duced by five percent (5.0%) for each year the member is under age sixty-two (62).
Upon retirement, the member will receive a monthly service retirement allowance of $32 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.

A-84

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 15. Retirement Systems (continued)
Summary of Significant Accounting Policies The fmancial statements ofLRS are prepared on the accrual basis of accounting. Contributions from the employer and members are recognized in the period in which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
Funding Policy Member contributions are eight and one-halfpercent (8.5%) of annual salary. The State pays member contributions in excess of four and three-fourths percent (4.75%) of annual compensation. Employer contributions are actuarially determined and approved and certified by the Board.
Annual Pension Cost The required contribution for 2002 was determined as part of the June 30, 2001, actuarial valuation using the unit credit actuarial cost method. The actuarial assumptions included (a) seven percent (7%) investment rate of return, and (b) three percent (3%) annual post-retirement cost-of-living adjustment. The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value ofinvestments over a five-year period. LRS' actuarial funding excess is being amortized using the level dollar method on an open basis.
Three-Year Trend Information for LRS (in thousands)

Fiscal Year Ended
June 30 1999 2000 2001

Annual Pension Cost (APC)
84 22

Percentage ofAPC
Contributed 108% 436% N/A

Net Pension Obligation
0 0 0

Superior Court Judges Retirement Fund
Plan Description 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. ERS issues a publicly available fmancial report that includes the financial statements and disclosures applicable to SCJRF. The report may be obtained at the ERS offices.
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.
Summary of Significant Accounting Policies The fmancial statements of SCJRF are prepared on the accrual basis of accounting. Contributions from the employer and members are recognized in the period in which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price.
Funding Policy Member contributions are five percent (5.0%) oftheir salary plus an additional two and one-half percent (2.5%) for the spousal coverage benefit ifelected. The State pays member contributions offive percent (5.0%) of the member's annual salary. Additional employer contributions are not actuarially determined but are provided on an as-needed basis to fund current benefits.

A-85

Notes to the Financial Statements
For the Year Ended June 30, 2002
Note 15. Retirement Systems (continued)
Regents Retirement Plan
Plan Description The Regents Retirement Plan, a single-employer defined contribution plan, is an optional retirement plan established and administered by the Board of Regents of the University System of Georgia (Higher Education Fund), under which it may purchase annuity contracts for the purpose ofproviding 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.
Funding Policy Member contributions are five percent (5.0%) of the earnable compensation, as established by the Board of Trustees of the Teachers' Retirement System. Employer contributions are 9.62% of the participating employee's earnable compensation. Employer contributions are established by statute and may be amended only by the General Assembly of the State of Georgia. Amounts attributable to all plan contributions are fully vested and non-forfeitable. In 2002, employer and employee contributions were (in thousands) $47,063 and $24,357, respectively.
Teachers' Retirement System of Georgia
Plan Description 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 of Trustees comprised of active and retired members and ex-officio State employees is ultimately responsible for the administration ofTRS. TRS issues a publicly available fmancial report that includes the applicable financial statements and required supplementary information. The report may be obtained at the TRS offices.
On October 25, 1996, the Board created the Supplemental Retirement Benefit Plan ofthe Georgia Teachers ("SRBP"). SRBP was established as a qualified governmental excess

benefit plan in accordance with Section 415 of the Internal Revenue Code ("IRC") as a portion ofTRS. The purpose of the SRBP is to provide retirement benefits to employees covered by TRS whose benefits are otherwise limited by IRC Section 415. Beginning July 1, 1997, all members and retired former members in TRS are eligible to participate in the SRBP whenever their benefits under TRS exceed the IRC Section 415 imposed limitation on benefits.
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 (2.0%) of the average of the member's two (2) highest paid consecutive 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 (1/12) of seven percent (7.0%) for each month the member is below age sixty (60), or by seven percent (7.0%) 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 montWy for life. Death, disability and spousal benefits are also available.
Summary of Significant Accounting Policies The financial statements ofTRS are prepared on the accrual basis of accounting. Contributions from the employers and members are recognized in the period in which the members provide services. Benefit and refund payments are recognized when due and payable in accordance with the terms of the plan. Investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales pnce.
Funding Policy TRS is funded by member and employer contributions as adopted and amended by the Board of Trustees. Member contributions are five percent (5%) of annual salary, and employer contributions are 9.24%, as required by the annual actuarial valuation. The State's contributions to TRS for the years ending June 30, 2002 and 2001 were (in thousands) $119,391 and $145,705, respectively, and were equal to the required contributions for each year.

A-86

Notes to the Financial Statements
For the Year Ended June 30. 2002
Note 16. Posternployment Benefits
In addition to the pension benefits described in Note 16, 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, 2002, there were 63,263 employees who had retired and were receiving postretirement health care benefits through the State Health Benefit Plan. For the fiscal year ended June 30, 2002, the State recognized expenditures of $197,736,814, which was net of retiree contributions of $104,054,697.
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 of the 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, 2002, the University System recognized expenditures of $32,535,828, which was net of participant contributions of$12,164,027.
Note 17. Deficit Fund Balance/Net Assets
The following organizations had deficit balances at June 30, 2002.
Primary Government
Internal Service Funds
Workers' Compensation Fund - At June 30, 2002, the Fund had an unrestricted net assets deficit of $29,403,450.
Component Units
Superior Court Clerks' Cooperative Authority - At June 30, 2002, the Authority had an unrestricted net assets deficit of$28l,736.

A-87

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REQUIRED SuPPLElvfENTARY INFOR1vfATION

(This page intentionally left blank)
--_ _-_.- _ - - ----_.__

Required Supplementary Information For the Fiscal Year Ended June 30, 2002

Employees' Retirement System of Georgia

Schedule ofFunding Progress
(dollars in thousands)

Actuarial Valuation
Date
6/30/99 6/30/00 6/30/01

Actuarial Value of Plan Assets
(a)

$

9,848,723

10.999.901

11,750,624

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

$

9,695,614

10,573,408

11,557,255

Unfunded AAL/(Funding
Excess) (b-a)

$

(153, I09)

(426,493)

(193,369)

Funded Ratio (alb)

Annual Covered Payroll
(c)

101.6% $ 104.0% 101.7%

2,152,072 2,304,289 2,397,169

Unfunded AAL/(Funding
Excess) as a Percentage of Covered Payroll
I(b-a)/cl
(7.1%) (18.5%)
(8.1%)

A-91

Required Supplementary Information Budgetary Comparison Schedule Budget Fund For the Fiscal Year Ended June 30, 2002

Funds Available (inflows)
Revenues: State Appropriation Regular Lottery Proceeds Tobacco Settlement Funds Federal Revenues Other Revenues Retained
Total Revenues
Carry-Over from Prior Year: Transfer from Fund Balance

Budgeted Amounts

Original

Final

Actual Amounts

Variance Positive (Negative)

$

14,755,609.988 $

550,000,000

149,000,025

5,889,708,413

4.653,713,307

$

25,998,031,733 $

15,000,602,752 $ 703,080,431 172,645,061
8,872,997.131 7,487,205,264
32,236,530,638 $

14,995,434,403 $ 703.080,431 172,645,061
7,826,114,439 6,474,680,931
30,171,955,265 $

(5,168,349)
o o
(1,046,882,692) (1,012,524,332)
(2,064,575,373)

2,376,323,708

1,241,820,781

(1,134,502,927)

Total Funds Available

$

25,998,031.733 $

34.612,854,347 $

31,413,776.046 $ _ _(:....3:....,1.:..99,--,.:..07_8.:..,3_0-,-0)

Expenditures (outflows)

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

Community Affairs, Department of

Community Health, Department of

Corrections, Department of

Defense, Department of

Education, Department of

Employees' Retirement System -

Administrative Expense Fund

Financing and Investment Commission, Georgia State

Forestry Commission

General Assembly

General Obligation Debt Sinking Fund

Governor, Office of the

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

Juvenile Justice, Department of

Labor, Department of

Law, Department of

Motor Vehicle Safety, Department of

Natural Resources, Department of

Pardons and Paroles, State Board of

Personnel Board, State - Merit System of

Personnel Administration

Public Safety, Department of

Public School Employees' Retirement System

Public Service Commission

Public Telecommunications Commission

Regents of the University System of Georgia, Board of

288,935,872 $ 6,881,794 55,494,347 \'856,837
30,832,595 11,547,248 43,849,826 163,926,550 5,948.622,226 967.018,287 33,498,322 6,736,374,937
6,749,343 0
44,622,176 35,789,123 575,708,563 52,601,167
0 2,732,681,007
64,103,337 18,161,809 98,280,628 139,232,474 298,305,079 354,059,794 37,454,547
0 188,511,722 52,691,248
13,474,982 144,550,338
13,499,104 13,469,232 37.218,516 3,751,359,414

76,188,000 $ 7,019,301 64,360,272 1,964,720 29,616,070 11,045,266 55,431,681 236,088,809 8,943,915,847 1,051,309,554 38,025,766 7,128,619,386
10,445,256 0
47,462,091 38,031,989 739,869,163 94,308,796
0 3,113,006,409
63,175,936 17,811,703 151,437,246 145,462,121 331,244,637 436,065,627 45,632,839 110,730,679 296,725,768 51,543,432
17.483,070 137,358,722 12,238,226
8,958,930 40,429,654 4,356,033,084

71,590,814 $ 6,948,788 64,192,038 1,534,549 28,835,258 10,870,940 47,864,260 221,976,972 8,106,971,126 968,064.108 36,652,251 7,019,165,018
9,479,408 28,617,127 47,283,758 30,544,260 739,869,163 70,639,128
0 2,941,176,392
62,523,541 16,514,477 142,602,874 144,464,795 306,659,018 379,957,866 45,320,250 106,993,439 287,495,951 51,448,774
15,279,516 126,819,614
12,238,226 8,616,680 32,953,096 3,658,254,588

4,597,186 70,513 168.234
430,171 780,812 174.326 7,567,421 14,111,837 836,944,721 83,245,446 1,373,515 109,454,368
965,848 (28,617,127)
178,333 7,487,729
0 23,669,668
0 171,830,017
652,395 1,297,226 8,834,372
997,325 24,585,619 56,107,761
312,589 3,737,240 9,229,817
94,658
2,203,554 10,539,108
0 342,250 7,476,558 697,778,496

A-92

Required Supplementary Information Budgetary Comparison Schedule Budget Fund For the Fiscal Year Ended June 30, 2002

Budgeted Amounts

Original

Final

Actual Amounts

Variance Positive (Negative)

Revenue. Department of School Readiness. Office of Secretary of State Soil and Water Conservation Commission Student Finance Commission Teachers' Retirement System - Expense Fund Technical and Adult Education, Department of Technology Authority Transportation. Department of Veterans Service. Department of Workers' Compensation, State Board of

$

366.878.758 $

386,660,995 $

362.294.474 $

24,366,521

373.481.513

372.848.034

317,516.256

55,331.778

35.111.406

42,321.423

38.931.417

3,390,006

4.097.104

4,466,026

4.456,843

9,183

305.916.757

406,401.783

402.046,757

4,355,026

14.508.437

25.612.722

22.521.539

3,091,183

353.004,339

473,694,761

435,526.533

38,168,228

0

244,645.694

225.221,343

19,424,351

1.537.772.665

4,700,924.493

2.035,308,430

2,665,616,063

33,149,393

33,743,677

33, I05,942

637.735

12,748,917

12,494,689

12,482,772

11.917

Total Expenditures Excess of Funds Available over Expenditures

$

25,998,031,733 $

34,612,854,347 $

29,739,830,367 $

4,--,8_73--,-,0_2_3,--,9_80_

$

1.673,945,679 $ ==~1~,6::,:73~,9~4=5~,6=79~

A-93

Required Supplementary Information Budgetary Comparison Schedule Budget-To-GAAP Reconciliation For the Fiscal Year Ended June 30, 2002
Sources/Inflows of Resources Actual amounts (budgetary basis) "Total Funds Available"
from the budgetary comparison schedule
Differences - budget to GAAP: Revenues of nonbudgeted funds included within the State's reporting entity, and shown in General Fund for financial reporting purposes. Revenues of budgeted funds included in the Budget Fund, but removed from the General Fund for financial reporting purposes. Budgeted Carry-Over Funds from Prior Year Fund Balances shown as Funds Available in Budget Fund, but removed for fmancial reporting purposes. Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes. Receivables and revenues accrued based on encumbrances reported for supplies and equipment ordered but not received are reported in the year the order is placed for budgetary purposes, but in the year the supplies are received for GAAP reporting Accrual of taxpayer assessed receivables and revenues Proceeds from the sale of land and equipment are budgetary resources but are recorded as other fmancing sources under GAAP. State appropriation revenues are budgetary resources,but are netted with the State's treasury disbursements for GAAP purposes Budget Fund reserves federal financial assistance, but these funds are not earned at year end, and are shown as deferred revenue for GAAP purposes Intrafund revenues are budgetary revenues, but are not revenue for GAAP reporting purposes Fund balance adjustments are a budgetary resource, but are not current year revenues for GAAP reporting purposes. Change in revenue accrual for nonbudgetary medicaid claims Change in revenue accrual for nonbudgetary food stamp program Change in revenue accrual for nonbudgetary upper payment limit Change in pooled investments to show at fair value Other net accrued receivables and revenues
Total revenues as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds

General Fund
$ 31,413,776,046
15,105,711,916
(4,044,917,427) (1,241,820,781 )
( 193,268,399)
(445,889,138) (184,651,691)
(3,965,808) (15,871,159,895)
(46,306,640) (422,806,982)
(79,768,113) 79,354,539 593,187,975 63,160,672
(181,858) (118,182)
$ 24,720,336,234

A-94

Required Supplementary Information Budgetary Comparison Schedule Budget-To-GAAP Reconciliation For the Fiscal Year Ended June 30, 2002
Uses/Outflows of Resources
Actual amounts (budgetary basis) "Total Expenditures" from the budgetary comparison schedule
Differences - budget to GAAP: Expenditures of Nonbudgeted Funds included within the State's reporting entity, and shown in General Fund for financial reporting purposes. Expenses of Budgeted Funds included in the Budget Fund, but removed from the General Fund for fmancial reporting purposes. Transfers to other funds are outflows of budgetary resources but are not expenditures for GAAP reporting purposes. Encumbrances for supplies and equipment ordered but not received are reported in the year the order is placed for budgetary purposes, but in the year the supplies and equipment are received for GAAP reporting. Intrafund expenditures are budgetary expenditures, but are not expenditures for GAAP reporting purposes Fund balance adjustments are a budgetary resource, but are not current year expenses for GAAP reporting purposes. Change in expenditure accrual for nonbudgetary medicaid claims Change in expenditure accrual for nonbudgetary food stamp program Change in expenditure accrual for nonbudgetary teacher salaries Change in expenditure accrual for nonbudgetary upper payment limit Capital lease acquisitions are not outflows of budgetary resources, but are recorded as current expenditures and other fmancing sources for GAAP reporting Other net accrued liabilities and expenditures
Total Expenditures as reported on the Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds

General Fund
$ 29,739,830,367
47,189,573
(6,060,222,931 ) (750,702,672)
(141,965,338) (422,806,982)
(225,713,893) 140,474,125 593,187,975 (140,738,724) 83,721,253
2,354,002 67,412,316
$ 22,932,019,071

A-95

Notes to Required Supplementary Information For the Fiscal Year Ended June 30, 2002

Budgetary Process 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 1 of each year, the head of each executive branch budget unit must submit estimates of the fmancia1 requirements for the subsequent fiscal year to the Office ofPlanning 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 ofPlanning and Budget for the purpose of estimating the total financial 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 ofGeorgia, 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 of the 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 unit, other than those of the legislative 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 debt service fund and capital projects funds, which are not subject to appropriation. The budget does include certain proprietary funds, the higher education funds, and the administrative costs of operating various public employee retirement systems.
Budgetary Presentation The accompanying budgetary comparison schedule for the Budget Fund presents comparisons of the legally adopted budget with actual data prepared on the budgetary basis of accounting utilized by the State. The Budget Fund, a compilation of the budget units of the State, differs from the funds presented in the basic financial statements. The Budget-to-GAAP reconciliation immediately following the budgetary comparison schedule identifies the necessary adjustments to convert the Budget Fund into governmental funds, proprietary funds, and fiduciary funds, as required by generally accepted accounting principles (GAAP).
For the year ended June 30, 2002, no budget units had expenditures in excess of appropriations plus carry-over of prior year funds.

A-96

RlSSELL \V. HI,<TON
STATE AUDITOR 14041656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S\\'. Suite 2i4 At Ianta. Georgia :W:rQ-X400

REPORT ON COMPLIANCE AND ON INTERNAL CONTROL OVER FINANCIAL REPORTING BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

The Honorable Sonny Perdue Governor of Georgia
and Members of the General Assembly of the State of Georgia

We have audited the fmancial statements of the State of Georgia as of and for the year ended June 30, 2002, and have issued our report thereon dated June 4, 2003, except for Note 13b, paragraph 2, which is as of June 9, 2003. This report was qualified for various departures from accounting principles generally accepted in the United States of America.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. The financial statements of the Employees' Retirement System of Georgia, Georgia General Assembly, Georgia Lottery Corporation, Georgia Ports Authority, 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 fmancial statements of certain organizations and they reflect the following percentages of total assets and revenues or additions of the indicated opinion units:

Opinion Unit Governmental Activities Business-Type Activities Aggregate Discretely Presented Component Units General Fund Georgia State Financing and Investment Commission State Employees' Health Benefit Plan Higher Education Georgia Technology Authority Unemployment Compensation Fund Aggregate Remaining Fund Information

Percent of Opinion Unit's Total Assets
15%
10%
70% 10%
100% 100%
---
-----
87%

Percent of Opinion Unit's Total Revenues/Additions
1% 34% 88% 21% 100% 100%
---
-----
14%

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 fmancial statements are free of material misstatement, we and other auditors perfonned 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 of financial 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 no instances of noncompliance that are required to be reported under Government Auditing Standards.
Internal Control Over Financial Reporting In planning and performing our audit, we and other auditors considered the State of Georgia's i..T1ternal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the fmancial statements and not to provide assurance on the internal control over financial reporting. However, we noted certain matters involving the internal control over financial 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 of the internal control over financial reporting that, in our judgment, could adversely affect the State of Georgia's ability to record, process, summarize and report financial data consistent with the assertions of management in the fmancial statements. The following reportable conditions are described in the Financial Statement sections of the accompanying schedule of Findings and Questioned Costs.
(1) Accounting Controls (Overall) Inadequate General Controls FS-472-02-02 - Board of Regents ofthe University System ofGeorgia Inadequate Controls Over Cruise Card Infonnation (Georgia 400 Project) FS-927-02-01 - State Road and Tollway Authority
(2) Budget PreparationlExecution Overexpenditure of Budget Unit Object Class FS-472-02-04 - Board ofRegents ofthe University System of Georgia FS-472-02-05 - Board of Regents ofthe University System of Georgia FS-472-02-06 - Board ofRegents ofthe University System ofGeorgia
(3) Cash and Cash Equivalents Various Inadequate Accounting Procedures FS-440-02-02 - Department of Labor FS-440-02-03 - Department ofLabor FS-521-02-02 - Albany State University FS-528-02-03 - Clayton College and State University FS-548-02-01 - Savannah State University FS-823-02-01 - Atlanta Technical College FS-830-02-01 - DeKalb Technical College
B-4
- - - _...._---_ ...

(4) Inventories FS-521-02-02 - Albany State University FS-823-02-01 - Atlanta Technical College FS-830-02-01 - DeKalb Technical College
(5) RevcnuelReceivableslReceipts Deficiencies in the State Revenue Coilections Fund (Overall) FS-474-02-01 - Department of Revenue Deficiencies in the Income Tax Division Subsidiary Records FS-474-02-02 - Department of Revenue Deficiencies in the Collection and Recording of Cash Tolls FS-927-02-02 - State Road and Tollway Authority Inadequate Accounting Procedures FS-440-02-05 - Department of Labor FS-440-02-06 - Department of Labor FS-521-02-02 - Albany State University FS-548-02-01 - Savannah State University FS-823-02-01 - Atlanta Technical College FS-927-02-03 - State Road and Tollway Authority
(6) ExpenditureslLiabilitieslDisbursements Improper Contracting Practices FS-414-02-02 - Department of Education Inadequacies in Information System FS-414-02-04 - Department of Education Inadequate Accounting Procedures FS-467-02-01 - Department of Corrections FS-521-02-02 - Albany State University FS-548-02-01 - Savannah State University FS-823-02-01 - Atlanta Technical College FS-927-02-04 - State Road and Tollway Authority FS-980-02-01 - Georgia Technology Authority
(7) Employee Compensation Inadequacies in Maintenance of Attendance and Leave Records FS-427-02-03 - Department ofHuman Resources Inadequate Accounting Procedures FS-440-02-07 - Department of Labor
(8) General Ledger Inadequate Accounting Procedures FS-427-02-02 - Department of Human Resources FS-440-02-01 - Department of Labor FS-440-02-04 - Department of Labor FS-440-02-05 - Department of Labor FS-440-02-06 - Department of Labor FS-440-02-07 - Department of Labor FS-528-02-03 - Clayton College and State University FS-548-02-01 - Savannah State University FS-830-02-01 - DeKalb Technical College FS-918-02-01 - Higher Education Assistance Corporation
B-5

(8) General Ledger (continued) Ending Balances in Balance Sheet Clearing Accounts FS-440-02-08 - Department of Labor Inadequacies in Control Over Manual Journal Entries FS-466-02-01 - Department of Public Safety Inadequacies in Control Over Subsidiary Ledgers FS-472-02-03 - Board of Regents ofthe University System of Georgia Failure to Comply With Board of Regents' Requirements FS-533-02-06 - Fort Valley State University
(9) Capital Assets Inadequacies in Operation of Property Management System

FS-403-02-01 FS-414-02-05 FS-427-02-04 FS-440-02-03 FS-440-02-09 FS-466-02-04 FS-503-02-01

FS-512-02-06 FS-521-02-06 FS-524-02-04 FS-528-02-03 FS-530-02-01 FS-533-02-12 FS-548-02-01

FS-548-02-08 FS-554-02-04 FS-572-02-02 FS-573-02-04 FS-823-02-01 FS-830-02-01 FS-980-02-02

FS-8564-02-0 1 FS-8604-02-0 1 FS-8664-02-0 1 FS-8724-02-0 1 FS-8764-02-0 1

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 functions. Our consideration of the internal control over [mandaI 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.
(l) Cash and Cash Equivalents Various Inadequate Accounting Procedures FS-440-02-02 - Department of Labor
(2) RevenuelReceivableslReceipts Deficiencies in the State Revenue Collections Fund (Overall) FS-474-02-01 - Department of Revenue Deficiencies in the Income Tax Division Subsidiary Records FS-474-02-02 - Department of Revenue Inadequate Accounting Procedures FS-440-02-05 - Department of Labor FS-440-02-06 - Department ofLabor
(3) General Ledger Inadequate Accounting Procedures FS-427-02-02 - Department of Human Resources FS-440-02-04 - Department of Labor FS-440-02-06 - Department of Labor
B-6

(4) Capital Assets Inadequacies in Operation of Property Management System Various Organizations

FS-403-02-0 1 FS-414-02-05 FS-427-02-04 FS-440-02-03 FS-440-02-09 FS-466-02-04 FS-503-02-01

FS-512-02-06 FS-521-02-06 FS-524-02-04 FS-528-02-03 FS-530-02-01 FS-533-02-12 FS-548-02-01

FS-548-02-08 FS-554-02-04 FS-572-02-02 FS-573-02-04 FS-823-02-01 FS-830-02-0 1 FS-980-02-02

FS-8564-02-0 1 FS-8604-02-0 1 FS-8664-02-01 FS-8724-02-01 FS-8764-02-01

This report is intended solely for the information and use of management, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~
R seli W. Hinton, CPA, COFM State Auditor
June 4,2003

B-7

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---" ",--

ReSSELL W. HINTON
STATE AUDITOR (404',656-2 174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washingtoll Strect. S.\V.. SUltc 214 Atlanta, Gcorgia 30334-X400

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 Sonny Perdue 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-I33 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2002. The State of Georgia's major federal programs are identified in the summary of auditor's results section of the accompanying schedule ofFindings and Questioned Costs. Compliance with the requirements oflaws, 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 ofGeorgia's compliance based on our audit. We did not audit the following major federal programs or percentages of federal programs:

CFDA NO,

PROGRAM NAME

14,239 HOME Investment Partnerships Program

66.458 Capitalization Grants for State Revolving Funds

66.468 Capitalization Grants for Drinking Water State Revolving Fund

66.470 Hardship Grants Program for Rural Communiries

Medicaid Cluster

Student Financial Aid Cluster

Research and Development Cluster

% AUDITED BY OTHER AUDITORS
100% 100% 100% 100% 94% 79% 84%

MONETARY EXPENDITURES
$12.191.847 $21,750,506 $11,233.154
$69 1,I 09 $3,941,748,799
$50 1,I42.295 $349,704,438

NONMONETARY EXPENDITURES
$0 $294.233,327 $25,381.147
$0 $0 $1.472,036.920 $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 paragraph, we conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General ofthe United States; and OMB Circular A-133, Audits of States, 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.
Other auditors were unable to obtain sufficient documentation supporting compliance for the Research and Development Cluster at the Georgia Institute of Technology with requirements governing reporting that are applicable to contract nos. A-6100, A-5521, and A-5617 ofthe U.S. Department ofDefense as these contracts and certain matters pertaining to them are classified by the U. S. Department ofDefense, and other auditors did not have security clearance to perform certain procedures with respect to these contracts; nor were other auditors able to satisfy themselves as to the Georgia Institute of Technology's compliance with the aforementioned requirement with respect to these contracts by other auditing procedures.
As described in finding numbers FA-427-02-03, FA-427-02-04, FA-427-02-05, FA-427-02-06, and FA427-02-07 in the accompanying schedule ofFindings and Questioned Costs, the State ofGeorgia did not comply with requirements regarding Allowable Costs/Cost Principles, Eligibility, Matching/Level of Effort/Earmarking, and subrecipient monitoring that is applicable to the HIV Care Formula Grants. Compliance with such requirements is necessary, in our opinion, for the State ofGeorgia to comply with requirements applicable to this program.
In our opinion, based on our audit and the reports of other auditors, except for the effects ofthe 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, 2002. However, the results ofour 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 of the accompanying schedule of Findings and Questioned Costs.

- - - _..._ - -

C-4

_ _ ..

--_ '--'---' ---

- - _.._......_ - -

Activities Allowed or Unallowed FA-548-02-01
Allowable Costs/Cost Principles FA-414-02-02 FA-414-02-03 FA-414-02-04 FA-419-02-01 FA-548-02-02 FA-548-02-03
Cash Management F A -440-02 -01 FA-521-02-01 FA-486-02-01

Eligibility FA-427-02-01 FA-427-02-02 FA-509-02-01 FA-52 1-02-02 FA-533-02-01 FA-548-02-04
Equipment and Real Property Management FA-414-02-01 FA-548-02-05

Reporting FA-918-02-01 FA-503-02-01 FA-503-02-02 FA-518-02-01 FA-533-02-02 FA-533-02-03
Subrecipients Monitoring FA-414-02-05 FA-414-02-06 FA-469-02-01
Special Tests and Provisions FA-548-02-04

Internal Control Over Compliance The management of the State of Georgia is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, 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 of the organizations mentioned previously is based solely upon the reports of the other auditors.
In planning and performing our audit, 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.
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 of laws, regulations, contracts and grants. Reportable conditions are described in the Federal Awards section ofthe accompanying schedule of Findings and Questioned Costs.

C-5

Activities Allowed or Unallowed FA-548-02-0 1
Allowable Costs/Cost Principles FA-414-02-02 FA-414-02-03 FA-414-02-04 FA-427-02-06 FA-427-02-07 FA-548-02-02 FA-548-02-03
Cash Management FA-440-02-01 FA-521-02-01 FA-486-02-01

Eligibility FA-427-02-01 FA-427-02-02 FA-427-02-05 FA-509-02-0 1 FA-521-02-02 FA-533-02-01 FA-548-02-04
Equipment and Real Property Management FA-414-02-01 FA-548-02-05
Matching, Level of Effort, Earmarking FA-427-02-04

Reporting FA-918-02-01 FA-503-02-01 FA-503-02-02 FA-533-02-02 FA-533-02-03
Subrecipients Monitoring FA-427 -02-03
Special Tests and Provisions FA-548-02-04

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 of laws, 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 of the 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, of the reportable conditions described above, we consider finding numbers FA-427-02-03, FA-427-02-04, FA-427-02-05, FA-427-02-06, andFA-427-07 to be material weaknesses.
This report is intended solely for the information and use ofmanagement, federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~d~ ~.4::J~ ~l w. Hinton, CPA, CGFM State Auditor
June 4,2003

C-6

~UM'MARY OF AUDITOR'S RESULTS

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Georgia.
Summary of Auditor's Results For the fiscaL Year Ended June 30, 2002

Financial Statements

Type of auditor's report issued:

Qualified

Internal control over financial reporting:

Reportable Condition identified?

Yes

Reportable Conditions identified considered to

be material weaknesses?

Yes

Noncompliance material to financial statements noted?

No

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 .510(a)?

Yes

Identification of major programs:

CFDA Numbers
14.239 66.458 66.468 66.470
84.031 84.048 84.126 93.558
93.917 93.959

Name of Federal Program or Cluster Food Stamp Cluster HOME Investment Partnerships Program Capitalization Grants for States Revolving Funds Capitalization Grants for Drinking Water State Revolving Fund Hardship Grants Program for Rural Communities Student Financial Aid Cluster Higher Education - Institutional Aid Vocational Education - Basic Grants to States Rehabilitation Services - Vocational Rehabilitation Grants to States Temporary Assistance for Needy Families Child Care and Development Cluster Medicaid Cluster HIV Care Formula Grants Block Grants for Prevention and Treatment of Substance Abuse Disability Insurance/SSI Cluster Research and Development Cluster

Dollar threshold used to distinguish between Type A and Type B programs - $30,000,000.00

Auditee Qualified as low-risk auditee

No

D-5

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FINANCIAL 9rATE~ENTFINDINGS

(This page intentionally left blank)

Findings and Questioned Costs For the FiscaL Year Ended June 30,2002

FINANCIAL STATEMENT RELATED FINDINGS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

FINDING CONTROL NO.

ORGAJ.'lIZATIONAL UNIT

PAGE NO.

ACCOUNTING CONTROLS (OVERALL)

FS-472-02-02

Regents of the University System of Georgia, Board of..

,

FS-927-02-01

Road and Tollway Authority, State

BUDGET PREPARATION/EXECUTION

FS-472-02-04

Regents of the University System of Georgia, Board of..

FS-472-02-05

Regents of the University System of Georgia, Board of..

FS-472-02-06

Regents of the University System of Georgia, Board of..

CASH AND CASH EQUIVALENTS

FS-440-02-02

Labor, Department of.

FS-440-02-03

Labor, Department of...

Colleges and Universities

FS-52 1-02-02

Albany State University

FS-528-02-03

Clayton College and State University

FS-548-02-0 I

Savannah State University

Technical Colleges

FS-823-02-0 I

Atlanta Technical College

FS-830-02-0 I

DeKalb Technical College

INVENTORIES
FS-521-02-02
FS-823-02-0 I FS-830-02-0 I

Colleges and Universities Albany State University
Technical Colleges Atlanta Technical College DeKalb Technical College

REVENUES/RECEIVABLES/RECEIPTS

FS-440-02-05

Labor, Department of...

FS-440-02-06

Labor, Department of..

FS-474-02-01

Revenue, Department of

FS-474-02-02

Revenue, Department of

Colleges and Universities

FS-52 1-02-02

Albany State University

FS-548-02-0 I

Savannah State University

Technical Colleges

FS-823-02-0 1

Atlanta Technical College

FS-927-02-02

Road and Tollway Authority, State

FS-927-02-03

Road and Tollway Authority, State

EXPENDITURES/LIABILITIES/DISBURSEMENTS

FS-414-02-02

Education, Department of

FS-414-02-03

Education, Department of

FS-414-02-04

Education, Department of

FS-467-02-01

Corrections, Department of..

Colleges and Universities

FS-521-02-02

Albany State University

FS-548-02-0 1

Savannah State University

D-9

D-23 D-38
D-24 D-24 D-24
D-17 D-17
D-27 D-29 D-32
D-34 D-36
D-27
D-34 D-36
D-19 D-19 D-25 D-26
D-27 D-32
D-34 D-38 D-39
D-12 D-13 D-13 D-22
D-27 D-32

Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINANCIAL STATEMENT RELATED FINDINGS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

FINDING CONTROL NO.

ORGANIZATIONAL UNIT

PAGE NO.

FS-823-02-0 1 FS-927-02-04 FS-980-02-0 1

Technical Colleges Atlanta Technical College
Road and Tollway Authority, State Technology Authority, Georgia

EMPLOYEE COMPENSATION

FS-427-02-03

Human Resources, Department of

FS-440-02-07

Labor, Department of..

GENERAL LEDGER FS-427-02-02 FS-440-02-0 1 FS-440-02-04 FS-440-02-05 FS-440-02-06 FS-440-02-07 FS-440-02-08 FS-466-02-0 I FS-472-02-03
FS- 52 8-02-03 FS-533-02-06 FS- 548-02-01
FS-830-02-0 1 FS-918-02-0 1

Human Resources, Department of

Labor, Department of..

Labor, Department of..

Labor, Department of...

Labor, Department of...

Labor, Department of.

'"

Labor, Department of

Public Safety, Department of

Regents of the University System of Georgia, Board of..

Colleges and Universities

Clayton College and State University

Fort Valley State University

Savannah State University

Technical Colleges

DeKalb Technical College

Higher Education Assistance Corporation, Georgia

CAPITAL ASSETS FS-403-02-01 FS-414-02-05 FS-427-02-04 FS-440-02-03 FS-440-02-09 FS-466-02-04
FS-503-02-01 FS- 512-02-06 FS-521-02-06 FS-524-02-04 FS-528-02-03 FS-530-02-01 FS-533-02-12 FS-548-02-01 FS-548-02-08 FS- 554-02-04 FS-572-02-02 FS-573-02-04

Administrative Services, Department of.. Education, Department of Human Resources, Department of Labor, Department of Labor, Department of Public Safety, Department of Colleges and Universities
Georgia Institute of Technology Medical College of Georgia Albany State University Armstrong Atlantic State University Clayton College and State University Columbus State University Fort Valley State University Savannah State University Savannah State University State University of West Georgia East Georgia College Floyd College

D-34 D-39 D-40
D-16 D-20
D-15 D-17 D-18 D-19 D-19 D-20 D-20 D-21 D-23
D-29 D-31 D-32
D-36 D-37
D-12 D-15 D-16 D-17 D-21 D-21
D-26 D-27 D-28 D-29 D-29 D-31 D-31 D-32 D-33 D-33 D-33 D-34

D-I0

Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINANCIAL STATEMENT RELATED FINDINGS REQUIRED TO BE REPORTED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

FINDING CONTROL NO.

ORGANIZATIONAL UNIT

PAGE NO.

FS-823-02-0 I FS-830-02-0 I FS-980-02-02
FS-8564-02-0 I FS-8604-02-0 I FS-8664-02-0 I FS-8724-02-0 1 FS-8764-02-01

Technical Colleges Atlanta Technical College DeKalb Technical College
Technology Authority, Georgia Regional Educational Service Agencies
Metropolitan Regional Educational Service Agency West Georgia Regional Educational Service Agency Oconee Regional Educational Service Agency Chattahoochee-Flint Regional Educational Service Agency Heart of Georgia Regional Educational Service Agency

D-34 D-36 D-41
D-42 D-42 D-42 D-42 D-43

D-ll

Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
DEPARTMENT OF ADMINISTRATIVE SERVICES
Finding Control Number: FS-403-02-01 CAPITAL ASSETS Inadequacies in Operation of Property Management System
Our examination included a review of the internal accounting controls utilized by the Department of Administrative Services in maintaining their capital asset inventory and also included testing the system for compliance with State laws and regulations. The Department of Administrative Services did not perform a physical inventory of equipment items during the year under review. In addition, the Department of Administrative Services did not maintain adequate records linking additions and disposals of equipment items to the property management records for budget unit 401. As a result, we were unable to reconcile the beginning and ending balance of equipment inventory through an analysis of current year equipment additions and deletions.
In addition, forty-seven (47) equipment items were selected to test the accuracy of the Department's property management records. These items had a value of $898,428.29 out of a population of $3,680,605.36 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiency was noted:
Twenty-One (21) items totaling $553,703.40 could not be located.
Also, during physical inspection testing, three (3) 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 State laws and regulations. The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
Failure to maintain accurate equipment inventory records causes internal reports to management to be misleading and can result in erroneous decisions by management concerning current and future equipment needs.
The Department should establish the necessary internal controls and implement procedures to ensure that equipment inventories are maintained in accordance with State laws and regulations.
DEPARTMENT OF EDUCATION
Finding Control Number: FS-414-02-02 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Contracting Practices
Our examination included a review of the internal accounting controls utilized by the Georgia Department of Education (GDOE) in maintaining their system of awarding contracts. We found that the GDOE is engaged in the practice of authorizing the contractor to begin services prior to the contract being fully executed by the State Board of Education or the State School Superintendent. These contracts have been identified in detail within the Federal Awards Findings and Questioned Costs, finding number FA-414-02-03.
The GDOE failed to follow established procedures to ensure that a fully executed contract was on hand prior to the date that services were set to begin on certain contracts. Failure to have a fully executed contract on hand prior to the commencement of services could result in an unauthorized commitment or expenditure of State funds.
The GDOE should review established procedures for contract processing and either modify existing internal controls or establish additional controls to ensure that a fully executed contract is on hand prior to the commencement of services.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
Finding Control Number: FS-414-02-03 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Grant Approval Practice
During the December 14, 2000, State Board of Education meeting. a resolution was passed stating, "that all grants, regardless of monetary amounts, must come before the board for approval". In October 200 I, the Georgia Department of Education amended the Richmond County Board of Education's regular fiscal year 2002 Title I budget, without Board approval, in the amount of $1,1 0 I ,500.00 to fund a reading program for underachieving students. This action appears to be in violation of State Board of Education policy.
Finding Control Number: FS-414-02-04 E X P E N D ITURES/LIABILITIES/D ISB URSEMENTS Inadequacies in Information System Operations, Changes to Applications, Security and Audit Trail Maintenance
SCOPE Our examination included a review of the following information system applications of the Department of Education for control effectiveness:
I) Full-Time Equivalent Reporting System (FTE);
2) Certified Personnel Information System (CPI);
3) Quality Basic Education Application (QBE) and
4) Grants Accounting Online Reporting System (GAORS).
Also, for the year under review, the GAORS was identified as an audit significant application and was selected for application control testing in addition to the review for control effectiveness.
In addition, a final audit objective was to review and test the Department of Education's audit trail maintenance over selected information system operations.
QBE For the QBE application, our review of control effectiveness identified the following as known problems or limitations:
1) End users are unable to adequately access and run the application.
2) Only draft documentation of the application is available.
These issues were also identified and reported in an audit finding in the Single Audit Report for the State of Georgia for the fiscal year ended June 30, 2001. (See Finding Control Number: FS-414-01-01). The Department of Education is aware of these issues and has requested funding to develop additional software programs and an operator rnarmal in order to attempt to eliminate these deficiencies.
GAORS Our review of the control effectiveness and application control testing for the GAORS was designed to review and test the information system controls regarding (1) changes to the application, (2) system security and (3) system operation.
1) In relation to the information system control changes to the GAORS application, weaknesses were identified for the control objectives change requests, testing of program changes, transfer of changes to the live environment, as well as, documentation and training. The significant weaknesses identified for these control objectives were as follows:
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Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
a) No formal, documented control procedures for system changes were found to exist. Formal procedures for change requests are needed to ensure that the changes being made are consistent with those being requested. The lack of formal, structured and documented control procedures for system changes to the GAORS could result in proposed system changes not being fully implemented or not being implemented as designed.
The Department of Education should establish a formal policy which should be followed for all changes to be made to the GAORS application.
b) No evidence that testing of program changes occur as internal procedures call for. Testing of the program changes being made is essential to ensure the modifications perform all tasks as expected. Maintaining documentation of the testing process provides support for the testing.
The Department of Education should perform appropriate tests to ensure that changes to the GAORS application function as intended. Further, documentation regarding these tests should be maintained.
c) Access to the directory where project code is supposedly reviewed and tested is set to allow access by individuals other than project managers and database administrators as called for by procedures. The failure to set the appropriate permissions for the directory where project code is housed allows anyone with access the ability to change code after it has been written, tested and approved.
The Department of Education should review the permissions that have been established for directories housing project code and ensure that only appropriate personnel have access to these directories.
2) Our review of the GAORS, in relation to computer security, resulted in a serious matter being identified with regard to testing the database controls. Reports necessary to test database controls and database integrity were not provided to us after repeated requests. In addition, a listing of current GAORS users was unable to be obtained in order to allow for appropriate authorization determinations to be made. As a result, assertions regarding the security of the database administration, security of the application's data and verification that the database has appropriate integrity controls could not be made.
Our review of the maintenance of an audit trail identified that, other than an audit of successful and unsuccessful login attempts to the operating system, auditing was not conducted at the operating system, database or application levels. Evidence did not exist that indicated any auditing was performed by the database administrator. The GAORS records the last time each user accessed the application, however, records are not maintained of prior access to the application, nor are records maintained of user activity during their session.
An application's accountability is achieved through its ability to identify and determine the actions and behavior ofa single individual within a system. The audit trail mechanism is the manner by which automated systems collect, maintain and report this information.
The Department of Education should review system and application audit reporting capability and consider implementing procedures to audit user access to sensitive system directories. For GAORS, the Department of Education should maintain complete records of user access to this application and the records should be audited periodically.
All of the information system weaknesses identified are considered to be reportable conditions in internal control. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operations of the internal control over fmancial reporting that, in our judgment, could adversely affect the Department of Education's ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements.
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Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002
FINANCIAL STATEMENT FINDINGS
Finding Control Number: FS-414-02-0S CAPITAL ASSETS Inadequacies in Operation of Property Management System
Our examination included a review of the internal accounting controls utilized by the Department of Education in maintaining their capital asset inventory 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 Award Findings and Questioned Costs, finding control number FA-4l4-02-01.
The Department is required to maintain equipment inventories in accordance with provisions of State laws and regulations. The discrepancies identified were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
Failure to maintain accurate equipment inventory records causes internal reports to management to be misleading and can result in erroneous decisions by management concerning current and future equipment needs.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with State laws and regulations.
DEPARTMENT OF HUMAN RESOURCES
Finding Control Number: FS-427-02-02 GENERAL LEDGER Inadequate Accounting Procedures
Our examination included a review of the internal accounting controls and accounting procedures utilized by the Department of Human Resources in recording their Federal program activity. The following deficiencies were noted:
1) Federal grant awards were not recorded on the General Ledger in a timely manner. A review of 62 grant awards revealed that 34 grant awards were not recorded on the general ledger for at least 30 days after receipt of the grant. This review also disclosed that 20 of these 34 grant awards were not recorded on the general ledger for at least 60 days after receipt of the award.
2) A review of the general ledger for the Federal Programs at the program level revealed that many of these programs had negative accounts receivable balances, negative accounts payable balances and negative fund balances at June 30, 2002. Subsequent to the end of the fiscal year, Department of Human Resources personnel performed an analysis of the negative fund balances and provided an audit adjustment in November 2002 to correct these negative balances at the program level.
These deficiencies were a result of the Department's failure to record Federal grant awards and to monitor Federal program codes within the general ledger in a timely manner.
Failure to record Federal grant awards and to monitor Federal program codes within the general ledger in a timely manner could affect the proper recording of Federal program revenues and expenditures, which could result in financial statement misstatements.
The Department of Human Resources should review current policies and procedures to ensure they are adequate to provide for the timely recording of Federal grant awards. This review should also include the policies and procedures for the monitoring of Federal program codes within the general ledger in a timely manner to ensure that all federal revenues earned are recorded and that account balances within the Federal program codes are correctly stated.
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GaJrgia.
Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
Finding Control Number: FS-427-02-03 EMPLOYEE COMPENSATION Inadequacies in Maintenance of Attendance and Leave Records
As part of our examination, testing was conducted at certain regional and/or county Department of Family and Children Services (DFACS) offices. This testing included examination of payroll transactions.
According to the Department of Human Resources' (Department) Personnel Policy ManuaL the supervisor must approve any leave taken and attendance and leave records of employees are to receive careful attention and review. In addition, according to the DFACS Administrative Services Policy and Procedures Manual, employees are to turn in time records at the end of each designated work period.
Thirty payroll transactions were selected for testing at the Fulton County DFACS. The following deficiencies relating to these transactions were noted:
1) 14 employees' leave request forms were not approved by their supervisor.
2) 12 employees had incorrect leave balances at fiscal year-end.
3) Four (4) employees had missing time sheets for the year under review.
These deficiencies occurred as a result of prescribed internal controls not being followed.
Failure to properly report and approve leave requests can result in overpayments to employees of the Fulton County DFACS as well as misstatements within the financial statements.
The Department should ensure that the Fulton County DFACS adheres to the policies and procedures for attendance and leave records as prescribed within the Department's Personnel Policy Manual and the DFACS Administrative Services Policy and Procedures Manual.
Finding Control Number: FS-427-02-04 CAPITAL ASSETS Inadequacies in Operation of Property Management System
Our examination included a review of the internal accounting controls utilized by the Department of Human Resources in maintaining their property management system. This review also included testing the system for compliance with State laws and regulations. A deficiency was noted in that equipment additions were not reconciled to the general ledger expenditure accounts.
The Department is required to maintain equipment inventories in accordance with provisions of State laws and regulations. The deficiency identified was caused by the Department's failure to follow guidelines for maintaining equipment inventories.
Failure to maintain accurate equipment inventory records causes internal reports to management to be misleading and can result in erroneous decisions by management concerning current and future equipment needs.
The Department should establish the necessary internal controls to ensure that equipment additions are reconciled to the general ledger expenditure accounts.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
DEPARTMENT OF LABOR
Finding Control Number: FS-440-02-01 GENERAL LEDGER Inadequate Accounting Procedures
During the period under review, the accounting procedures of the Department of Labor were not sufficient to provide for adequate controls over the Department's general ledger. Current year activity for funds of the Department of Labor on deposit with the Office of Treasury and Fiscal Services Georgia Fund I were not recorded on the general ledger. The Department recorded the June 30, 200 I, balance in the general ledger, but failed to record current fiscal year activity and the year-end balance ($280,101.08 at June 30, 2002). All financial activity should be recorded on the general ledger to maintain appropriate accountability.
The Department should ensure that the general ledger is accurately maintained and monitored. In addition, the Department should establish the necessary internal controls to ensure that all deposits and bank accounts are maintained on the general ledger including all activity within each account.
Finding Control Number: FS-440-02-02 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
The accounting procedures for the Georgia Department of Labor were inadequate to provide for adequate internal control over the bank reconciliation process. The following deficiencies and inappropriate practices were found to exist:
I) Bank reconciliations for the payroll account and the accounts payable account were not prepared in a timely manner for fiscal year 2002. A review of bank reconciliations indicated excessive delays between the month end and reconciliation dates. In addition, all reconciliations for fiscal year 2002 had not been completed as of the conclusion of fieldwork. These deficiencies were caused by the Department's failure to adequately monitor the bank reconciliation process.
2) Bank reconciliations for the operating account and the benefit account contained several unidentified variances. It could not be determined if the variances were actually book or bank errors. The unidentified variances remain on the reconciliations due to the Department's failure to implement adequate internal controls to ensure that all reconciling items are identified and prompt action taken to correct the items. Administrative reviews should be performed and documented to ensure reconciliations are accurate and adjustments are made in a timely manner.
The Department should establish the necessary internal controls to ensure that the bank reconciliation process is being performed in a timely and complete manner.
Finding Control Number: FS-440-02-03 CASH AND CASH EQUIVALENTS CAPITAL ASSETS Protection of Assets
Our examination of the accounting records of the Department of Labor disclosed deficiencies in the management of cash and capital assets as follows:
1) Proceeds from the sale of a capital asset were not deposited in a timely manner. A check for $568,700.00 representing proceeds from the sale of the Athens Career Center dated April 30, 2002, was not deposited until September 18,2002. As a result, the Department was unable to accrue interest for the five months the check was not deposited and ending fund balance was understated.
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Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002

FINANCIAL STATEMENT FINDINGS

2) The Department failed to adjust the capital assets subsidiary ledger to account for the sale of the asset. This resulted in capital assets being overstated at fiscal year end.

The condition was caused by a lack of control and accountability over cash and capital assets.

The Department should ensure that all funds are deposited on a timely basis in order to ensure that the general ledger is accurately maintained. In addition, capital asset records should be updated for the disposal of assets.

Finding Control Number: FS-440-02-04 GENERAL LEDGER Inadequate Accounting Procedures (Overall)

During the period under review, the accounting procedures of the Department of Labor were not sufficient to provide for adequate controls over the Department's general ledger. The following deficiencies were noted:

1) Examination of the general ledger disclosed that the Department failed to provide for adequate fund and program accountability as follows:

a) All transactions related to the State appropriations allotment for the "B" budget unit were recorded on the "A" budget unit's general ledger.

b) The Department failed to provide for adequate program accountability within each budget unit for each

program. Numerous adjusting journal entries were necessary to reflect the overall financial status of the

Department as follows:

Per

Per

Book

Audit

Reserves Surplus

$ -145,730.01 $ -84,348,472.10

$ 3,487,410.64 $ 79,350.72

2) An examination of State appropriation allotment revenue and accounts receivable accounts recorded in the general ledger disclosed that the Department's procedures did not provide for a periodic reconciliation of State appropriation allotment activity to information provided by the Office of Treasury and Fiscal Services. This deficiency resulted in the appropriation allotment revenue and the accounts receivable accounts recorded in the general ledger being materially misstated.

3) Examination of accounts receivable and accounts payable balances recorded in the general ledger revealed that Department personnel did not routinely reconcile these balance sheet accounts to relevant subsidiary ledgers and did not periodically determine the validity of outstanding balances. These deficiencies resulted in the following:

a) Accounts receivable and accounts payable balances reflected in the general ledger were not supported by detail on relevant subsidiary ledgers.

b) Balances existing at the end of the prior fiscal year remained on the general ledger and/or the relevant subsidiary ledgers at fiscal year end.

The Department is required to maintain their general ledger in such a manner as to provide for individual fund accountability for each budget unit included in the annual Appropriations Act passed by the General Assembly of Georgia as well as to provide for separate program accountability within each budget unit. In addition, the accurate recording of State appropriation allotments and the balancing of subsidiary ledgers to the general ledger should be done on an ongoing basis.

As a result of these deficiencies, extensive procedures were required to determine ending balances of various State and D-18

Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
Federal programs as of June 30, 2002, for each budget unit and to reconcile the State appropriation allotment revenue and receivable balances to those reported by the Office of Treasury and Fiscal Services.
These deficiencies were caused by a lack of control and accountability over the general ledger.
The Department should ensure that the general ledger is reconciled with subsidiary ledgers as a routine matter with any variances noted and resolved in a timely manner. Additionally, the validity of accounts receivable and accounts payable remaining outstanding for extended periods of time should be determined and resolved on a regular basis in order for general ledger balances to include only earned revenues and valid obligations of the Department.
Finding Control Number: FS-440-02-0S REVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures
The Department of Labor acts as a lessor for property and parking lot space adjacent to the Department's main office building located in Atlanta, Georgia. The following deficiencies exist with regard to the Department's management controls over the lease agreement:
1) Two months were invoiced twice resulting in an overcharge to the lessee. A review of the remaining invoices to the lessee disclosed additional inaccurate billings.
2) The annual increase, effective January 2002, was not factored into the billings from that date and was not corrected until September 2002.
3) The Department could not provide auditors with a copy of the current lease agreement.
4) An examination of the Department's lessee accounts receivable recorded on the general ledger disclosed that the Department's procedures did not provide for a periodic reconciliation with subsidiary ledgers. This deficiency resulted in the lessee accounts receivable balance being misstated at fiscal year end.
The Department should ensure that reconciliations are performed and that variances are resolved in a timely manner. These reconciliations provide management with the necessary assurances that subsidiary ledgers accurately represent the financial activity and balances recorded in the general ledger.
Finding Control Number: FS-440-02-06 REVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures
During the period under review, accounting procedures of the Department of Labor were insufficient to provide adequate internal controls over the recognition of revenue within the general ledger as noted below:
1) The Department of Labor uses the FARS accounting system, which can be programmed to recognize revenue within the various programs (fund ledgers) based on expenditures recorded within a particular fund ledger. This feature is appropriate for recognizing revenue for reimbursement based funding sources such as Federal grants, but would not be appropriate in instances where funding does not depend entirely on the recording of expenditures. Our testing of the internal accounting controls and procedures utilized by the Department for the revenue recognition process disclosed that during fiscal year 2002, the Department utilized the above programming feature for revenue recognition for both reimbursement based funding sources and non-reimbursement based funding sources.
2) There were numerous manual journal entries posted to the general ledger to correct negative balances in accounts receivable. These negative balances represent amounts received on Federal fund ledgers in excess of current
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Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002
FINANCIAL STATEMENT FINDINGS
expenditures. The manual journal entries properly moved these balances to the deferred revenue account (Due to Grantor account). However, the prior year manual journal entries were not properly reversed at the opening of fiscal year 2002 nor were the amounts offset when fiscal year 2002 revenue was recognized.
As a result of these deficiencies, revenue as well as associated balance sheet accounts were materially misstated as of June 30,2002. Adjusting journal entries to correct certain of these misstatements have been provided by the Department.
These deficiencies occurred because of management's failure to establish procedures to analyze and reconcile balances recorded in the general ledger with detailed supporting records.
The Department should establish appropriate procedures to ensure the general ledger is posted, balanced and reviewed on a monthly basis and that detailed records supporting the general ledger are complete, accurate and reliable.
Finding Control Number: FS-440-02-07 EMPLOYEE COMPENSAnON Inadequate Accounting Procedures
During the period under review, the accounting procedures of the Department of Labor were not sufficient to provide for adequate controls over the Department's general ledger for employee compensation expenditures. The following deficiencies were noted:
1) Reconciliations from the general ledger to the subsidiary ledger were not performed in a timely manner.
2) Reconciliations provided by the Department for the period under review contained unidentified amounts (coding errors) and amounts unrelated to employee compensation.
In addition, an unidentified variance in the amount of $141,000.06 was noted in the salary expenditures reported to the Department of Audits and Accounts (DOAA) and the amount recorded on the general ledger. The Department is required to submit salary information to DOAA in accordance with Official Code of Georgia Annotated Section 50-6-27.
The Department of Labor should establish procedures to ensure that the employee compensation reconciliation process is being performed in a timely and complete manner. In addition, the subsidiary ledger should be reconciled with the general ledger monthly.
Finding Control Number: FS-440-02-08 GENERAL LEDGER Ending Balances in Balance Sheet Clearing Accounts
During the period under review, the accounting procedures of the Department of Labor were not sufficient to provide for adequate controls over clearing accounts. Our testing revealed that, at June 30, 2002, the Department's general ledger contained ending balances in the balance sheet clearing accounts. These clearing accounts have been provided in the State Chart of Accounts to facilitate the accumulation of transactions, which are subsequently distributed to appropriate accounts. At fiscal year end, no balances should remain in the clearing accounts.
Management's failure to ensure that these accounts do not have balances at fiscal year end can materially misstate the financial statements of the Department and can lead to erroneous decisions by the Department's management.
The Department should ensure that clearing account balances have been distributed to appropriate accounts at the end of each accounting period and that no balances remain in the clearing accounts at fiscal year end.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
Finding Control Number: FS-440-02-09 CAPITAL ASSETS Inadequacies in Operation of Property Management System
Our examination included a review of the internal accounting controls utilized by the Department of Labor in maintaining their property management system. This review also included testing the system for compliance with State laws and regulations. A deficiency was noted in that equipment additions were not reconciled to the general ledger expenditure accounts.
The Department is required to maintain equipment inventories in accordance with provisions of State laws and regulations. The deficiency identified was caused by the Department's failure to follow guidelines for maintaining equipment inventories.
Failure to maintain accurate equipment inventory records causes internal reports to management to be misleading and can result in erroneous decisions by management concerning current and future equipment needs.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with State laws and regulations.
DEPARTMENT OF PUBLIC SAFETY
Finding Control Number: FS-466-02-01 GENERAL LEDGER Inadequacies in Control Over Manual Journal Entries
Our examination included a review of the internal accounting controls and procedures utilized by the Department of Public Safety in recording adjustments to the various modules comprising the statewide Phoenix accounting system. Our testing revealed that, at June 30, 2002, the Department's general ledger module did not balance with the accounts receivable (subsidiary) module. This condition resulted because numerous manual journal entries were posted to the general ledger module instead of recording the adjustment in the appropriate subsidiary module. As a result, numerous reconciling items existed at June 30, 2002. These reconciling items occurred because, in many cases, the Department used manual journal vouchers, which are posted only to the general ledger, instead of adjustment vouchers, which are posted directly to the modules and automatically update the general ledger. The Department was unable to provide necessary documentation to support all reconciling items.
Management's failure to ensure that subsidiary modules are in balance with the general ledger module causes internal reports to management, generated from the subsidiary modules, to be inaccurate and misleading. This condition can lead to erroneous decisions by the Department's management as well as by the State of Georgia's executive decision makers.
To ensure accurate and timely reporting of financial information from subsidiary modules, the Department of Public Safety should use adjustment vouchers rather than manual journal entries to the extent possible. This procedure will allow the natural flow of the subsidiary modules into the general ledger module to correct adjustments to the accounting records that are determined to be necessary. The Department should also develop internal accounting controls and procedures to ensure that adequate supporting documentation is maintained for all adjustments and reconciling items.
Finding Control Number: FS-466-02-04 CAPITAL ASSETS Inadequacies in Operation of Property Management System
One hundred seventy-three (173) equipment items were selected from certain locations to test the accuracy of the Department's property management records. These items contained a value of $2,811,149.72 out of a population of $5,900,802.51 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted at the Georgia Public Safety Training Center, Forsyth, Georgia:
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Findings and Questioned Costs For the fiscaL Year Ended June 30. 2002
FINANCIAL STATEMENT FINDINGS
1) Ten (10) items totaling $73,900.86 could not be located.
2) Four (4) items did not have decal numbers attached. However, items were located utilizing serial numbers or descriptions.
Also, during the physical inspection testing, four (4) items of equipment were located in our test locations, which were not included in the equipment inventory records for the particular location.
The Training Center is required to maintain equipment inventories in accordance with provisions of State laws and regulations. The discrepancies identified above were caused by the Training Center's failure to follow guidelines for maintaining equipment inventories.
Failure to maintain accurate equipment inventory records causes internal reports to management to be misleading and can result in erroneous decisions by management concerning current and future equipment needs.
The Training Center should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with State laws and regulations.
DEPARTMENT OF CORRECTIONS
Finding Control Number: FS-467-02-01 EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures
Our examination included a review of the internal accounting controls and accounting procedures utilized by the Department of Corrections (Department) in processing expenditures for the Health Services Purchases object class. This object class captures expenditures for the Department's health services contracts for the State's inmate population. Total expenditures of Health Services Purchases contracts within this object class for fiscal year 2002 amounted to $117,091,413 .02. The Department failed to maintain adequate written policies and procedures related to the processing and approval of vendor's invoices for this object class. This lack of written policies and procedures resulted in the following deficiencies and inappropriate accounting practices:
1) The Department's Health Services Division (Division) did not provide for adequate segregation of employee duties in the performance of responsibilities for invoice processing/preparation and responsibilities for purchase order/voucher payment approval.
2) The review of invoice documentation requires the corroboration of many preapproved Department forms, inmate sundown counts or other documentation provided by vendors. We were unable to determine whether this documentation was approved by Division officials before being used to process expenditures.
3) There was no indication that vendor invoice, supporting data and Division employee worksheets were extended and footed to check for accuracy.
4) We were unable to determine how the Division tracked progress payments under these long-term contracts for health services.
5) The Division failed to maintain a current list of those authorized to approve supporting data submitted by the vendor along with the invoice (for example; sundown counts, payroll records, doctors, doctor hours worked).
6) The Division could not document whether vendor invoices containing medical services were reviewed by a Division employee with experience in the medical field.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
7) Certain payments to the vendor are charged to one facility for accounting purposes and then distributed to other facilities on a monthly basis. The Medical College of Georgia could not provide expenditure details or total expenditure amounts for the second half of the fiscal year before year-end closing; distributions of expenditures for this period were based on estimates.
These deficiencies were a result of the Department's failure to adequately establish clear written policies and procedures over the Health Services Purchases object class and could result in erroneous payments to the vendor, misstatements in the financial statements going undetected, and inconsistencies in the review and approval process over vendor invoices.
The Department should establish the necessary policies and procedures to ensure there are adequate internal controls over contracts for health services for the State's inmate population.
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
Finding Control Number: FS-472-02-02 ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls
During Fiscal Year 2002, the Board of Regents of the University System of Georgia converted thirty one units of the University System along with the Administrative Central Office from the College University Financial Accounting (CUFA) legacy system to the new GeorgiaFIRST System (Financial, Information and Reporting Systems for Tomorrow).
Management of each of the institutions and the central office was responsible for implementing procedures to establish and maintain adequate control over the operation, utilization and integrity of their data processed with the GeorgiaFIRST System. On many of our engagements we encountered problems with the financial data presented to us for examination. Management's failure to establish and adhere to final closing dates for the year ended June 30, 2002, created situations whereby data presented for examination was incomplete. Extensive procedures were necessary to determine the validity of the information provided.
To reduce the risk of reporting incomplete information, units of the University System should work with the Board of Regents Central Office to develop procedures that will result in complete reporting of all financial data in a more efficient and timely manner.
Finding Control Number: FS-472-02-03 GENERAL LEDGER Inadequacies in Control Over Subsidiary Ledgers
Our examination included a review of the procedures utilized by units of the University System and the Administrative Central Office in recording transactions to the various modules comprising the GeorgiaFIRST accounting system. Our testing at June 30, 2002, revealed numerous instances where an entity's general ledger module did not balance with the subsidiary modules. These conditions were primarily due to errors in posting subsidiary records during the conversion from the old College University Financial Accounting (CUFA) legacy accounting system to the new GeorgiaFIRST accounting system and due to transactions being posted to the general ledger module rather than in the appropriate subsidiary modules. In many instances management could not provide a reconciliation of the general ledger balances to the subsidiary records, which required extensive work by the auditors to identify reconciling items at June 30, 2002.
At several schools our testing also revealed that certain general ledger accounts for deferred revenues and accounts receivable, which are supported by information provided from the Banner Student Registration System, included numerous errors. These errors were the result of incorrect postings between the Banner Student Registration System module and the new GeorgiaFIRST accounting system. In the instances noted, management was unable to provide adequate detailed records from the Banner Student Registration System to support the balances recorded on the accounting system's general ledger.
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Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002

FINANCIAL STATEMENT FINDINGS

Finding Control Number: FS-472-02-04 BUDGET PREPARAnON/EXEcunON Overexpenditure of Budget Unit Object Class Resident Instruction, "A" Budget

The total approved budget for the Resident Instruction, "A" Budget, of the Board of Regents of the University System of Georgia, provided for expenditures totaling $3,825,236,236.00. 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:

Office of Minority Business Enterprise Student Education Enrichment Program

$ 12,665.81 $ 27,906.00

These overexpenditures are a violation of Section 58 of the Amended Appropriations Act of 200 1-2002.

These overexpenditures were the result of the failure of units of the University System to adhere to their authorized budget authority. Units of the University System should closely monitor their internal control procedures over budget operations to prevent the expenditure of funds in excess of budget approval.

Finding Control Number: FS-472-02-05 BUDGET PREPARAnON/EXECUTION Overexpenditure of Budget Unit Object Class Regents Central Office and Other Organized Activities, "B" Budget

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 $475,464,938.00. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicates that the object class Regents Opportunity Grants was overspent by $15,000.00. This overexpenditure is a violation of Section 58 of the Amended Appropriation Act of2001-2002.

This overexpenditure was the result of the Administrative Central Office's failure to adhere to its' authorized budget authority. 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.

Finding Control Number: FS-472-02-06 BUDGET PREPARAnON/EXECUTION Overexpenditure of Budget Unit Object Class Lottery for Education, "D" Budget

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 $55,331,910.00. 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:

Internet Connection Initiative Equipment - Public Libraries Technology Equipment Initiative

$ 140,272.36 $ 760,482.50 $ 2,750,985.93

These overexpenditures are a violation of Section 58 of the Amended Appropriations Act of2001-2002.

These overexpenditures were the result the failure of units of the University System to adhere to their authorized budget authority and to submit budget amendments in a timely manner. Units of the University System should closely monitor their internal control procedures over budget operations to prevent the expenditure of funds in excess of budget approval.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
DEPARTMENT OF REVENUE
Finding Control Number: FS-474-02-01 REVENUES/RECEIVABLES/RECEIPTS Deficiencies in the State Revenue Collections Fund (Overall)
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. This 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 practices were found to exist:
1) The majority of entries made to the general ledger system were made by manual journal entry. The utilization of only manual journal entries increases the risk of erroneous postings. Our review disclosed multiple instances where entries were posted twice to the general ledger. The resulting overstatements made the reconciliation of revenue collections received with amounts transferred to OTFS unduly difficult.
The Department should develop procedures through which the activity of the subsidiary revenue collection records are properly recorded within the general ledger system used by the Department, the statewide Phoenix accounting system.
2) 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 is no consistent cut-off date established between the two sets of 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 not reconcilable with the general ledger.
The Department should establish policies and procedures that will establish managerial control for the Central Accounting Unit over the subsidiary ledgers and associated records through use of an integrated general and subsidiary ledgers 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.
3) The Department has not established an internal control system that requires cash receipts and disbursements to be posted 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 general 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 and accounting period cut-offs in the general ledger are consistent with the posting dates and accounting period cut-offs in the subsidiary ledgers and associated records.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
4) The Department has not established an internal control system which ensures that revenue collections received by the Department through either the Mail Cash System and/or the Electronic Funds Transfer Maintenance Unit are reconciled to the general ledger.
The Department should develop and implement procedures to ensure that all receipts are reconciled to general ledger postings on at least a monthly basis. Failure to reconcile receipts to postings in the general ledger could result in misstatements to the financial statements not being detected, prevented or corrected.
5) The Department converted the State Revenue Collections Fund to the statewide Phoenix accounting system as of July 1, 2001. The new accounting system provided for separate program information for each type of revenue received by the Department. However, the distribution of cash balances by tax type was incorrect. This deficiency resulted in extensive time and effort being required to review and correct the financial activity for reporting by tax type.
The deficiencies noted above are a result of the Department's failure to integrate its accounting system and to provide for 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.
Finding Control Number: FS-474-02-02 REVENUES/RECEIVABLES/RECEIPTS Deficiencies in the Income Tax Division Subsidiary Records
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 that there is a deficiency in the maintenance of subsidiary records by the Division. 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.
GEORGIA INSTITUTE OF TECHNOLOGY
Finding Control Number: FS-503-02-01 CAPITAL ASSETS Inadequacies in Operation of Property Management System
For the year under review, audit sampling and other procedures were utilized to verify the validity and accuracy of the equipment inventory records as presented for audit. An equipment inventory sample of one hundred fifty (150) items was randomly selected from the subsidiary equipment inventory records. Fifty (50) equipment items reported by the Institute as having been deleted or disposed of during the fiscal year were also selected for testing. Additionally, as of July 1, 2001, the University System of Georgia implemented a new Capital Asset Guide. One of its many changes was to allow units of the University System to remove "small value" equipment from their capital asset records by raising the capitalization threshold for equipment items from $1,000.00 to $5,000.00. As part of our testing procedures, we examined the listing of "small value" items deleted to verify that no equipment items meeting or exceeding the $5,000.00 threshold had been improperly deleted.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
The results of our testing disclosed the following:
1) Two (2) items from our equipment sample could not be located.
2) Adequate documentation could not be provided for thirteen (13) items, equaling $622,895.07, reported as being disposed of by the Institute.
3) Twenty-three (23) items, equaling $158,212.26, were deleted incorrectly as part of small value deletions. These items had individual item values greater than $5,000.00 each.
These deficiencies occurred because of management's failure to adequately monitor and maintain equipment inventory records. The Institute should strengthen internal accounting controls over the equipment inventory process.
MEDICAL COLLEGE OF GEORGIA
Finding Control Number: FS-512-02-06 CAPITAL ASSETS Inadequate Capital Asset Records
Our review of Medical College of Georgia's accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to provide adequate control over the College's capital assets. The following deficiencies were noted:
1) Effective July 1,2001, the capitalization threshold for equipment was increased from $1,000.00 to $5,000.00. The College failed to reconcile the equipment component of the Asset Management module as of July 1, 2001, with the equipment inventory balance as of June 30, 2001.
2) The College's Asset Management module did not reconcile to the Capital Ledger.
3) The College failed to record periodicals purchased for the Library on the Capital Ledger.
These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the College's capital assets are properly maintained. The College should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
ALBANY STATE UNIVERSITY
Finding Control Number: FS-521-02-02 CASH AND CASH EQUIVALENTS INVENTORIES REVENUES/RECEIVABLESIRECEIPTS EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures
Accounting procedures for Albany State University were found to be deficient in the following control categories:
Cash and Cash Equivalents
Bank reconciliations for the operating account were not properly completed for the year under review. The University did not provide a list of outstanding checks or a listing of deposits in transit for the operating account at June 30, 2002. Extensive audit procedures were performed by the auditors to identify reconciling items. However, due to the poor condition of the accounting records, cash could not be properly reconciled from the bank statement balances to the general ledger. Additional work performed by Department of Audits personnel identified outstanding checks of
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Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
$3,308,180.19 and deposits in transit of $118,973.67 with an unidentified variance of $452,363.72 remaining at June 30,2002.
Inventories
1) Adequate procedures did not exist for the systematic and consistent mark-up ofresale inventories.
2) Tests of the perpetual inventory system revealed numerous errors between physical counts taken by the auditors and the inventory subsidiary records.
Revenues/Receivables/Receipts
An examination of student accounts receivable at June 30, 2002 revealed that $524,297.74 in receivables were over one year old and were not supported by approved financial aid.
Expenditures/Liabilities/Disbursements
Proper supporting documentation could not be provided for three operating leases.
The deficiencies noted in the above control categories occurred because of management's failure to establish procedures to: analyze and reconcile balances on the general ledger with supporting records, adequately monitor inventory throughout the year, obtain approved documentation to support financial aid before disbursement of funds, and implement controls over the disbursement function.
The University should implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger in a timely manner and ensure that reconciling items are identified and corrected promptly. The University should review the accounting procedures in place, design procedures relative to the above control categories and implement procedures to strengthen the internal controls over the accounting functions.
Finding Control Number: FS-521-02-06 CAPITAL ASSETS Inadequate Capital Asset Records
Our examination of accounting procedures for the Capital Asset Management System revealed that procedures in place were insufficient to provide adequate control over the University's capital assets. A sample of sixty-four equipment items selected from the Asset Management Module detail and other tests of capital assets records revealed the following:
I) Thirteen of the items selected for the sample could not be located.
2) Nine of the items located did not have decals affixed.
3) Three items were transferred to another location, but the inventory records were not updated to reflect this change in location.
4) Ten items totaling $180,202.51 had not been added to the equipment inventory records.
5) Six items with an original acquisition cost of $155,322.86 were surplused, but had not been removed from the equipment records.
6) The University failed to record on the Asset Management Module $61,521,011.58 of buildings, $4,317,640.96 of facilities and other improvements, $1,112,790.00 of infrastructure and $1,715,432.85 of land along with any applicable depreciation. An audit adjustment was made to record these amounts along with the associated depreciation.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the University's capital assets are properly maintained. The University should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
ARMSTRONG ATLANTIC STATE UNIVERSITY
Finding Control Number: FS-524-02-04 CAPITAL ASSETS Inadequate Capital Asset Records
Our review of Armstrong Atlantic State University's accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to provide adequate control over the University's capital assets. The following deficiencies were noted:
1) Required supplemental information reconciling capital asset balances at June 30, 2001 to adjusted beginning balances at July 1, 2001, as shown per Note 6 of the financial statements, was not prepared.
2) Effective July 1, 2001, the University adopted provisions of Governmental Accounting Standards Board (GASB) Statements 34 and 35, which require the depreciation of capital assets. The University failed to utilize the Board of Regents Library Depreciation schedule to calculate July 1, 2001 amounts for book value of library collections and associated accumulated depreciation over a lO-year life. Therefore, library collections' accumulated depreciation and fiscal year 2002 library collections' depreciation expense was misstated.
3) The University did not attempt to reconcile fiscal year 2002 capitalized additions to associated purchases of capital assets.
4) Effective July 1,2001, the capitalization threshold for equipment was increased from $1,000.00 to $5,000.00. The University failed to reconcile the equipment component of the Asset Management module as of July 1, 2001, with the equipment inventory balance as of June 30, 2001. The University was unable to provide supporting documentation of equipment items not converted to the Asset Management module.
Our review of capital assets consisted of extensive procedures in an attempt to accurately report the University's capital assets. These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the University's capital assets are properly maintained. The University should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
CLAYTON COLLEGE AND STATE UNIVERSITY
Finding Control Number: FS-528-02-03 CASH AND CASH EQUIVALENTS GENERAL LEDGER CAPITAL ASSETS Deficiencies in Accounting Procedures
Accounting procedures of Clayton College and State University were insufficient to provide adequate controls over the Cash and Cash Equivalents, General Ledger and Capital Assets. The following deficiencies were noted:
Cash and Cash Equivalents
1) The monthly bank statements for the operating account were not reconciled with general ledger balances in a timely manner.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
2) Net uncorrected adjustments of $30,684.92 reflected on the bank reconciliations have remained uncorrected for as long as 10 months.
These deficiencies occurred because of management's failure to establish procedures to promptly reconcile bank statements and record necessary adjustments on a timely basis.
General Ledger
The detail listings of travel and salary payments made to employees, as submitted by the University to the Georgia Department of Audits, was not reconciled with the general ledger as presented for review. The unlocated differences of $4,677 .68 and $6,679.10, respectively, are reflected in the Reconciliation of Salaries and Travel.
This deficiency occurred because management did not ensure that the amounts submitted to the Georgia Department of Audits were reconciled to the University's general ledger.
Capital Assets
1) The University's June 30, 2001, financial statements reported an equipment capital asset balance of $23,113,706.61. The July 1, 2001, adjusted beginning equipment capital asset balance was reported at $5,605,392.90 with the $17,508,313.71 reduction being reported as a restatement of beginning net assets. A portion of this reduction appears to be related to the adoption of new capitalization asset guidelines. Effective July 1, 2001, the Board of Regents of the University System of Georgia adopted a new Capital Asset Guide which established new capitalization thresholds by asset category. For equipment, the capitalization threshold was increased from $1,000.00 to $5,000.00. At July 1,2001, equipment items valued at $3,542,431.91 were identified as "small value property" with values below the $5,000.00 threshold and were removed from the total equipment capital asset value. The University could not provide documentation for the remaining $13,965,881.80 reduction in asset value.
2) For fiscal year ended June 30, 2002, an outside appraisal firm was hired to assist the University in valuing capital assets for financial reporting in conjunction with the implementation of GASB Statement 34/35 financial reporting requirements. As part of the services performed, the appraisal firm inventoried equipment items and conducted a limited reconciliation of the newly developed inventory listing with the University'S existing equipment property records in order to develop two exception reports. These exception reports were to include (1) items not found that appeared to be on existing records and (2) items found that were not on existing records.
The University did not perform the appropriate reconciliations from the equipment items reported on the capital assets management system to items reported from the equipment physical inventory listing and exception reports provided by the outside appraisal firm.
3) Depreciation expense was not properly recorded for capital assets. Only ten months of depreciation expense was recorded for the majority of capital assets. Depreciation expense for the eleventh month was calculated but not recorded, and the University never calculated depreciation expense for the twelfth month.
4) The University failed to record capital asset activity for library collection on the accounting records. Audit adjustments were necessary to correct omission of the library collections activity.
These deficiencies occurred because management failed to ensure that controls were in place to properly reconcile, monitor, and record capital asset activity related to equipment and library collections. Management should review its system of internal controls, initiate necessary changes, and monitor the effectiveness of controls implemented.
Management should establish appropriate procedures and controls to ensure that (1) bank reconciliations are performed in a timely manner and reconciling adjustments are promptly recorded, (2) salary and travel continuous audit information is
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Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
correctly reported to the Department of Audits, and (3) capital asset records are properly maintained and safeguarded from unauthorized use or disposition.
COLUMBUS STATE UNIVERSITY
Finding Control Number: FS-530-02-01 CAPITAL ASSETS Inadequate Capital Asset Records
Our review of Columbus State University's accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to provide adequate control over the University's capital assets. The following deficiencies were noted:
1) Effective July 1,2001, the capitalization threshold for equipment was increased from $1,000.00 to $5,000.00. The University failed to reconcile the equipment component of the Asset Management module as of July 1, 2001, with the equipment inventory balance as of June 30, 2001.
2) Effective July 1, 2001, the University adopted provisions of Governmental Accounting Standards Board (GASB) Statements 34 and 35, which require the depreciation of capital assets. Depreciation expense was recorded for only nine of twelve months for the majority of capital assets.
3) Numerous current year equipment purchases were not recorded on the Asset Management module.
These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the University's capital assets are properly maintained. The University should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
FORT VALLEY STATE UNIVERSITY
Finding Control Number: FS-533-02-06 GENERAL LEDGER Failure to Comply with Board of Regents' Requirements
During fiscal year 2002, the Board of Regents of the University System of Georgia converted units of the University System from the College University Financial Accounting (CUFA) legacy system to the new GeorgiaFJRST System. The conversion process prescribed by the Board of Regents included thirty-two journal entries that were required to be made by University personnel, depending upon their applicability, to the University's Actuals, GAAP and Capitals Ledgers. The University attempted to make only one of the journal entries as required by the Board of Regents.
Management's failure to follow Board of Regents' requirements results in material misstatements within the University's financial statements. This condition causes inaccurate reporting of financial information and could lead to erroneous decisions to be made by those reviewing the University's financial statements. To ensure accurate reporting of financial information, the University should follow Board of Regents' guidelines as required.
Finding Control Number: FS-533-02-12 CAPITAL ASSETS Inadequacies in Operation of Property Management System and Equipment Inventory Records
Our examination included a review of the procedures utilized by Fort Valley State University in maintaining their property management system and subsidiary equipment inventory records. This review also included testing the system for compliance with State laws and regulations and testing of one hundred equipment items. The following conditions relating to inappropriate accounting practices and procedures were found to exist:
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Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
1) The subsidiary equipment inventory records, as presented for review, did not reconcile to the general ledger. Extensive work was performed by the auditors to reconcile subsidiary records to the general ledger and identify reconciling items.
2) Equipment purchased by the University from July through March 2002, in the CUFA system, was not posted to the Capital Assets detailed records. In addition, total amounts posted to the Capital Assets ledger from the CUFA system included items below the capitalization threshold of$5,000.00.
3) The University did not complete calculations necessary to properly record library collections in accordance with guidelines issued by the Board of Regents. As a result, accumulated depreciation and current depreciation expense have not been reflected for library collections.
4) Thirty-eight of the items selected for testing could not be located.
5) Twenty of the items located were not in their proper location as shown on the inventory listing.
The matters above indicate material deficiencies relative to the University's management of their capital assets records and equipment inventory. These deficiencies were due to management's failure to implement controls adequate to ensure capital assets were properly reported in the general ledger, reconciled to detailed capital assets records and equipment inventories are properly maintained. The University should establish appropriate procedures to strengthen internal accounting controls to ensure capital assets are properly recorded in the general ledger and that assets are safeguarded against loss from unauthorized use or disposition.
SAVANNAH STATE UNIVERSITY
Finding Control Number: FS-548-02-01 CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENSES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER CAPITAL ASSETS Inadequate Separation of Duties
Our examination of the internal accounting control procedures revealed that the University did not provide for adequate separation of duties in the performance of the following accounting functions and related procedures:
1) Cash receipting functions were not separated from cash disbursement and general ledger functions.
2) Cash collection functions and maintenance of detail accounts receivable records were not separated from general ledger functions.
3) Deposit preparation functions were not separated from cash receipts functions.
4) Banner receivable and accounts receivable functions were not separated from the check disbursement functions.
5) Supervisory access level to the various functions within the accounts payable, accounts receivable, human resources, capital assets and general ledger modules of the GeorgiaFirst System were not separated.
These conditions were the result of management's failure to assign 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 that would enhance segregation of duties relative to the above control categories and implement procedures to strengthen the internal controls over the accounting functions.
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
Finding Control Number: FS-548-02-08 CAPITAL ASSETS Inadequate Capital Assets Records
Our review of Savannah State University's Accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to provide adequate control over the University's capital assets. The following deficiencies were noted:
1) The University did not reconcile the equipment asset ending book balance at June 30, 2001, to the adjusted beginning balance as of July 1, 2001.
2) The University did not reconcile the property records to the capitals ledger. Extensive procedures were performed in an attempt to determine the variances. Variances were identified in accumulated depreciation, equipment and capitalized collections. Net adjustments of $426,053.16 were made to obtain per audit figures for capital assets.
3) The University was unable to provide a listing of equipment which included all of the following attributes: property description including serial number and decal number, source of funds used to purchase item, acquisition date and cost, reference to originating invoices and reference to physical location of the equipment item.
These deficiencies are result of management's failure to implement adequate policies and procedures to ensure that the University's capital assets are properly maintained. The University should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
STATE UNIVERSITY OF WEST GEORGIA
Finding Control Number: FS-554-02-04 CAPITAL ASSETS Inadequacies in the Capital Asset System
Our review of the State University of West Georgia's accounting procedures for the Capital Assets Management System revealed that the University could not reconcile the capital asset balance at June 30, 2001 with the restated capital asset balance at July 1, 2001 related to equipment. An unidentifiable variance of $963,056.76 resulted. This deficiency occurred because management failed to ensure that controls were in place to properly record and reconcile capital asset activity. Management should review its system of controls, initiate necessary changes, and monitor the effectiveness of controls implemented to ensure that capital assets records are accurately maintained.
EAST GEORGIA COLLEGE
Finding Control Number: FS-572-02-02 CAPITAL ASSETS Inadequate Capital Assets Records
Our review of East Georgia College's accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to provide adequate control over the College's capital assets. The following deficiencies were noted:
1) Effective July 1, 2001, the capitalization threshold for equipment was increased from $1,000.00 to $5,000.00. The College failed to reconcile the equipment component of the Asset Management module as of July 1, 2001, with the equipment inventory balance as of June 30, 2001.
2) The College's Asset Management module, as of July 1, 2001, did not reconcile with estimated cost values established by an independent appraisal. There were assets in the amount of $38,978.00 for Equipment that were included on the independent appraisal report that were not included on the Asset Management module, as well as D-33

Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
assets in the amount of $163,471.00 for Facilities and Other Improvements that were included on the Asset Management module that were not included on the independent appraisal report. The College was unable to provide an explanation or documentation for the variances.
3) The College's Asset Management module did not reconcile to the Capital Ledger. There was an asset included on the Asset Management module that was not added to the Capital Ledger as of June 30,2002. An audit adjustment of $434,542.39 was made to record the asset in the Capital Ledger.
These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the College's capital assets are properly maintained. The College should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
FLOYD COLLEGE
Finding Control Number: FS-573-02-04 CAPITAL ASSETS Inadequate Controls Over Capital Assets
Our review of Floyd College's accounting procedures for the Capital Asset Management System determined that procedures in place were insufficient to provide adequate control over the College's capital assets. The following deficiencies were noted:
1) The College was unable to provide a Capital Asset Listing by Asset ID which detailed the acqmsltIon cost, accumulated depreciation at July 1, 2001, current year depreciation, acquisition year and estimated useful life for each individual asset.
2) Effective July 1,2001, the capitalization threshold for equipment was increased from $1,000.00 to $5,000.00. The College failed to reconcile the equipment component of the Asset Management module as of July 1, 2001, with the equipment inventory balance as ofJune 30, 2001.
3) The College failed to provide documentation for the library collections additions during the current period.
These deficiencies are a result of management's failure to implement adequate policies and procedures to ensure that the College's capital assets are properly maintained. The College should establish appropriate procedures to strengthen controls and ensure that assets are properly accounted for and safeguarded.
ATLANTA TECHNICAL COLLEGE
Finding Control Number: FS-823-02-01 CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLESIRECEIPTS EXPENDITURES/LIABILITIESIDISBURSEMENTS INVENTORIES CAPITAL ASSETS Inadequate Accounting Procedures
The accounting procedures of the College were insufficient to provide adequate control over the above control categories. The following deficiencies were noted as summarized below:
Cash and Cash Equivalents
1) Reconciling items, such as unposted deposits and checks, noted by the College during monthly bank reconciliation procedures for the operating, payroll, PELL, and H.O.P.E. accounts were not corrected in a timely manner. Upon D-34

G1eorgia
Findings and Questioned Costs For the Fiscal Year Ended June 30,2002
FINANCIAL STATEMENT FINDINGS
review of the College's monthly bank reconciliations, some reconciling items remained uncorrected for up to twelve (12) months.
2) The College did not have procedures in place to ensure the bank was notified to stop payments on outstanding checks that were issued and subsequently voided.
3) The College did not have procedures in place to ensure access to their check-signing machine was limited. In addition, the activation key was left in the machine.
The deficiencies noted above occurred because of management's failure to implement controls adequate to safeguard cash and cash equivalents. The College should establish appropriate procedures and controls to ensure uncorrected items identified when reconciling bank statements to the general ledger are documented and posted in a timely manner, to ensure the bank is notified to stop payments on outstanding checks that were issued and subsequently voided, and to ensure access to the check signing machine is restricted to authorized personnel.
Revenues/Receivables/Receipts
1) The College did not have procedures in place to ensure that accounts receivable write-offs were made in compliance with O.e.G.A. Sec. 50-16-18. Our testing revealed that the College made two journal entries 'WTiting off a total of $146,127.07 in accounts receivable which were not adequately documented or explained.
2) The College did not have procedures in place to perform reconciliations of the accounts receivable subsidiary ledger (BANNER) to the general ledger (Phoenix/PeopleSoft). In addition, the College .could not provide documentation verifying that receipts posted to the subsidiary ledger (Banner) are being properly recorded in the general ledger (Phoenix/PeopleSoft).
3) The College did not have effective procedures in place to ensure revenues were recorded in the general ledger in a timely manner. Our testing revealed $247,362.18 ofH.O.P.E. Scholarship Program receipts had not been properly recognized as revenue in the general ledger. An audit adjustment was made to properly reflect revenues in the financial statements.
4) The College did not have procedures in place to ensure a daily log was maintained for receipts received by mail.
The deficiencies noted above occurred because of management's failure to implement controls adequate to ensure revenues, receivables and receipts were properly documented and recorded in the accounting records. The College should establish appropriate procedures and controls to document accounts receivables written off are in compliance with a.e.G.A. Sec. 50-16-18, to ensure accounts receivable subsidiary records are in agreement with the general ledger, to ensure that amounts received are properly recorded in the accounting records, and to ensure a detailed log is maintained of all receipts received by mail.
Expenditures/Liabilities/Disbursements
The College did not have procedures in place to verify receipt of goods before the accounts payable department processed vendor payments.
The deficiency noted above occurred because of management's failure to implement adequate controls supporting disbursement of funds. The College should implement controls to ensure documentation supporting receipt of goods is reviewed by accounts payable prior to processing vendor payments.
Inventories
The College did not have procedures in place to perform reconciliations from quarterly bookstore resale inventory counts to the general ledger. In addition, the resale inventory balance reported on the general ledger had not been
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Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
adjusted for goods sold. Based on testing performed, an audit adjustment of $857,556.34 was necessary to properly reflect resale inventory for cost of sales in the financial statements.
The deficiencies identified above occurred because of management's failure to implement controls adequate to ensure the general ledger accurately reflected resale inventory and cost of goods sold. The College should establish appropriate controls to ensure resale inventory records are periodically reconciled to the general ledger, and the College should implement controls to ensure inventory and cost of goods sold balances reflected in the general ledger are adjusted to reflect sales activity and physical inventory counts.
Capital Assets
The College did not have effective controls in place to ensure equipment inventory items were properly tagged. A test of thirty-one (31) equipment items revealed twenty-eight (28) items did not contain inventory tags nor were assigned inventory numbers identified on the items.
The deficiency identified above occurred because of management's failure to implement controls to easily identify and track equipment inventory items. The College should implement procedures to ensure that equipment items are easily identified and tracked through the Capital Assets system.
DEKALB TECHNICAL COLLEGE
Finding Control Number: FS-830-02-01 CASH AND CASH EQUIVALENTS INVENTORIES GENERAL LEDGER CAPITAL ASSETS Deficiencies in Accounting Procedures
The accounting procedures of the College were insufficient to provide adequate control over the above control categories. The following deficiencies were noted as summarized below:
Cash and Cash Equivalents
1) Reconciling items noted by the College during the monthly bank reconciliation procedures for the operating, payroll, Federal funds, PELL and H.O.P.E. accounts were not corrected in a timely manner. Many of these reconciling items related to fiscal year 2001 activity that had not been properly corrected by the College. In addition, supporting documentation was not available for several reconciling items noted on the bank reconciliations.
2) The College did not have procedures in place to adequately account for $76,000.00 in petty cash related to the bookstore. During the year, the College failed to properly reimburse and record petty cash activity on the general ledger. As a result, petty cash was not replenished in a timely manner nor was it counted at fiscal year end.
The deficiencies noted above occurred because of management's failure to implement controls adequate to safeguard cash and cash equivalents including petty cash. The College should establish appropriate procedures and controls to ensure uncorrected items identified when reconciling bank statements to the general ledger are documented and posted in a timely manner. The College should also establish adequate controls and procedures related to petty cash to ensure that petty cash is properly maintained, receipts and disbursements are recorded accurately, and periodic counts and reconciliations of petty cash are performed.
D-36

Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINANCIAL STATEMENT FINDINGS

Inventories
The College could not provide an accurate detail listing of resale inventory at June 30, 2002, which reconciled to the general ledger. In addition, the College failed to properly account for changes in inventory on the general ledger and did not have adequate procedures in place to perform reconciliations of quarterly bookstore resale inventory counts to the general ledger.
These deficiencies are a result of management's failure to have adequate policies and procedures to ensure inventories are properly maintained and reflected on the accounting records. The College should implement procedures to ensure that inventory counts are completed on a periodic basis and that proper and accurate inventory adjustments are accounted for on the general ledger.
General Ledger
The College did not have effective controls in place to ensure the general ledger was maintained on a program/project basis to accurately reflect local program activity. Numerous posting errors were noted that incorrectly increased the local reserved fund balance by $39,331.32. Local reserves can only be increased by interest earned or receipt of funds related to prior year local activity. Due to the extent of the posting errors and the inability of the College to appropriately justify an increase in local reserves, an adjustment was made to reduce local reserves to the prior year balance.
This deficiency occurred because of management's failure to implement controls adequate to ensure the general ledger accurately reflected local program activity. The College should implement procedures to ensure that the local reserve is properly maintained and not augmented by improper adjustments.
Capital Assets
Equipment items totaling $3,124,562.17 were listed on a local inventory system maintained by the College. The College could not provide documentation that these items were included on the Capital Assets Module of the PeopleSoft system. Therefore, it could not be determined if these items were properly capitalized and depreciated in accordance with the State of Georgia Capital Asset Guide. In addition, equipment items totaling $24,040.75 were identified that were not included on either inventory system maintained by the College.
This deficiency occurred because of management's failure to implement controls to identify and track equipment inventory items. The College should perform a comprehensive physical inventory to ensure that all items are recorded in accordance with guidelines set forth by the Georgia Department of Technical and Adult Education. Policies and procedures should be established to ensure that reconciliations are performed for the Capital Assets Module and the related subsidiary records.

GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION (*)
Finding Control Number: FS-918-02-01 GENERAL LEDGER Inadequate Accounting Procedures
Federal Program Information: 84.032 - Federal Family Education Loan Program

Criteria:

The Corporation is established to guarantee student loans made by lenders and perform certain

administrative and oversight functions under the Federal Family Education Loans (FFEL) program.

Under this program, the Corporation must provide accurate and reliable reports to the U.S. Department

of Education ("DOE"). (OMB Circular A-133 Compliance Supplement).

(*) THIS ORGANIZATIONAL UNIT WAS AUDITED BY OTHER AUDITORS

D-37

Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINANCIAL STATEMENT FINDINGS

Condition:

During fiscal year 2002 and in connection with the audit of the financial statements, we (the Corporation and Ernst & Young) noted instances related to the prior year in which amounts were not properly recorded in accordance with GAAP and which have affected the current fiscal year. A summary of the more significant adjustments is as follows: (1) improperly recorded revenues (collection fees on student loans and default aversion fees) and related receivables, (2) overstated compensated absence expense, (3) incomplete reconciliation of the Great Lakes trial balance to the general ledger. While the Corporation has corrected these errors in the current year and believes that all significant issues have been appropriately addressed, we believe that management should ensure that reconciliation of reports, regulations and details to the general ledger balance are performed monthly.

Questioned Costs: N/A

Context:

The process of reviewing and recording the Form 2000 did not result in accurate financial statement reporting.

Effect:

The financial information submitted to the DOE was not complete and accurate.

Recommendation: Management should ensure that reconciliations of reports, regulations and details to the general ledger balance are performed monthly.

STATE ROAD AND TOLLWAY AUTHORITY

Finding Control Number: FS-927-02-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Controls Over Cruise Card Information (Georgia 400 Project)

Our examination included a review of the internal controls utilized by the State Road and Tollway Authority in securing confidential patron information. The following conditions were noted as a result of our review:

1) Cruise card patrons can make changes to credit card information, on file with the Authority, by faxing their changes to the Authority's Service Center. The Service Center's fax machine is located in an unsecured location that can be accessed by all Service Center employees.

2) Original patron cruise card applications that contain confidential patron information are filed in a locked file cabinet; however, all Service Center employees including temporary employees have access to this cabinet.

Failure to adequately secure confidential information could result in unauthorized use or dissemination of patron information. The Authority should ensure that all confidential information is stored in a secure location that can only be accessed by designated employees.

Finding Control Number: FS-927-02-02 REVENUES/RECEIVABLES/RECEIPTS Deficiencies in the Collection and Recording of Cash Tolls (F.J. Torras Causeway)

Our audit included an examination of the internal controls utilized by the State Road and Tollway Authority to safeguard collection and recording of cash tolls received by the Authority. This examination included procedures to provide reasonable assurance that cash tolls collected were correctly recorded on subsidiary records and posted on the Authority's accounting records. We observed that the Authority's equipment used to record toll patron activity and revenue received at the F.J. Torras Causeway plaza was not functioning properly. The following deficiencies were noted:

1) Electronic equipment could not produce reports to track individual lane activity, including the number of vehicles passing through the toll booth and the amounts deposited into the toll bins as vehicles pass through each toll lane.

D-38

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....

...

_ ..... - - - - _.....

Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
2) Electronic equipment, at times, could not provide data to facilitate a formal reconciliation of amounts collected at the toll plaza and amounts deposited by the contracted security company.
3) Laser scanners used to read yearly decals were not functioning properly.
4) No formal violation processing procedures were in place to provide the appropriate data to identify toll violations.
5) Cash receipts were not deposited into the bank in a timely manner.
Lack of internal controls over the recording of patron activity, including violations, tolls collected, and untimely deposits could result in undetected misstatements and/or misappropriation of assets. These deficiencies are a result of mechanical failure of toll plaza equipment as well as management's failure to establish procedures to ensure timely deposits of cash receipts. The Authority should provide a system to accurately record patron activity, including violations, and toll revenue on the accounting records. The Authority should also establish appropriate procedures to ensure deposits are made in a timely manner.
Finding Control Number: FS-927-02-03 REVENUES/RECEIVABLES/RECEIPTS Inadequate Accounting Procedures
Subsequent to the year under review, Authority employees discovered that State Road and Tollway Authority funds had been misappropriated. Purportedly, certain employees of the Authority had made reimbursements to their personal credit card accounts utilizing Authority funds. The employees allegedly involved in this misappropriation of funds have been terminated and the case is currently under investigation by the Georgia Bureau of Investigation.
This condition occurred because management failed to provide for adequate internal controls over the credit card processing function. Internal controls should be established to ensure that the credit card processing function is adequately safeguarded.
Finding Control Number: FS-927-02-04 EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures
Our examination included a review of internal accounting controls and accounting procedures utilized by the State Road and Tollway Authority in processing payments made to the Georgia Department of Transportation for various transportation projects. The total expenditures reimbursed to Georgia Department of Transportation during fiscal year 2002 amounted to $69,662,279.93 with an additional $16,744,468.10 recorded as an accounts payable at June 30, 2002. The Authority has no written policies and procedures to ensure that the invoices received were for approved transportation projects.
This deficiency was a result of the Authority's failure to adequately establish clear written policies and procedures over the payments made to Georgia Department of Transportation and could result in erroneous payments made for projects other than the approved projects. The Authority should establish the necessary policies and procedures to ensure there are adequate internal controls over payments made for approved transportation projects.
D-39

Georgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
GEORGIA TECHNOLOGY AUTHORITY
Finding Control Number: FS-980-02-01 EXPENSES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures
Our examination included a review of the internal accounting controls and accounting procedures utilized by the Georgia Technology Authority (Authority) in processing expenses paid to a certain vendor from the Telephone Billing object class included in Goods and Services operating expenses. This object class captures expenses associated with providing telecommunications services to customers of the Authority. The vendor, as a contractor of the Authority, provided cable and wiring services and repairs at the facilities of customers of the Authority. Total expenses in the Telephone Billings object class totaled $84,338,695.67 and total expenses recorded for the vendor totaled $6,532,036.70. Management of the Authority failed to maintain effective controls to determine whether services paid for by the Authority were actually received by the Authority's customers. The following deficiencies were noted:
1) Documentation supporting a significant number of invoices received from the vendor for services performed for customers of the Atlanta region could not be provided for audit, nor was there any indication that the Authority periodically reviewed the original records maintained by the vendor to substantiate the invoices. These invoices amounted to $3,683,019.28 of Authority expenses to the vendor. Other deficiencies noted in the Authority's procedures for maintenance of documentation supporting the remaining invoices expensed during fiscal year 2002 are as follows:
a) There was no consistency in the documentation submitted by the vendor to support the invoices. For example, labor summaries, individual time sheets, etc., to document labor hours billed by the vendor and receipts to document materials purchased were submitted in some instances, but not in others.
b) Documentation maintained often did not fully support the transaction. The vendor was allowed to invoice for blocks of hours, which could not be identified to actual work performed or to the specific customer served. Invoices billed to the Authority with the job name of "block time" amounted to $1,617,471.81.
2) The internal control procedures utilized by the Authority did not provide for adequate monitoring of the propriety and progress of cable and/or wiring projects as follows:
a) No uniform format was consistently utilized for customer orders, internal cost proposals or cost proposals submitted to customers (which included the Authority'S mark-up and service order charge) to ensure that the Authority paid the vendor only for work authorized and for work which was actually and adequately performed.
b) In the Authority's Atlanta region, Authority personnel approved invoices for purchases of materials by the vendor that could not be identified to actual work performed or to the specific customer served. Materials purchased by the vendor were included on invoices to the Authority with the vendor's mark-up of30% added.
3) The internal control procedures utilized by the Authority did not provide a formal process to accumulate all costs of a particular cable and/or wiring project to ensure that all costs were identified and passed on to the Authority's customers. As a result, the Authority could not perform the primary function associated with enterprise fund accounting, which is the determination of profitability or the cost to the general government, i.e., the State of Georgia. Project costs could include labor hours of Authority technicians, materials purchased by the Authority, and labor and materials invoiced by the vendor. The Authority failed to provide a methodology for tracking or monitoring these costs as follows:
a) The Authority did not utilize its accounting system to accommodate the determination of profitability by providing a common identifier between the accounts payable system utilized to process costs and the billings system utilized to bill customers. In addition, no manual procedures were in place at a management level to
D-40

Findings and Questioned Costs For the FiscaL Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
perform the task of comparing the costs of providing services to customer billings.
b) The job naming convention utilized by the Authority did not provide for a direct identification of the customer name, which is how billing records are maintained. Accounts payable records included the vendor's invoice information along with the job name. We found that the job names consisted of a variety of titles, which made any comparison of project costs to billings unduly difficult to perform.
These deficiencies were a result of the Authority's failure to adequately establish clear written policies and procedures over cable and wiring services and repairs performed by outside vendors. Such deficiencies did result in erroneous payments to the vendor, misstatements in the financial statements going undetected and inconsistencies in the review and approval process over vendor invoices. An investigation by the Georgia Bureau of Investigation is currently in progress for payments made to the vendor.
The Authority should establish the necessary policies and procedures to ensure that there are adequate internal controls over cable and wiring services and repairs performed by outside vendors.
Finding Control Number: FS-980-02-02 CAPITAL ASSETS Inadequacies in Operation of Asset Management Module
As part of our audit of the basic financial statements for the State of Georgia and our stand-alone audit of Georgia Technology Authority (Authority), a component unit of the State of Georgia, testing of the asset management module of the Phoenix financial system was conducted. Our testing disclosed that the asset management module table "DIST_LN" and the general ledger table "DX_JRNL_LN_HIST" were out of balance with each other. Out of balance amounts were found to exist at 59 organizational units of the State of Georgia. At June 30, 2002, the cumulative out of balance amount for these 59 organizational units was determined to be $210,530,022.55.
The financial impact of the above out of balance amount is not a reflection solely on the Authority's financial statements but rather a reflection on the basic financial statements for the State of Georgia, as a whole. This deficiency is included within the report of the Authority due to its operational responsibility over the Phoenix financial system, and in particular the asset management module, for the State of Georgia.
The above deficiency relating to the asset management module administered by the Authority resulted in the misstated balances on the general ledgers for the 59 organizational units of the State of Georgia for asset management transactions. These misstatements were caused by numerous factors. The primary factor was duplicate entries being made for accumulated depreciation. Efforts to reverse the duplicate entries were not successful since the lines for the reversing entries were missing from the journal line and ledger tables.
The Authority should review the out of balance analysis and prepare correcting journal entries and table corrections as needed. The correcting journal entries should have the same identification numbers as the original entries, when possible, in order to identify which journal entries are being corrected.
Also, to provide for increased controls over the asset management module, the Authority should consider placing edits within the purchasing and accounts payable modules which would require users to route, to the asset management module, all charges made to applicable capital asset expenditure chart of accounts.
Subsequent to the close of the fiscal year, the Authority posted adjusting journal entries to correct a significant portion of the out of balance condition identified above. The overall impact of these adjustments was approximately $209 million; leaving a debit out of balance amount of $564,989.65 and a credit out of balance amount of $574,929.40 remaining to be corrected.
D-41

Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8564-02-01 CAPITAL ASSETS Failure to Maintain Capital Assets
The Metropolitan Regional Educational Service Agency did not maintain capital assets within the formal accounting records. This condition results in the 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 capital assets. These subsidiary records should include an inventory of all capital assets 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 capital assets.
WEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8604-02-01 CAPITAL ASSETS Failure to Maintain Capital Assets
The West Georgia Regional Educational Service Agency does not maintain capital assets within the formal accounting records. This condition results in the 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 capital assets. These subsidiary records should include an inventory of all capital assets 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 capital assets.
OCONEE REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8664-02-01 CAPITAL ASSETS Failure to Maintain Capital Assets
The Oconee Regional Educational Service Agency did not maintain capital assets within the formal accounting records. This condition results in the 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 capital assets. The records should include an inventory of capital assets 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 capital assets.
CHATTAHOOCHEE-FLINT REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8724-02-01 CAPITAL ASSETS Failure to Maintain Records for Capital Assets
The Chattahoochee-Flint Regional Educational Service Agency did not maintain capital assets within the formal accounting records. This condition results in the 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 capital assets. The records should include an inventory
D-42

Gevrgia
Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FINANCIAL STATEMENT FINDINGS
of capital assets 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 capital assets.
HEART OF GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8764-02-01 CAPITAL ASSETS Failure to Maintain Records for Capital Assets The Heart of Georgia Regional Educational Service Agency did not maintain capital assets within the formal accounting records. This condition results in the 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 capital assets. These subsidiary records should include an inventory of capital assets 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 capital assets.
D-43

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FEDERAL AVVARD~ FINDING~AND QuESTIONED ~

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FederaL Awards Findings and Questioned Costs TabLe of Contents For the Fiscal Year Ended June 30, 2002

ENTITY CODE

ORGANIZATIONAL UNIT

414

Education, Department of.

419

Community Health, Department of

427

Human Resources, Department of.

440

Labor, Department of

469

School Readiness, Office of

486

Treasury and Fiscal Services, Office of.

Colleges and Universities

503

Georgia Institute of Technology

509

Georgia State University

518

University of Georgia

521

Albany State University

533

Fort Valley State University

548

Savannah State University

918

Higher Education Assistance Corporation, Georgia

PAGE NO.
D-48 D-56 D-57 D-60 D-61 D-61
D-62 D-63 D-64 D-64 D-66 D-67 D-70

D-47

Federal Awards Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
DEPARTMENT OF EDUCATION
Finding Control Number: FA-414-02-01 EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
Our examination included a review of the internal accounting controls utilized by the Department of Education in maintaining their capital asset inventory. 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 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 nine (9) additions that had been updated onto the equipment inventory records incorrectly by the amount of$8,012.60.
In addition, one hundred eighty-three (183) equipment items were selected from certain locations to test the accuracy of the Department's property management records. These items contained a value of $2,537,182.14 out of a population of $15,296,340.10 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
1) Eight (8) items totaling $53,887.50 could not be located.
2) Two (2) items were found in locations other than the location indicated in the equipment inventory records.
Also, during the physical inspection testing, four (4) items of equipment were located in our test locations, which were not included in the equipment inventory records for the particular location.
The Department is required to maintain equipment inventories in accordance with provisions of Title 34 CFR 80.32 Equipment (Office of the Secretary of Education). The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories. Failure to maintain accurate equipment inventory records causes internal reports to management to be misleading and can result in erroneous decisions by management concerning current and future equipment needs.
The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with federal regulations.
Major Federal Program/Award Affected: U.S. Department of Education 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
Finding Control Number: FA-414-02-02 ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Title VI - Innovative Education Program Strategies (CFDA 84.298) Questioned Cost: $134,800.00
U. S. Public Law 103-382, Title VI - Innovative Education Program Strategies, Section 6201, State Use of Funds states: "(a) Authorized Activities - A State educational agency may use funds made available for State use under this title only for-
0-48

~rgia
FederaL Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

1) State administration of programs under this title including a) supervision of the allocation of funds to local educational agencies; b) planning, supervision, and processing of State funds; and c) monitoring and evaluation of programs and activities under this title; and
2) technical assistance and direct grants to local educational agencies and statewide education reform activities including effective school programs which assist local educational agencies to provide targeted assistance."
"(b) Limitations and Requirements - Not more than 25 percent of funds available for State programs under this title in any fiscal year may be used for State administration under subsection (a)(l )."

The Georgia Department of Education (GDOE) contracts with various individuals and organizations to assist the GDOE in carrying out its responsibilities at the State level under the Title VI program. To test the GDOE contracting process for the Title VI program. we examined sixteen contracts in the amount of $552,950.00 ($492,950.00 charged to fiscal year 2002 expenditures and $60,000.00 charged to fiscal year 2001 expenditures). Our examination revealed five contracts in the amount of $134,800.00 that did not appear to meet the criteria identified above for a State educational agency eligible expenditures. The contracts are as follows:

Contract Number 910682
911464 911465

Date of Contract
5/9/01
9/5/01 9/12/01

Period of Services 1/1/01 -6/30/0 I
5/1/01 - 8/15/01
5/1/01 - 8/15/01

Account Number 653200
651003 707008

Amount $25,000.00
$4,800.00 $6,000.00

Purpose Coordinate, plan, implement teacher of the year program Coordinate and report Title II training evaluation surveys Local school board participation in national science competition

920604 920744

1/18/02 2/14/02

1/31/02 - 2/3/02 12/11/01 -6/30/02

653600 707008

$49,000.00 $50,000.00

Symposium for Exemplary Educators Local school board foreign language program

Total

$134,800.00

These expenditures resulted from management's broader interpretation of Title VI laws.
Improper interpretation of Title VI laws raises the risk of non-allowable costs being charged to the Title VI program and could result in refunds to the Title VI program.
We recommend that the U. S. Department of Education review these contracts to determine the manner in which the $134,800.00 of questioned costs should be resolved.
Finding Control Number: FA-414-02-03 ALLOWABLE COSTS/COST PRINCIPLES Improper Contracting Practices State Funds Title II - Dwight D. Eisenhower Professional Development Program (CFDA 84.281) Title VI - Innovative Education Program Strategies (CFDA 84.298)
The State Board of Education (State Board), as the governing board for the Georgia Department of Education (GDOE), has the responsibility to execute or to direct the execution of contracts for the GDOE. In addition, the State School Superintendent (Superintendent) has the statutory authority to enter into contracts incidental to the day-to-day operations of the GDOE in the amount of $50,000.00 or less without prior Board approval [Official Code of Georgia Annotated Section 20-2-241(c) and Attorney General Opinion 96-12].
Title 34 CFR 80.36(a) (Office of the Secretary of Education) states, in part, "when procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its non-Federal funds."

D-49

Federal Awards Findings and Questioned Costs
For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

The GDOE is engaged in the practice of authorizing the contractor to begin services prior to the contract being fully executed by the State Board or Superintendent. The GDOE has procedures in place that guide the contracts through the various approval stages and through to final execution but does not have adequate internal controls in place to ensure proper State Board or Superintendent approval prior to the services commencing.

To test the GDOE contracting process, we selected a sample of215 contracts in the amount of$ 6,513,315.04 out ofa total population of $29,164,051.10. Our examination of these items revealed 43 contracts whose execution date was after the date when services were to begin, and in certain instances, after the completion date of the services. These contracts are as follows:

Contract

Date of

Period of

Number

Contract

Services

910661

4/2/01

111/01 -12/31/02

910682

5/9/01

1/1/01 - 6/30/01

910847

8114/01

8/9/0 I - 8/30/0 I

910858

6/5/01

5/26/01 - 7/28/01

911464

9/5/01

511/01- 8/15/01

911465

9112/01

5/1/01 - 8115/01

920022

7117/01

611 /01 - 6/2/02

920043

7/31/01

7II /0 1 - 6/30102

920061

8/10/01

7/1/01 - 6/30/02

920123

9/6/01

9/1/01 - 8/1102

920139

9/6/01

9/1/01 - 811/02

920142

9/6/01

9/1/01 - 8/1/02

920151

9/12/01

8/1 /0 I - 6/30/02

920164

9/13/01

9/1/01 - 8/1/02

920165

9/13/01

9/1/0 I - 8/1/02

920176

9/20/01

9/1/01 - 8/1/02

920224

9/21/01

7/1/0 I - 6/30/02

920276

10/8/01

9/1/0 I - 8/1/02

920288

10/8/01

9/1/01 - 8/1/02

920309

10/3/01

7/1/01 - 6/30/02

920334

10/3/01

7/1/01 - 6/30/02

920375

1I/l7!01

7/1/01 - 6/30/02

920376

11/17/01

11/1/01 - 11/1/02

920387

9/3/01

9/1/01 - 8/1/02

9204!1

11/1/01

7/1/01 -12/31/01

920478

11/27/01

9/1/01 - 8/1/02

920480

11120/01

9/24/01 - 9/25/02

920563

12/13/01

7/1 /0 1 - 6/30/02

920566

12/17/01

9/27/01 - 9/29/01

920571

12/18/01

7/1/01 - 6/30/02

920577

12/19/01

7/1/01 - 6/30102

920637

1/7/02

12/14/0 I - 6/30/02

920713

2/6/02

7/1 /0 1 - 6/30/02

920744

2/14/02

12/11/01 - 6/30/02

920773

2/21/02

1/1/02 - 6/30/02

920866

4/22/02

3/1/02 - 6/30/02

920867

4/22/02

4/1 /02 - 12/31/02

920870

4/24/02

4/1/02 - 6/30/02

920936

5/6/02

1/1102 - 12/31/02

920937

5/6/02

2/28/02 - 6/30/02

920940

5/6/02

4/1 /02 - 10/31/02

921101

6/17/02

6/3/02 - 9/30/02

921119

6/21/02

5/1/02 - 8/1 /02

* Contract paid III full on thiS date..

Date First Payment Made
4/11/01 4/20/02 8/28/01 8/22/01 11/20/01* 12/13/01 8/16/02* 8/14/01 8/28/01 * 10/9/01 1019/01 10/9/01 12/18/01 10/9/01 10/9/01 10/9/01 10/23/01 1011/01 10/11/01 5/23/02 12/13/01 3/14/02 2/20/02* 11/27/01 11/20/01 12/11/01 4/25/02* 11/28/01* 1/4/02* 1130/02 3/27/02 5/29/02* 10/2/01 8/19/02 3/14/02 4/11/02 3/29/02* 7/25/02 No payment to Date 5/30/02* 5/10/02 No payment to date 7/9/02

Account Number 651003 707008 653001 653600 651003 707008 653200 653600 653600 653001 653001 653001 653600 653001 653001 653001 653600 653600 653001 707008 707008 653001 653600 653001 707009 653001 654001 653600 653200 653200 653200 653200 707008 707008 651003 707008 707008 707010 707008 653200 654001 654001 653600

Amount $35.000.00 $25,000.00 $88,000.00 $24,921.50 $4,800.00 $6,000.00 $100,000.00 $70,000.00 $2,400,000.00 $37,500.00 $37,500.00 $37,500.00 $6,000.00 $37,500.00 $37,500.00 $37,500.00
$800.00 $37,500.00 $37,500.00 $48,500.00 $49,950.00 $47,000.00 $27,840.00 $208,208.00 $15,000.00 $26,651.00 $26,488.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $43,000.00 $50,000.00 $50,000.00 $20,000.00 $50,000.00 $50,000.00 $30,000.00 $48,700.00 $49,000.00 $47,145.00 $43,776.00 $11,300.00

Program TitleYl TitleYl
State State TitleYl TitleYl State State State State State State State State State State State State State TitleY! TitleYI State Title II State TitleY! State State Title II Title II State State State TitleY! TitleY! TitleY! Title Y! TitleY! TitleY! TitleY! Title II State State State

The GDOE failed to follow established procedures to ensure that a fully executed contract was on hand prior to the date that services were set to begin on certain contracts.

-_... _ - - - _... _ - - - - - - -

D-50

FederaL Awards Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
Failure to have a fully executed contract on hand prior to the commencement of services could result in an unauthorized commitment or expenditure of State and Federal funds and could result in refunds to the respective Federal program.
The GDOE should review established procedures for contract processing and either modify existing internal controls or establish additional controls to ensure that a fully executed contract is on hand prior to the commencement of services.
Finding Control Number: FA-414-02-04 ALLOWABLE COSTS/COST PRINCIPLES Improper Contracting Practices Vocational Educational- Basic Grants to States (CFDA 84.048) Title II - Dwight D. Eisenhower Professional Development Program (CFDA 84.281) Title VI - Innovative Education Program Strategies (CFDA 84.298) Questioned Cost: FY 2002 - $ 82,493.50 Questioned Cost: FY 2003 - $ 581,394.00
APPLICABLE LAWS AND REGULATIONS The State School Superintendent has the statutory authority to enter into contracts incidental to the day-to-day operations of the Georgia Department of Education (GDOE) in the amount of $50,000.00 or less without prior State Board of Education (State Board) approval [Official Code of Georgia Annotated (OCGA) Section 20-2-241(c) and Attorney General Opinion 96-12].
All State agencies are required to contract through the Georgia Technology Authority (GTA) for any technology resource purchase exceeding $100,000.00 and no agency shall divide purchases so as to avoid the $100,000.00 threshold [OCGA Section 50-25-7.2 and Attorney General Opinion 2001-8].
No official of the State of Georgia shall have the power to grant any donation or gratuity or to forgive any debt or obligation owing to the public [Constitution of the State of Georgia; Article III; Section VI; Paragraph VI, Gratuities].
GDOE contracts, with the exception of construction contracts, must be procured in accordance with the "Department of Education Contract Manual" as revised August 22,2000.
Title 34 CFR 80.36(a) (Office of the Secretary of Education) states, in part, "when procuring property and services under a grant, a State will follow the same policies and procedures it uses for procurements from its non-Federal funds."
OMB Circular A-87 Cost Principles for State, Local and Indian Tribal Governments governs whether expenditures charged to a federal program are allowable.
IT NEEDS ASSESSMENT - GOVERNOR'S HONORS PROGRAM During the year under review, payment was made by a hand-drawn check to the Computer Consulting Services Corporation (CCSC) for a Governor's Honors Program (GHP) information technology needs assessment. The contract provided to our Department states "The needs assessment will identify needed areas of improvement in the technology functions of the Governor's Honor Program, and will include prioritization of needed areas of improvement and recommendations made as to the technology function-specific assessments(s)." Furthermore, it is stated, "The assessment team will gather information and evaluate the following technology functions, software applications, data management, networking, infrastructure, desktop support, security, human resources and best practices." On the same day another handdrawn check was issued to the same vendor for 650 PowerResearcher software licenses for the GHP. We were unable to ascertain why the software was purchased prior to the needs assessment being completed. In addition, three needs assessment contract extensions were issued by GDOE, the final of which was granted through December 31, 2002. On July 24, 2002, two additional information technology related disbursements totaling $99,498, (see Table 2 below) were made on behalf of the GHP.
In a written response to a question asking the former State School Superintendent why a contract was entered into with CCSC for a GHP technology needs assessment on the same day that the contract period began for the purchase of the
D-51

Federal Awards Findings and Questioned Costs For the FiscaL Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

PowerResearcher software for the GHP, the State School Superintendent replied, "The term needs assessment is somewhat misleading. The intent was to evaluate the software, it usefulness and application within the GHP environment and determine if further adjustments in training and usage by GHP staff, students and parents would be necessary to the effectiveness and user friendly application we sought. The company was to keep and evaluate records and data, and conduct surveys and interviews to determine the extent of the use and satisfaction with the product by students and staff. The DOE would determine if next year's GHP would use it again, and what adaptations should be made. Thus the needs assessment was both an evaluation and needs assessment for next year. That has now been delivered to DOE and will be used as a planning tool in this spring's GHP staffretreat." It should be noted that the Superintendent's response does not coincide with the requirements of the contract and that included in the $99,498 in additional disbursements made on July 24, 2002, is a disbursement of $49,900 for the purchase of 500 additional PowerResearcher licenses for the GHP.

SOFTWARE LICENSES - GOVER.NOR'S HONORS PROGRAM

GDOE personnel responsible for administration of the GHP indicated that only 50 of the initial 650 PowerResearcher

licenses were utilized through installation of the software on GHP personal computers. Per the contract with CCSC, the

software was available for download by both the students and faculty of the GHP. We were unable to determine through

interviews with GDOE personnel, however, if any additional PowerResearcher software was downloaded.

Table 1

Check

Date

Number

Issued

Payee

Amount

Description

Computer Consulting Services

Needs assessment of the GHP to identify areas needing

1004

6/26/2002 Corporation

$50,000.00

technology improvement

Computer Consulting Services

1005

6/26/2002 Corporation

$32,493.50

650 PowerResearcher software licenses for the GHP

Total

$82,493.50

FISCAL YEAR 2003 TRANSACTIONS

Subsequent to June 30, 2002, we became aware of additional payments made to vendors by hand-drawn checks for

technology resource purchases in the amount of $581,394.00. Documentation (contract, vendor invoice and receiving

report) to substantiate the issuance of these checks was not available upon request (see bullet number two below). These

payments are as follows:

Table 2

Check Number

Date Issued

Payee

Amount

Description

Automated communications service for Georgia Academy for

1007

7/24/2002 Calling Post Communications Inc.

$49,500.00 the Blind

Computer Consulting Services

1008

7/24/2002 Corporation

$49,900.00 500 PowerResearcher software licenses-GHP

Computer Consulting Services

1009

7/24/2002 Corporation

320 PowerResearcher software licenses for the Atlanta School

$48,850.00

for the Deaf-(ASFD)

Computer Consulting Services

1010

7/24/2002 Corporation

320 PowerResearcher software licenses for the Georgia School

$48,850.00

for the Deaf- (GSFD)

lOll

7/24/2002 Majestix LLC

$49,900.00 Web cast courses for the GDOE and affiliated school systems

lOB

7/24/2002 Maverix Corporation

$47,500.00 My Community Server-ASFD

1014

7/24/2002 Maverix Corporation

$47,500.00 My Community Server-GSFD

1015

7/24/2002 Proactive Research LLC

$45,000.00 180 Maestro Pro Software Licenses-ASFD

1016

7/24/2002 Proactive Research LLC

$45,000.00 180 Maestro Pro Software Licenses-GSFD

1018

7/24/2002 Uniting Networks Incorporated

$49,598.00 Distribution, management and maintenance of software-GHP

1019

7/24/2002 Uniting Networks Incorporated

$49,898.00 Distribution, management and maintenance of software-ASFD

1020

7/24/2002 Uniting Networks Incorporated

$49,898.00 Distribution, management and maintenance of software-GSFD

Total

$581,394.00

Further investigation of these payments disclosed the following: D-52

FederaL Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
1) Through interviews with GDOE personnel we determined that the twelve hand-drawn checks were issued on July 24, 2002, on the instructions of the State School Superintendent (Superintendent) and prior to the initiation of GDOE's contract approval process and prior to any goods or services being delivered.
2) On August 21, 2002 and again on August 23, 2002, we verbally requested documentation (contract, vendor invoice and receiving report) to substantiate the issuance of these checks. When GDOE failed to respond to these requests, we formally requested the documentation on August 26, 2002, and were informed that the documentation was not available. Documentation, in the form of contracts and vendor invoices, was provided on September 10, 2002, with two of the contracts signed and dated June 24, 2002, and the remainder signed and dated July 24, 2002. However, documentation to support receipt of the goods and services was not provided as requested. Subsequent interviews with GDOE personnel confirmed that the contracts were not in existence on those dates.
3) The contracts were approved only by the Superintendent and did not proceed through the GDOE normal contract approval process.
4) Interviews with GDOE personnel responsible for the programs for which the purchases were made revealed that they were not aware of the contracts and had not been consulted concerning their technology resource needs prior to the contracts being signed. It was also revealed that these GDOE program personnel had not received the goods and services nor had they been contacted about future delivery of the goods and services.
5) One contract (check number 1007) for a school messaging service at the Georgia Academy for the Blind expired on December 31, 2002. Interviews with GDOE program personnel for the State schools confirmed that the service was never supplied to the Georgia Academy for the Blind.
6) The contract period for two contracts (check numbers 1013 and 1014) is more than half complete with no discernable goods or services having been provided. These contracts were executed to purchase software licenses with license periods running twelve months from the date of execution of the contracts (June 24, 2002).
7) The individual PowerResearcher software licenses, depending on the contract, varied in cost from $49.99 to $152.66 per license (see Tables 1 and 2).
8) On January 13,2003, an e-mail was issued indicating that GDOE personnel could now register for webcast courses (check number 1011). GDOE management personnel rescinded this e-mail subsequent to the Superintendent leaving office later that day.
NONCOMPLIANCE WITH LAWS AND REGULATIONS These contracts appear to be in violation of the following laws and regulations:
1) The contracts appear to be structured in such a manner as to be in violation of OCGA 20-2-241 (c) authorizing the Superintendent to contract for goods and services at $50,000.00 or less. All but two of the contracts (check numbers 1007 and 1011) were for multiple contracts (exceeding $50,000.00 in the aggregate) with the same vendor for the same goods or services. The primary purpose in structuring these contracts in this manner appears to be the exclusion of the State Board from the contract approval process.
2) Six of the contracts (check numbers 1008 through 1010 for $147,600.00 and 1018 through 1020 for $149,394.00) appear to be in violation of OCGA section 50-25-7.2 which states that an agency cannot divide purchases in order to avoid the $100,000.00 threshold for contracting through the GTA for any technology resource purchase. OCGA Section 50-25-7.8 states that purchases made contrary to OCGA Section 50-25-7.2 shall be void and of no effect.
3) One contract (check number 1007) appears to be in violation of the Constitution of the State of Georgia; Article III; Section VI; Paragraph VI, Gratuities. The contract expired on December 31, 2002, without goods or services being delivered and with no contract extension executed.
4) All the contracts listed in Table 2 appear to be in violation of regulations listed in the "Department of Education Contract Manua\."
D-53

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

5) The contracts appear to be in violation of Title 34 CFR 80.36(a) relative to procurement in that the contracts were initiated and finalized in direct conflict with standard GDOE contract procurement processes. In addition, the contracts appear to be in conflict with OMB Circular A-87's general principles for determining allowable costs as follows: a) Necessary and Reasonable - The variance in cost of the PowerResearcher licenses and interviews with GDOE program personnel called into question whether the costs, listed in the above tables, were necessary or reasonable. The interviews revealed that the GDOE program personnel believed the purchases to be unnecessary and would not benefit their respective programs. b) Adequately Documented - Documentation was not available to support the goods and services being delivered. Interviews with GDOE program personnel confirmed that the affected programs had not received the goods and services. c) Significant Deviations from Established Practice - As noted above, the contracts were initiated and finalized in direct conflict with established GDOE policies for contract procurement. d) Allocable Costs - A cost is allocable to a particular cost objective if the goods or services involved are chargeable or assignable to such cost objective in accordance with relative benefits received. Interviews with GDOE program personnel raise questions as to whether any benefit to a federal program has been received. e) Sound Business Practices - As previously noted, the twelve hand-drawn checks were issued prior to the initiation ofGDOE's contract approval process and prior to any goods or services being delivered.

The GDOE, primarily the State School Superintendent, failed to follow established procedures to ensure that a fully executed contract was on hand prior to the date that services were set to begin or payment being made to the vendor. Failure to have a fully executed contract on hand prior to the commencement of services could result in an unauthorized commitment or expenditure of Federal funds and could result in refunds to the respective Federal program. In addition, failure to ensure that goods or services are received prior to payment being made could result in a violation of the gratuities section of the State Constitution.

Recommendations: We recommend that the U. S. Department of Education (USDOE) review these contracts to determine the manner in which the $663,887.50 of questioned costs should be resolved. We further recommend that GDOE management, in consultation with the Attorney General of the State of Georgia, seek restitution of the funds for which services have not been rendered.

Finding Control Number: FA-414-02-05 SUBRECIPIENT MONITORING Inappropriate Issuance of Management Decision Vocational Education - Basic Grants to States (CFDA 84.048)

As provided in OMB Circular a-133, section AOOd(5), pass-through entities are responsible for making the management decision for audit findings that relate to Federal awards it makes to subrecipients.

The Georgia Department of Education (GDOE), a pass-through entity with regard to Federal awards sub-granted to the Georgia Department of Technical and Adult Education (GDTAE), did not consider all available evidence in making the management decision regarding Perkins III audit findings disclosed at four Technical Colleges. These findings are as follows:

Technical Colle2e Augusta Technical Institute DeKalb Technical Institute Savannah Technical Institute Okefenokee Technical College

Findine; No. FA-824-98-0 1 FA-830-98-0 1 FA-841-98-01 FA-818-01-01

Questioned Cost $48,930.95 $31,480.04 $21,277.55 $102,129.32

The findings questioned the use of Perkins III funds in support of Student Financial Aid (SFA) office activities and whether the use of Perkins funds in this manner violated the supplement versus supplant requirements.

_-_ ........ _ .... ----------

D-54

___. . _ - -

.__. _ - - - - - - - -

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
GDOE resolved these findings based on guidance provided in a letter to the U.S. Department of Education (USDE) dated October 16, 2000. USDE stated that if a technical college serves only vocational education students from economically disadvantaged families and the position has always been funded with Federal vocational education funds, then supplanting did not occur. USDE also stated that since a SFA Director provided counseling services, the associated costs were not subject to the 5% limit on administrative costs in section 135(d) of Perkins III. USDE advised that if similar circumstances prevailed at other institutions, then the letter's stated guidance might be applied at other technical colleges in resolving the Perkins III findings. We have concerns about the resolution ofthis matter as noted below:
1) The October 16, 2000 letter did not address all the requirements that the audit findings disclosed as being necessary to comply with supplanting requirements as listed in the OMB A-133 Compliance Supplement and cited Federal regulations.
2) Records do not support that the technical colleges and the SFA offices serve only students who are from economically disadvantaged families.
3) The audit findings disclosed that a large percentage of the SFA Director's salary at three of the four technical colleges were for a wide variety of activities outside of counseling. In addition, auditors were not provided documentation of a SFA Director's time and effort devoted to these various activities as required by OMB Circular A-87. To the contrary, substantial portions of these salaries were charged to Perkins III based only on approved GDTAE budgets.
4) A significant part of reported questioned costs charged to Perkins III funds by the technical colleges involved costs for (1) salaries of SFA staff personnel such as secretaries, clerks, receptionists, etc., who performed only administrative duties and (2) acquisition of computer equipment and office furnishings for the SFA office. At another technical college, the cost of the college's Registrar'slManagement Information System Coordinator's salary was charged to Perkins III funds. OMB Circular A-87 requires that benefits must be derived as a result of a charge to a federal program. USDE did not indicate if program charges such as these were allowable program costs.
The above matters were discussed with USDE and GDTAE in December 2001. The USDE indicated that these were valid issues needing to be addressed in resolving the findings. In addition, GDOE officials advised that they were not informed by either USDE or GDTAE of these issues; therefore, they were not considered in the resolution process.
We are concerned that failure to issue appropriate management decisions could result in the continuation of noncompliance with Federal program requirements at the technical colleges. Therefore, we suggest that GDOE, in consultation with USDE, re-examine the management decision that previously resolved these findings by addressing the aforementioned issues.
Finding Control Number: FA-414-02-06 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period
As part of our examination, we reviewed tracking documents used by the Department of Education to determine the status of subrecipient audit reports for the year ended June 30, 2001. Of the two hundred forty (240) subrecipients identified on the tracking documents, one hundred eighty-eight (188) had not submitted their audits within the nine-month period as required by OMB Circular A-133. This noncompliance is due to subrecipient audits not being performed in a timely manner.
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 provisions of OMB Circular A-133.
D-55

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

Major Federal Program/Award Affected:
us. Department of Education
Vocational Education - Basic Grants to States - CFDA No. 84.048

Federal Agencies With Other Affected Programs:
us. Department of Agriculture
Corporation for National and Community Service US. Department of Defense US. Department of Education US. Department of Health and Human Services

DEPARTMENT OF COMMUNITY HEALTH (*)

Finding Control Number: FA-419-02-01 ALLOWABLE COSTS/COST PRINCIPLES Pharmacy Benefit Claims

Information:

Federal Program CFDA No. 93.778 Medical Assistance Program U.S. Department of Health and Human Services Grant Award No. 5-0205GA5028 Fiscal Year 2002

Criteria:

Federal rules require the Department of Community Health to use Medicaid funds for Medicaid benefit payments (as specified in the State plan, Federal regulations, or an approved waiver), expenditures for administration and training, expenditures for the State Survey and Certification Program, and expenditures for State Medicaid Fraud Control Units. The State plan may also provide for case management services, a managed care waiver, payment of certain health insurance premiums for Medicare patients, payments to Disproportionate Share Hospitals, and home and community based services which may permit an individual from avoiding institutionalization.

Condition:

During performance of our annual auditing procedures, we became aware, through discussions with DCH and DOAA personnel, that problems existed within Express Scripts, Inc., the third party that processes pharmacy claims for DCH, which led to errors in payments for pharmacy benefit claims during fiscal year 2002. These errors led to overages in federal funds obtained.

Questioned Cost: Context:

$152,403.
The benefits claims sample yielded one pharmacy claim, identified as such by its corresponding Category of Service (COS), which was paid more than one time. DCH then made the auditors aware that certain problems relating to the processing of the pharmacy claims were identified, and steps were being taken to correct those problems.

Effect:

The total dollar value of pharmacy claims was overstated for the year by the amount of $152,403. The Department of Community Health recovered the full amount of the questioned cost prior to the issuance of this report.

Cause:

Management did not complete correction procedures for pharmacy claim processing errors in time

to record benefit expenditure amounts accurately classified by the proper fiscal years within the

Medicaid Management Information System.

(*) THIS ORGANIZATIONAL UNIT WAS AUDITED BY OTHER AUDITORS

D-56

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

Recommendation:

Management should develop procedures to review pharmacy claims periodically to ensure third parties are processing claims properly.

DEPARTMENT OF HUMAN RESOURCES

Finding Control Number: FA-427-02-01 ELIGIBILITY Deficiencies in File Maintenance Temporary Assistance to Needy Families (CFDA 93.558) Questioned Cost: $ 4,610.00

Our examination included a review of one hundred sixteen client case files from the Temporary Assistance to Needy Families Program (TANF) at certain county Department of Family and Children Services (DFACS) offices to detennine if benefit payments were made within program guidelines. These items contained a value of $212,298.20 out of a sample population of 45,762 cases totaling $82,700,152.26. Our examination revealed that three client files were incomplete which resulted in $4,610.00 of known questioned costs. These errors were caused by DFACS management's failure to ensure that information required by the Department of Human Resources "Economic Support Services Manual" 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 detennination is included in the file.

Finding Control Number: FA-427-02-02 ELIGIBILITY Deficiencies in File Maintenance Food Stamp Cluster
Food Stamps (CFDA 10.551) State Administrative Matching Grants for Food Stamp Program (CFDA 10.561) Questioned Cost: $ 3,405.00

Our examination included a review of one hundred forty-nine client case files from the Food Stamp Program at certain county Department of Family and Children Services (DFACS) offices to detennine if benefit payments were made within program guidelines. These items contained a value of $303,076.00 out of a sample population of 37,604 cases totaling $91,788,393.50. Our examination revealed that five client files were incomplete which resulted in $3,405.00 of questioned costs. These errors were caused by DFACS management's failure to ensure that information required by the Department of Human Resources "Economic Support Services Manual" 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 induded in the file.

Finding Control Number: FA-427-02-03 SUBRECIPIENT MONITORING Inadequate Monitoring of Subrecipients HIV Care Formula Grants (93.917)

Our examination of monitoring of subrecipients for the HIV Care Formula Grants disclosed that procedures were not in place to effectively monitor their subrecipients during the year under review. The HIV Care Formula Grants uses subrecipients to apply services to clients. The HIV Care Formula Grants provided funding to nineteen subrecipients during the year under review. Our examination disclosed that the Department of Human Resources did not conduct site visits to any of these subrecipients.

D-57

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
The Department of Human Resources indicated that site visits were not conducted due to staff shortages. The failure to conduct site visits increases the risk that non-eligible recipients will be admitted to the program. Accordingly, uncertainties with regard to activities allowed or unallowed, allowable costs/cost principles, eligibility, reporting, and matching, level of effort, and earmarking exists.
Monitoring of subrecipients is necessary to ensure compliance with applicable program guidelines; therefore the Department of Human Resources should strengthen monitoring procedures for the HIV Care Formula Grants program, including annual site visits to each of its subrecipients. Other recommendations were made to program staff during the course of our audit to strengthen monitoring efforts.
Finding Control Number: FA-427-02-04 MATCHING, LEVEL OF EFFORT, EARMARKING Failure to Establish Quality Management Program HIV Care Formula Grants (93.917)
The State of Georgia is required to establish a quality management program to determine whether the services provided under the grant are consistent with the most recent Public Health Service guidelines for the treatment of HIV disease. Our examination disclosed that a quality management program was not in effect during the year under review.
The Department of Human Resources indicated that a quality management program was not in effect during the year under review due to staff shortages. The failure to comply with this program requirement increases the likelihood that eligible individuals will not receive optimal treatment.
The Department of Human Resources should establish the required quality management program in order to ensure that the services being provided are in conformity with program guidelines.
Finding Control Number: FA-427-02-05 ELIGIBILITY Deficiencies in Eligibility Database/File Maintenance HIV Care Formula Grants (93.917)
During the course of our examination of program eligibility, we requested electronic data that included all recipients who received benefits for the period under review. The Department of Human Resources, however, could not provide a database that was both accurate and complete for both the AIDS Drug Assistance Program (ADAP) and the Health Insurance Continuation Program (HICP).
As the Department of Human Resources could not provide the total population of recipients receiving benefits in the year under review, statistical samples were not selected. Dual purpose testing (testing of internal controls and compliance requirements), however, was conducted on ADAP and HICP by selecting recipients from paid monthly invoices.
ADAP
Our testing included a review of one hundred case files to determine if the Department of Human Resources performed required eligibility determinations (including obtaining required documentation/verifications) and to determine if the recipients selected for testing were eligible. Results of our testing are as follows:
In 17 of the 100 files, the recipients' HIV positive status was questionable.
In 11 of the 100 files, the recipients' income level was questionable.
9 of the 100 files indicated the recipient was receiving or had applied for Medicaid.
In 67 of the 100 files, Georgia residency was not properly supported.
D-58

FederaL Awards Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002
FEDERAL AWARDS FINDINGS
In 17 of the 100 files, recipient CD4 counts were not properly documented.
In 5 of the 100 files, the application date was documented at a date after the date of service.
In 26 of the 100 files, an emollment application was not available to review.
In 5 of the 100 files, there was no documentation to determine if the recipient had third party insurance.
In 6 of the 100 files, the recipient social security number was matched to a Medicaid recipient social security number.
In 32 of the 100 files there was no indication that the file had been properly reviewed and approved.
24 of the 100 files did not contain a re-certification within 6 months of the testing date.
HICP Our testing included a review of forty-seven case files to determine if the Department of Human Resources performed required eligibility determinations (including obtaining required documentation/verifications) and to determine if the recipients selected for testing were eligible. Results of our testing are as follows:
In 5 of the 47 files, the recipient income level was questionable.
In 2 of the 47 files, documentation indicated that the recipient was receiving Medicaid or had applied for Medicaid.
In 18 of the 47 files, Georgia residency was not properly supported.
In 7 of the 47 files, the recipient social security number was matched to a Medicaid recipient social security number.
In 47 of the 47 files there was no indication that the file had been properly reviewed and approved.
17 of the 47 files did not contain a re-certification within 12 months of the testing date. Failure to properly maintain recipient 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. Also, the Department of Human Resources should strengthen its HIV subsystems in order to provide critical program supporting documentation.
Finding Control Number: FA-427-02-06 ALLOWABLE COSTS/COST PRINCIPLES Improper Health Insurance Continuation Program (HICP) Payments HIV Care Formula Grants (93.917)
During the course of our testing of Health Insurance Continuation Program (HICP) eligibility files it was noted that premium payments for family and dental insurance coverage was made in 5 of 47 files examined. Information sufficient to calculate questioned costs associated with these instances of noncompliance was not readily available. Payments for family and dental insurance were not allowable costs of the HIV Care Formula Grants program for the year under review. The Department of Human Resources should strengthen its internal controls to ensure that improper program payments do not occur.
D-59

Federal Awards Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

Finding Control Number: FA-427-02-07 ALLOWABLE COSTS/COST PRINCIPLES Inadequacies in Collection of Overpayments of Health
Insurance Continuation Program (HICP) Premiums HIV Care Formula Grants (93.917)
Our examination included a review of the internal accounting controls for Allowable Cost/Cost Principles for HIV Care Formula Grants. Our review disclosed that some refunds due back to the Department of Human Resources for overpayment of Health Insurance Continuation Program (HICP) premiums were not collected. In some of these instances, program staff was not aware that refunds were due to the Department.
Program staff of the Department of Human Resources should regularly review correspondence from insurance companies to verify that the correct amount is being paid for premiums and that payments are not being made for expired coverage. Further, written policies and procedures should be developed and put into place to track refunds due to the Department.
DEPARTMENT OF LABOR
Finding Control Number: FA-440-02-01 CASH MANAGEMENT Improper Fund Requests Disability Insurance/SSI Cluster Program (96.001) Questioned Costs: $36,316.32
During the period under review, the Georgia Department of Labor improperly requested funds for four separate grants totaling $777,555.32 as follows:

Grant 0004GADIOO 0004GADI02 9804GADI01 9804GADIOO

Amount $709,631.00
$26,000.00 $5,608.00 $36,316.32

Resolution Returned May, 2002 Returned May, 2002 Returned May, 2002
Unresolved

These funds were transferred from the U.S. Department of Treasury in January 2002. Federal auditors of the Social Security Office of the Inspector General requested documentation for the expenditures related to three of the fund requests. The Department of Labor was unable to provide adequate documentation to support the three fund requests, and as a result, returned the funds to the U.S. Department of Treasury based on the federal auditors request in May 2002. Our review of the remaining grant request disclosed that documentation for the expenditures could not be provided by the Department to support the request of funds for grant number 9804GADIOO in the amount of $36,316.32. These funds should be returned to the U.S. Department of Treasury.

The Department should review the Disability Insurance/SSI Cluster Program regulations in order to develop adequate control procedures to ensure that the cash drawdowns of the Disability Insurance/SSI Cluster Program are made based on immediate cash needs.

D-60

Georgia
FederaL Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
OFFICE OF SCHOOL READINESS
Finding Control Number: FA-469-02-01 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period
As part of our examination, we reviewed tracking documents used by the Office of School Readiness to determine the status of subrecipient audit reports for the year ended June 30, 2001. Of the one hundred sixty-three (163) subrecipients identified on the tracking documents, ninety-seven (97) had not submitted their audits within the nine-month period as required by OMB Circular A-133. This noncompliance is due to subrecipient audits not being performed in a timely manner.
The Office of School Readiness uses program staff for interim compliance reviews of all subrecipients in accordance with the provisions ofOMB Circular A-133.
Federal Programs/Awards Affected: U.S. Department of Agriculture Child Nutrition Cluster Summer Food Service Program - CFDA 10.559 Child and Adult Food Care Program- CFDA 10.558
OFFICE OF TREASURY AND FISCAL SERVICES
Finding Control Number: FA-486-02-01 CASH MANAGEMENT Failure to Adhere to Terms of the Cash Management Improvement Act Agreement Cash Management Improvement Act (CMIA)
Under 31 CFR 205 .29(b), the State of Georgia's CMIA agent is responsible for certain oversight duties with regard to the CMIA program. The agent has the responsibility to "... maintain records supporting interest calculations, clearance patterns, interest calculation costs, and other functions directly pertinent to the implementation and administration of this subpart A for audit purposes ... "
For the year under review, the State of Georgia's CMIA agent, the Office of Treasury and Fiscal Services, did not verify the accuracy of interest calculations and clearance patterns claimed by state agencies and subsequently submitted to the United States Department of the Treasury.
The Office of Treasury and Fiscal Services indicated they were unable to verify the accuracy of interest calculations and clearance patterns claimed by state agencies during the year under review due to staff shortages.
The Office of Treasury and Fiscal Services should implement policies and procedures to assure compliance with the Cash Management Improvement Act agreement between the State of Georgia and the United States Department of the Treasury.
D-6l

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

GEORGIA INSTITUTE OF TECHNOLOGY (*)

Finding Control Number: FA-503-02-01 REPORTING Reports Not Submitted in a Timely Manner Research and Development Cluster

Statement of Condition: Numerous progress reports required by grant and contractual agreements entered into by GTRC and various Federal agencies were not filed on time, as specified in the grant and contractual agreements.

Criteria: The reporting compliance requirement mandates the 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, should be filed on time.

Effect: Since the reports listed below were ultimately filed, the effect of untimely filing is the possible delay of other projects that were related to GTRC and GlT grants and contracts.

Agency
Army Army Army Army Army USDOD USDOD USDOD USDOD USDOD USDOD USDOD US Dept of Energy NASA NASA NASA NASA NASA NASA NASA NASA NASA NASA NASA National Textile Center National Textile Center NSF NSF US DOT US DOT

CFDA Number
98.0FA 980FA 98.0FA 98.0FA 98.0FA 12.0FA 12.0FA 12.0FA 12.0FA 12.0FA 120FA 12.0FA 81.000 43.000 43.000 43.000 43.000 43.000 43.000 43.000 43.000 43.000 43.000 43.000 11.000 11.000 47.076 47.041 20.000 20.000

Contract Number
DAAB07-99-C-K530 DAAB07-99-C-K530 DAAB07 -99-C-K530 DAAB07-99-C-K530 DAAB07 -99-C-K530 XXXXXX-98-C-8094 XXXXXX-98-C-8094 XXXXXX-98-C-8094 MDA972-99-1-0002 MDA972-99-1-0002 MDA972-99-1-0002 MDA972-99-1-0002 DE-FC36-00GO I0600 NASIO-OI025 NASI 0-01025 NAS10-01025 NAS 10-0 1025 NASIO-OI025 NASIO-OI025 NAS 10-01025 NAS10-01025 NASIO-01025 NASIO-01025 NASIO-01025 E-27-BOO E-27-BOO G-32-669 E-20-G48 E-20-F64 E-20-F64

GTRC/GIT Ref Number
A-6100 A-6100 A-6100 A-6100 A-6100 A-5617 A-5617 A-5617 R-1357 R-1357 R-1357 R-1357 R-2315 R-2774 R-2774 R-2774 R-2774 R-2774 R-2774 R-2774 R-2774 R-2774 R-2774 R-2774 R-7488 R-7488 R-3268 R-2778 R-2149 R-2149

Report Type
Quarterly Quarterly Quarterly Quarterly Yearly Monthly Cost Status Status Quarterly Progress Quarterly Progress Quarterly Progress Quarterly Progress Progress Report Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Technical Progress Quarterly Progress Quarterly Progress Annual Progress Annual Progress Progress Report Progress Report

Report Number
002AA 002AA 002AA 002AA 003AA D.O. 0010 D.O. 0007 D.O. 0007 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Date Due
07-14-01 10-14-01 01-14-02 04-14-02 10-30-01 12-25-01 02-20-02 03-20-02 09-30-01 12-31-01 03-31-02 06-30-02 07-31-01 07-16-01 08-14-01 09-14-01 11-14-01 12-14-01 01-15-02 02-14-02 03-14-02 04-12-02 05-14-02 06-14-02 07-10-01 10-10-01 05-31-02 04-30-02 08-20-01 09-20-01

Date Mailed
09-17-01 12-10-01 02-04-02 05-06-02 12-10-01 01-02-02 03-04-02 05-21-02 10-31-01 02-05-02 04-30-02 10-03-02 08-02-01 07-20-01 08-20-01 09-24-01 11-26-01 12-19-01 01-18-02 02-18-02 03-25-02 04-22-02 05-24-02 06-27-02 10-24-01 11-01-01 07-22-02 07-03-02 10-01-01 10-01-01

Cause: The cause of untimely filing, as stated to us by GTRC and GIT personnel, was the unavailability of data necessary for the completion of the required reports.

Recommendation: Efforts should be made by GTRC and GIT to ensure that all required contractual deliverables are submitted to the contracting agencies by the specified due dates.

Questioned Cost: None (*) CERTAIN FEDERAL COMPLIANCE REQUIREMENTS FOR THE RESEARCH AND DEVELOPMENT
CLUSTER OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS
D-62

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FEDERAL AWARDS FINDINGS

Finding Control Number: FA-503-02-02 REPORTING Reports Not Prepared for the Appropriate Period and/or Submitted at an Appropriate Date Research and Development Cluster

Statement of Condition: Certain progress reports required by grant and contractual agreements entered into by GTRC and various Federal agencies were not prepared for the appropriate period and/or submitted at an appropriate date, as specified in the grant and contractual agreements.

List of agency names, contract numbers, and CFDA numbers associated with this finding were:

Agency
US DOD NatIonal Textile Center National Textile Center

CFDA Number
120FA 11000 11.000

Contract Number
XXXXXX-98-C-8094 E-27-BOO E-27-BOO

GTRC/GIT Ref Number
A-5617 R-7488 R-7488

Report Type
Status Report Quarterly Progress Quarterly Progress

End Date of covered Period

Date Due

12-31-01 12-31-01 03-31-02

01-20-02 01-10-02 04-10-02

Date Mailed
11-20-01 11-01-01 11-01-01

Criteria: The reporting compliance requirement mandates the submission of certain reports in accordance with the provisions of 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, should be filed for the appropriate period.

Effect: The effect of the untimely filing is the possible delay of other projects which were related to GTRC and GIT grants and contracts.

Cause: The cause of untimely filing, as stated to us by GTRC and GIT personnel, was the unavailability of data necessary for the completion of the required reports.

Recommendation: Efforts should be made by GTRC and GIT to ensure that all required contractual deliverables are submitted to the contracting agencies for the specified periods and submitted at an appropriate due date.

Questioned Cost: None

GEORGIA STATE UNIVERSITY

Finding Control Number: FA-509-02-01 ELIGIBILITY Student Direct Loan Disbursements Exceed Loan Limit Student Financial Aid Cluster Program Questioned Cost: $2,024.00

Federal Direct Student Loan Program testing revealed one sPldent whose total direct loan disbursements exceeded the student's subsidized aggregate loan limit in the amount of $2,024.00. Federal Regulations (34 CFR 685.203) state that the aggregate loan limit of all direct subsidized and unsubsidized loans for dependent undergraduate students is $23,000.00.

The above instance of noncompliance resulted from management's failure to properly maintain student financial aid files to ensure that Federal Direct Loans do not exceed the aggregate loan limits. The University should implement policies and procedures to ensure adequate controls over the eligibility process. In addition, the University should develop and implement a monitoring process to ensure that the controls are being followed. The University should contact the U. S. Department of Education regarding the resolution of this questioned cost.

D-63

FederaL Awards Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002

FEDERAL AWARDS FINDINGS

UNIVERSITY OF GEORGIA (*)

Control Number: FA-518-02-01 REPORTING FINANCIAL REPORTS NOT PROPERLY FILED
Condition: 4 of the 20 expenditures selected for testing included financial reports that were not filed timely.
The following table lists the financial reports filed improperly:

Account Number 26-31-GE361-00l 26-31-GE670-001 26-31-RE677-221 10-31-RE263-187

C.F.D.A. # Not Applicable Not Applicable
10.500 93.558

Due Date 04/01/02 04/01/02 12/31/01 05/15/02

Date Submitted 06120/02 06120/02 06120/02 06/17/02

Criteria: Attachment H of OMB Circular A-II0 establishes requirements for monitoring and reporting program performance.

Effect: The University failed to comply with the applicable financial 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 achieve full compliance with the existing internal controls for the monitoring of required reports. The University should consider developing a monthly report that lists all reports required to be delivered within a certain number of days, for example 45. This list should be reviewed by University personnel in order to monitor the timeliness of required reporting.

ALBANY STATE UNIVERSITY
Finding Control Number: FA-521-02-01 CASH MANAGEMENT Excessive Cash Balances
A review of the cash management procedures for the Federal Direct Loan Program disclosed the cash draws were made in advance of immediate cash needs. During the year under review, the University had excessive cash balances for 68 days with an average cash balance of $10,042.21 for these days.
Federal cash draws should not exceed the immediate cash need. The excessive cash balances were the result of management's failure to forecast needs of this program and to have controls in place and operational to prevent excess cash balances. Procedures should be implemented by the University to ensure that requests for cash draws do not exceed the immediate need.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program U. S. Department of Education Federal Direct Student Loan Program (CFDA 84.268)
(*) FEDERAL COMPLIANCE REQUIREMENTS OF THIS ORGANIZATIONAL UNIT WERE AUDITED BY OTHER AUDITORS
D-64
..- - - _ . _ . _ - - - -

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
Finding Control Number: FA-521-02-02 ELIGIBILITY Deficiencies in Student Financial Aid Disbursement Process Questioned Costs: $21,785.13
A sample of forty-three student financial aid files was selected to determine if financial aid was properly calculated and disbursed to eligible students. The items sampled contained financial aid disbursements of $358,301.44 out of a population of $19,426,642.23. Our examination of student financial files disclosed the following deficiencies:
1) One student received a Federal Direct Student Loan disbursement of $1,294.00 prior to signing an entrance counseling form. One student received a Federal Perkins Loan disbursement of $1,000.00 prior to signing a promissory note.
34 CFR 685.304 and 674.16 requires that entrance counseling be performed and students sign a promissory note, respectively, prior to disbursement of funds. These errors were caused by management's failure to verify that all procedures had been performed prior to the disbursing of federal financial aid.
2) Clerical errors caused one student to receive $151.00 in excess of need due to the student's cost of attendance incorrectly including a loan origination fee and one student to receive $61.81 of Federal Work Study funds in excess of hours actually worked.
3) One student received $2,036.58 in excess of need due to Veterans' payments not being included as other sources of aid.
4) One student/employee received $1,669.00 in excess of need due to tuition and fee remission not being included as other sources of aid. A review of all students/employees of the institution receiving tuition and fee remission disclosed 11 additional students who received $15,572.74 in excess of need due to management's failure to include tuition and fee remission as other sources of aid.
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 financial aid programs it administers and must establish controls to preclude the awarding and disbursing of assistance in excess of a student's financial need.
Procedures should be implemented to 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 these questioned costs.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program U. S. Department of Education Federal Supplemental Educational Opportunity Grant Program (CFDA 84.007) Federal Work Study Program (CFDA 84.033) Federal Perkins Loan Program (CFDA 84.038) Federal Direct Student Loan Program (CFDA 84.268)
D-65

Georgia
Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
FORT VALLEY STATE UNIVERSITY
Finding Control Number: FA-533-02-01 ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Costs: $24,489.00
A sample of fifty-eight financial aid files was selected to determine if financial aid was properly calculated and disbursed to eligible students. The items sampled contained financial aid disbursements of $543,705.87 out of a population of $14,323,008.67. Our examination revealed that seven students received funds in excess of their eligible need totaling $24,489.00 as shown below:
1) Three students were not in compliance with the University's published satisfactory Academic progress policies. Federal regulations (34 CFR 668.32 and 668.34) state that a student must maintain satisfactory academic progress to be eligible to receive financial assistance under the Title IV programs. The University's policy states that the maximum time frame a graduate student is allowed to successfully complete his course of study is 72 semester hours. The three students in question had not successfully completed their course of study within the required time frame. This noncompliance resulted in questioned costs of$19,220.00.
2) Two students exceeded the aggregate limit of $23,000.00 in Direct Loans for a dependent undergraduate. Federal regulations (34 CFR 685.203) state that the aggregate limit of all Direct Subsidized and Unsubsidized Loans for dependent undergraduate students is $23,000.00. This noncompliance resulted in questioned costs of$3,473.00.
3) Two students received Direct Subsidized Loans in excess of their financial need. Federal regulations (34 CFR 685.200) state that Direct Subsidized Loan borrowers must demonstrate financial need in order to meet borrower eligibility requirements. This noncompliance resulted in questioned costs of$1,796.00.
The weaknesses identified in the Federal Student Financial Aid Cluster Program were a result of management's failure to perform a risk assessment of the critical areas of the program and implement appropriate controls in the Financial Aid Office. The University should develop and implement policies and procedures to ensure adequate controls over the eligibility process. Additionally, the University should develop and implement a monitoring process to ensure that controls are being followed. The University should contact the United States Department of Education regarding the resolution of these questioned costs.
Federal Programs/Awards Affected: Student Financial Aid Cluster Program U.S. Department of Education Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
Finding Control Number: FA-533-02-02 REPORTING Expenditures in Excess of Authorization Student Financial Aid Cluster Program
The Statement of Account report from the U. S. Department of Education indicated that the University was authorized to expend $4,357,017.51 in Federal Pell Grant Program funds in state Fiscal Year 2002. The University's accounting records, however, reflected $4,433,125.00 for Fiscal Year 2002 Pell Grant expenditures. As a result, the University expended $76,107.49 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 2002 authorized amount in order to make the funds available to the University.
D-66

FederaL Awards Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
Federal Programs/Awards Affected: Student Financial Aid Cluster Program U. S. Department of Education Federal Pell Grant Program (CFDA 84.063)
Finding Control Number: FA-533-02-03 REPORTING Reports Not Reconciled Student Financial Aid Cluster Program
For the year under review, amounts reported on several of the 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 Pell Year to Date Report and the Statement of Account, which reports Federal Pell Grant Program 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 State Grants and Scholarships Made to Undergraduates, Tuition and Fees, the Pell Grant Program, the Federal Work-Study Program and the Perkins Loan Program that did not reconcile to the accounting records.
3) The University did not reconcile monthly the Federal Direct Loan Program to the accounting records in accordance with Section 2 of The Blue Book.
Federal regulations (34 CFR 674.19, 675.19, 685.309, 690.81 and 690.83) require the University ensure that reported 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 all reports submitted to the U. S. Department of Education are accurately completed and supported by the accounting records. Detailed 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 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)
SAVANNAH STATE UNIVERSITY
Finding Control Number: FA-548-02-01 ACTIVITIES ALLOWED OR UNALLOWED Improper Activity Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $7,185.07
At June 30, 2002 the University's accounting records reflected $7,185.07 of expenditures for "University's Image Building" Activity. The U. S. Department of Education determined, in a memorandum dated June 27, 2001, that "University Image Building is an unallowable activity". Furthermore, the U. S. Department of Education directed that "as of June 27,2001, any Title III, part B funds for this activity that have not been expended are suspended". The additional expenditures in this activity were the result of management's disregard to comply with allowable activities as set forth in the Federal regulations and mandates made by the U. S. Department of Education. The University should adhere to the Federal regulations
D-67

Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
FEDERAL AWARDS FINDINGS
governing allowable activities. The University should contact the U. S. Department of Education for resolution of this finding.
Finding Control Number: FA-548-02-02 ALLOWABLE COST/COST PRINCIPLES Deficiencies in Internal Controls Higher Education - Institutional Aid (CFDA 84.031)
During the year under review, a sample of forty-six Title III expenditures revealed the University's failure to comply with the general provision for allowable cost according to OMB Circular A-21 Sections C and J. The following instances were noted in the expenditure sample:
I) Payments for meals at two workshops were based upon the number of persons listed on the purchase requisition request rather than the number of individuals that actually attended the events. This resulted in the vendor receiving payment for services that were not provided to the University.
2) Seven expenditures lacked adequate documentation.
3) One voucher included unallowable lodging cost of $136.46. This amount was approved in error as part of an employee's travel reimbursement.
4) Three vouchers were paid from duplicated invoices rather than from the original invoices.
These conditions were the result of management's failure to have adequate accounting policies and procedures in place to ensure compliance with OMB Circular A-21. The University should develop and implement policies and procedures to ensure that program expenditures are allowable according to Federal regulations. In addition, the University should develop a monitoring process to ensure that controls are being followed. The University should contact the U. S. Department of Education for resolution of this finding.
Finding Control Number: FA-548-02-03 ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $1,112.00
During the year under review, the University utilized Title III funds, in the amount of $1 ,112.00, for duplicating forms that are used in the general operating activities of the University. The use of Title III funds for general operating activities, that should be paid utilizing State and local funds, constitutes noncompliance with the "supplement versus supplant" rule included in 34 CFR 608.20.
A projection of questioned cost could not readily be determined. However, the likely questioned costs are believed to exceed $10,000.00.
The University should implement policies and procedures to ensure that Title III funds are used only to supplement (rather than supplant) State and local funds. The University should consult with the U. S. Department of Education to resolve the questioned cost of$1,ll2.00.
D-68

Georgia
Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30. 2002
FEDERAL AWARDS FINDINGS
Finding Control Number: FA-S48-02-04 ELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Costs: $3,990.81
For the year under review, an examination of the University's student financial aid refund process revealed the following deficiencies:
1) Unearned Title IV funds were not applied by the University to the appropriate student financial aid program for one student selected for refund testing, resulting in questioned cost of $234.82. In addition, ten students were disbursed Title IV funds greater than the amounts earned resulting in additional questioned cost of$3,755.99.
2) Unearned Title IV funds were not applied by the University to the appropriate student financial aid programs within 30 days as required by the Higher Education Amendments of 1998, Public Law 105-244.
3) Due to the University's failure to notify students within 10 days after refund checks are available for disbursement, refund checks were cancelled and reissued after 60 or more days.
4) Three refund checks were reissued before the first refund check was cancelled.
A projection of questioned cost could not be readily determined. However, the likely questioned costs are believed to exceed $10,000.00.
These deficiencies were the result of management's failure to complete the refund process in accordance with Federal regulations. The University should develop and implement procedures to ensure that unearned funds are correctly returned to the appropriate accounts in a timely manner in accordance with the Higher Education Amendments of 1998, Public Law 105-244. The University should contact the U. S. Department of Education regarding resolution of this finding.
Federal Programs/Awards Affected: Student Financial Aid Cluster Programs U. S. Department of Education Federal Supplemental Education Opportunity Grant (CFDA 84.007) Federal Work Study-Program (CFDA 84.033) Federal Pell Grant Program (CFDA 84.063) Federal Direct Student Loan Program (CFDA 84.268)
Finding Control Number: FA-S48-02-0S EQUIPMENT AND REAL PROPERTY MANAGEMENT Failure to Maintain a Property Management System Higher Education - Institutional Aid (CFDA 84.031)
For the year under review, the University failed to provide a Title III equipment inventory report. Audit procedures relating to equipment could not be performed.
The University failed to have internal controls in place and operational to ensure compliance with Federal requirements for equipment as set forth in 34 CFR 74 and OMB Circular A-I 10, Subpart c.34. The University should establish policies and procedures to ensure that equipment purchases are identified by fund sources and grant award numbers, property records are maintained in accordance with Federal requirements and physical inventories are conducted every two years. The U. S. Department of Education should review these matters and determine appropriate action by the University to resolve this finding.
D-69

Georgia
Federal Awards Findings and Questioned Costs For the Fiscal Year Ended June 30. 2002
FEDERAL AWARDS FINDINGS GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION (*)
Finding Control Number: FA-918-02-01 REPORTING Inaccurate Data Submitted to ED Federal Program Information: 84.032 Federal Family Education Loan Program Criteria: The Corporation is established to guarantee student loans made by lenders and perform certain administrative and oversight functions under the Federal Family Education Loans (FFEL) program. Under this program, the Corporation must provide accurate and reliable reports to the U.s. Department of Education ("DOE"). (OMB Circular A-133 Compliance Supplement). Condition: During fiscal 2002 and in connection with the audit of the financial statements, we (the Corporation and Ernst & Young) noted instances related to the prior year in which amounts were not properly recorded in accordance with GAAP and which have affected the current fiscal year. A summary of the more significant adjustments is as follows:
I) improperly recorded revenues (collection fees on student loans and default aversion fees) and related receivables, 2) overstated compensated absence expense, 3) incomplete reconciliation of the Great Lakes trial balance to the general ledger. While the Corporation has corrected these errors in the current year and believes that all significant issues have been appropriately addressed, we believe that management should ensure that reconciliation of reports, regulations and details to the general ledger balance are performed monthly. Questioned Costs: N/A Context: The process of reviewing and recording the Form 2000 did not result in accurate financial statement reporting. Effect: The financial information submitted to the DOE was not complete and accurate. Recommendation: Management should ensure that reconciliations of reports, regulations and details to the general ledger balance are performed monthly.
(*) THIS ORGANIZATIONAL UNIT WAS AUDITED BY OTHER AUDITORS D-70
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S;:CHEDULE OF EXPENDITURES OF FEDERAL AVVARDS

(This page intentionally left blank)
---------- - - -

Georgia
Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-TIJROUGH E]\TIlY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

~ONMONETARY EXPENDITIJRES

Inter~American Foundation
Other Federal Assistance Direct
AGENCY TOTAL
Office of National Drug Control Policy
Other Federal Assistance Dlrect
AGENCY TOTAL
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 Through: University of Georgia Research Foundation
Wildlife Services Through: University of Georgia Research Foundation
Forestry Incentives Program Direct
Conservation Reserve Program Direct
Market News Direct
FederalState Marketing Improvement Program Direct
Inspection Grading and Standardization Direct
Grants for Agricultural Research. Special Research Grants Direct Through American Distance Ed Consortium Through University of Geor1a Research Foundation
Cooperative Forestry Research Direct
Payments to Agricultural Experiment Stations Under the Hatch Act Direct
Grants for Agricultural Research Competitive Research Grants Direct Thmugh Georgia Tech Research Corporation Through Urnversity of Georgia Research Foundation
1890 Institution Capacity BuIldmg Grants Direct

04 XXX

07XXX

10001 10.025
10028 10064 ]0.069 ]0.153 ]0 ]56 10 ]62 10.200
]0202 10203 10.206
10.216

Various 0]-8100-0743-CA
Various
BLD83 Various
Various

]00 (R) ]00
38.] 17 38.117
905,862 (R) 540.485 (R)
3.435 (R) 543,920
13.445 (R) 45.087 450,979 30,374
8,434 2,6]3.376
202.836 (R) 15.570 (R)
3.458,985 (R) 3.677.39]
797.434 (R)
4,6]4,367 (R)
]59.698 (R) 58,807 (R) 2,478,387 (R) 2,696,892 2,568,523

E-5

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-TIlROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITlIRES

Agriculture, U. S. Department of
Hlgher Education Challenge Grants Direct Through" Florida State Uni'\'ersity Through Iowa State University Through Texas Agricultural Experiment Station Through University of Georgia Rese;uch Foundation
Biotechnology Risk Assessment Research Through: University of Georgia Research Foundation
Funds for Rural America Research. Education. and Extension Activities Direct
Agncultural and Rural Economic Research Direct
Initiative for Future Agnculture and Food Systems Through" University of Georgia Research Foundation Through: University of Wisconsin
Integrated Programs Direct Through Clemson University Through North Carolma State University 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 Through Cornell Umversity Through Kansas State University Through North Carolina State University Through Texas :\&M University Through University of Arkansas Through University of Georgia Research Foundation Through" University of Nebraska- Lmcoln
Food Distribution Direct
Food Stamps (FSC) Direct
School Breakfast Program (CNC) Direct
National School Lunch Program (CNC) Direct
Special Milk Program for Children (CNCj Direct

10.217
10.119 10.224 10250 10.302
10303
10.420 10.475 10500
10550 10551 10553 10.555 10.556

4162310 570078 2001-38411-10763
95392102663
Various 593A261
58375582072002700 2000173101 SCOO0475-1-1
99-41560-0821 SOI032
2001-0072-04 S900225 1'0004907 S01035
LMi63-121-16814

33,737 (R) 10.197 29,178 (R) 3,162 (R) 73,563 (R) 149,837
-2 (R)
36.760 (R)
129,585
452.034 (R) 30,918 (R)
482.952
476,664 (R) 4.749 (R)
54,01 I (R) 20,960 (R) 556.384
177,864
3,505,134
11,722,872 (R) 4,656 (R)
23.293 (R) 7,758 (R)
62,618 (R) 30,504 (R)
7,848 (R) 4,295 (R) 11,863,844
67,085,394
227,812,973
19,559

33,384,139 (4) 593.138,530 (4)

E-6

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA Nl:MBER

PASS-THROUGH EI'TITY IDENTIFYING
"UMBER

MO"ETARY EXPE"D1TURES

"ONMO"ETARY EXPENDITURES

Agriculture. V. S. Department of
Special Supplemental Food Program for Women. Infants. and Chddren Dlrect Through Ross Products. lne
Child and Adult Care Food Program Direct
Summer food Service Program for Children (CNC) Direct
State Administrative Expenses for Child Nutntion Direct
State Administrative Matchmg Grants for Food Stamp Program (FSC) Direct
Commodity Supplemental Food Program Through: Umversity of Georgia Research Foundation
Emergency Food Assistance Program (Administrative Costs) (EFAC) DIrect
Emergency Food Assistance Program (Food Commodlnes) (EFAC) DIrect
Nutrition Program for the Elderly (Commodities) Direct
WIC Farmers' Market Nutrinon Program (FMNP) Direct
Forestry Research Direct Through: University of Georgia Research Foundation
Cooperative Forestry Assistance Direct Through: University of Georgia Research Foundation
National Forest Dependent Rural Communities Direct
Rural Development. Forestry, and Communities Direct
Technical Assistance and Training Grants Direct
Rural Development Grants Direct
Resource Conservation and Development Direct
Soil and Water Conservation Direct Through: Umversity of Georgia Research Foundanon
Agncultural Statistics Reporn Direct

10.557

10.558 10,559 10560 10.561 10.565 10.568 10569 10.570 10572 10652
10664
10.670 10.672 10761 10769 10901 10.902
10.950

Various Various Various
68-6526-0-406

E-7

124.563.446 (2) 56,703.232 181.266,678 66760.048 10.321.612 (R) 4.057.292
59.610,012 .7] (R)
778.548
267.903 2,645.156
115,588 597,843 875,018 (R) 1.472,861 3JI7J82 (R) 159.539 (R) 3,476.721
8,224 92,000 50.397 88,142 19,581 147,191 6.178 (R) 153,569 33,851

7,680,653

ScheduLe of Expenditures of FederaL Awards For the Fiscal Year Ended June 3D, 2002
CFDA "lUMBER

PAS5-l1IROlIGH ENTITY IDENTIFY[1\/G
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Agriculture, LT. S. Department of
Scientific Cooperation Program Direct Through: University of Georgia Research Foundation
Other Federal Assistance DlTect Through Alabama A&M University Through American Distance Ed Consortium Through Auburn University Through: North Carolina State University Through Texas A&M University Through Umverslty of Flonda Through: University of Georgia Research Foundation

10961 IOXXX

Various
00-52100-9616PVAMV CLG87
570053 lA4790 Various

AGENCY TOTAL
Commerce, U. S. Department of
ITA Special Projects Through: Georgia Tech Research Corporation
Economic Development - Technical Asslstance Through: GeorgIa Tech Research Corporation
Trade Adjustment Assistance Through: GeorgIa Tech Research Corporation
Interjunsdictional Fisheries Act of 1986 Direct
Sea Grant Support Direct Through: Georgia Tech Research Corporation Through: University of Georgia Research Foundation

11.113 11303 11313 11.407 11.417

Coastal Zone Management Administration Awards Direct
Coastal Zone Management Estuarine Research Reserves Direct Through: UniverSity of Georgia Research Foundation

11.419 11.420

Climate and Atmospheric Research Through: Georgia Tech Research Corporation
Pacific Coast Salmon Recovery - Pacific Salmon Treaty Program Through: University of Georgia Research Foundation
Marine Research - Regional Programs Direct
Atlantic Coastal Fisheries Cooperative Management Act Direct
Center for Sponsored Coastal Ocean Program - Coastal Ocean Program Through: University of Georgia Research Foundation I
Measurement and Engineering Research and Standards Through Georgia Tech Applied Research Corporation Through: University of Georgia Research Foundation

11.431 IIA38 11.464 11.474 11.478 11.609

Vanous Various FYOI-02 NA960PO005 70NANB lH0068

E-8

8.118 24.509 (R)
32,627
3,244,620 (R) 12,862 52,236
UIJ
1.164 5,803 (R)
951 (R) 2,057,728 (R)
5,376,877
667AI3,984

634.203,322

48,169 (R)
(R)
838,461 (R)
163.589
12,703 (R) 4,341 (R) 991,437 (R) 1,008,481
1,929,157
379,992 (R) 47,337 (R)
427,329
44,408 (R)
25,477 (R)
263,298 (R)
545,846
126,656 (R)
103,621 (R) 57,410 (R) 161.031

Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2002
erDA
NUMBER

PASS-THROUGH ENTITY IDENTIFYING
,,"U'VIBER

'VIOi'iETARY EXPENDITURES

'10'lMONETARY EXPE'IDITl'RES

Commerce. V. S. Department of
Advanced Technolog:.,.' Program Direct
Other Federal Assistance Direct Through Georgia Tech Research Corporation Through University of Georgia Research Foundation
AGENCY TOTAL
Defense. U. S. Department of
Aquatic Plant Control Direct Through Georgia T~h Applied Research Corporation Through Georgia Tech Research Corporation
Navigation Projects Direct
Slate Memorandum of Agreement Program for the Reimbursement of Technical Services Direct
Collaborative Research and Development Direct
BasiC and Applied Scientific Research Direct Through Ball Aerospace & T echmcal Corporation Through: Georgia Teeh Applied Research Corporation Through Georgia Teeh Research Corporation Through Morehouse School of Medicine Through University of Georgia Research Foundation
Nanonal Guard Military Operations and Maintenance (O&M) Projects Direct
Military Medical Research and Development Direct Through: University of Georgia Research Foundation
Basic Scientific Research Through Georgia Tech Research Corporation Through University of Georgia Research Foundation Through" University ofTIlmois
International Education U.S. Colleges and Universities Direct
Community Economic Adjustment Direct Through: University of Georgia Research Foundation

11612 II XXX

Various

12100

12107 12.113 12.114 12.300
12401 12420

BLF29
BLD81 Various

12431
12.550 12.600

DAADI9-02-1-0015 01-208

6.162
610.606 (R) 5.741.519 (R)
217,135 (R) 6.569.260
12.157.525
293.03 I 77L62i (R) 4,969,755 (R) 6,034,413
198
312,690
91.508 (R)
66,639 (R) 36,183 (R) 926.332 (R) 8,336,918 (R) 12,098 (R) 226,209 (R) 9,604.379
26,539,903
45,888 (R) 148,644 (R) 194,532
120,253 (R) 5,402 (R)
24,981 (R) 150,636
168,112 (R)
79,836 (R) 5,686 (R)
85,522

E-9

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
erDA
NUMBER

PASS-THROliGH ENTITY IDE!'<TIFYE'OG
NliMBER

MONETARY EXPENDmiRES

NONMONETARY EXPENDITliRES

E - 10

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITI' IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDlTl:RES

Housing and Urban Development, V. S. Department of
Historically' Black Colleges and Universities Program Direct
Shelter Plus Care DIrect
HO!\1E Investment Partnerships Program Direct
Housmg Opportunities for Persons ",ith AIDS Direct
FaIr Housing Assistance Program - State and Local DIrect
Community Outreach Partnership Center Program DIrect Through Georgia Tech Research Corporation
Community Development Work-Study Program Direct
Section 8 Housing Choice Vouchers Direct
Lead-Based Paint Hazard Control in Privately-Owned Housing Direct
Other Federal Assistance Dlrect Through: Georgia Tech Research Corporation Through' University of Georgia Research Foundation
AGENCY TOTAL
Interior, U. S. Department of the
Grants for Mning and ~1ineral Resources and Research Institutes Direct
Sport Fish Restoration (FWC) Direct
Fish and Wildlife Management Assistance Direct
Wildlife Restoration (FWC) Direct
Endangered Species Conservation Direct
Cooperative Endangered Species Conservation Fund Direct Through State of Tennessee Through University of Georgia Research Foundation
WIldlife Conservation and Appreciation DIrect Through: University of Georgia Research Foundation

14237 14238 14.239 14.241 14.401 14.511
14.512 14.871 14900 14.XXX

H-21010SG

15.308 15605 15608 15.611 15.612 15615
15617

GU000278500 1448-40181-00-G-087
1448-401 8 1-00-G-044

72 -4.482.748 12,191.847
178.468 275.102
23AII 939 (R)
24,350 17,696 87,964,260
956,980 379,025 (R)
14,746 (R) 0 (R)
393,771 149,354,695
121.466 5,330,562
9,904 (R) 5,367,183
203,554 219,102
L711 (R) 9,931 (R) 230.744 84.322 (R) 51.718 (R) 136,040

E - II

ScheduLe of Expenditures of FederaL Awards For the Fiscal Year Ended June 30, 2002
eFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
Nt:MBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Interior. U. S. Department of the North American Wetlands Conservation Fund Direct V"rildlife Conservation and Restoration Direct Assistance to Slate Water Resources Research Institutes Through: Georgia Tech Research Corporaoon Through: University ofGeorgla Research Foundation
Earthquake Hazards Reduction Program Through Georgia Tech Research Corporation Through: University of Georgla Research Foundanon
U. S. Geological Survey - Research and Data Acquisition Direct Through: University of Georgia Research Foundation
Historic Preservation Fund Grants-In-Aid Direct Through: Umversity of Georgia Research Foundation
National Environmental Education Development Direct
NationaJ Historic Landmark Direct
Outdoor Recreation Acquisition, Development and Planning Direct Through: University of Georgia Research Foundation
National Center for Preservation Technology and Training Direct
Other Federal Assistance Direct Through' Georgia Tech Research Corporation Through University of GeorgIa Research Foundation
AGENCY TOTAL
Justice, U. S. Department of State Domestic Preparedness Equipment Support Program Direct Law Enforcement Assistance FBI Advanced Police Training Direct Juvenile Accountability Incentive Block Grants Direct Juvenile Justice and Delinquency Prevention Allocation to States Direct

15623 15625 15.805
15.807
15.808
15.904
15.905 15.912 15.916
15.923 15.XXX

B-02-645-G2 0lWRAG0066
Various CA-5890-5-9020
SRS 02-CA-11330139
Various

16.007 16.300 16.523 16.540

1.000.000
72.507
126.135 (R) 33.876 (R) 160.011
72.589 (R) 32.545 (R) 105.134
119,603 (R) 255,726 (R) 375.329
638,835 (R) 37.679 (R)
676,514
81.173
12,616 (R)
1,381,748 23,647 (R)
1,405,395
1.829 (R)
379.585 (R) 2,177 (R)
820,773 (R) 1,202,535
16,492,496
473,985
71,857 (R)
3,438,145
1.434,248

E - 12

Georgia
ScheduLe of Expenditures of FederaL Awards For the fiscaL Year Ended June 30, 2002
CFDA 'lUMBER

PASS-THROUGH ENTIn' IDENTIFYING
NU'\IBER

MONETARY EXPENDITURES

NONMONETARY EXPE1'iDITURES

Justice. r. S. Department of
Juvemle Justlce and Delinquency Prevention Special Emphasis Through: Florida Allantlc University
NatJonallnsritute for Juvenile Justice and Delinquency' PreventlOn Direct Through: Florida Atlantic University Through University of Georgia Research Foundation
Title \' - Delinquency Prevention Program DIrect
Part E - State Challenge Activities Dneet
State Justice Statistics Program for Stattstlcal AnalYSIS Centers Duect
National Crimmal History Improvement Program (NCHIP) Direct
National Institute of Justice Research. Evaluation. and Development Project Grants Direct
Crime Laborator Improvement - Combined Offender DNA Index System Backlog Reduction Direct
Nationallnstitute of Justice W.E.B. DuBois Fellovvs}lIp Program Direct
State Crimmal Alien Assistance Program Direct
Crime Victim Assistance Direct
Crime Victim Compensation Direct
B)-me Fonnula Grant Program Direct
Edward Byrne Memorial State and Local Law Enforcement Assistance Discretionary Grants Program DIrect
Violent Offender Incarceration and Truth in Sentencing Incentive Grants Direct
Violence Against Women Formula Grants Direct
Rural Domestic Violence and Child Victimization Enforcement Grant Program Direct
Local Law Enforcement Block Grants Program Direct
ReSidential Substance Abuse Treatment for State Prisoners Direct
Corrections - Training and Staff Development Through: Federal Correctional Institution

16541 16,542
16548 16.549 16550 16554 16560
16566 16572 16575 16.576 16579 16.580 16.586 16.588 16.589 16.592 16.593 16.601

2000JR-VX-0005

23,906
-97.861 24.582 125.260 (R) 51.981 238.823 128.761
29.3 17 851.213
128,222
740.745 23,592 (R)
630.645 13,582,546
1,282,186 18,184,029
174,083
5,266,924 3,263,378
285,028 1,151,079 2,129,093
91,724

E - 13

Schedule of Expenditures of Federal Awards For the fiscaL Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTIn' IDENTIFYING
NUMBER

'IONETARY EXPENDITURES

NONMONETARY EXPENDl'ruRES

Justice, U. S. Department of
ClosedCircuit Televising of Child Victims of Abuse Direct
Public Safety Partnership and Community' Policmg Grants Direct
Enforcing LTnderage Drinking Laws Program Direct
Other Federal Assistance Direct Through Commumty Research Associates. Incorporated Through University of Georgia Research Foundation
AGENCY TOTAL
Labor, U. S. Department of
Labor Force Statistics Direct
Compensation and Working Conditions Direct
Employment Service (ESC) Direct Through: City of Macon Through Middle Georgia Consortium, Incorporated
Unemployment Insurance Direct
Senior Community Service Employment Program Direct
Trade Adjustment Assistance - Workers Direct
Employment and Training AssistanceDislocated Workers Direct Through: East Central Georgia Employment and Training Consortium
Employment Services and Job Training PilotsDemonstrations and Research Direct Through: Oglethorpe County Board of Education
Job Training Partnership Act Direct lltrough: Coosa Valley Reglonal Development Center
Through Middle Flint Regional Development Center Through: RichmondlBurke Job Training Authority

16,611 16,710 16727 16 XXX

97-LF-CX-KOOI MOU

17002 ]7,005 ]7207
17225 17235 17245 17246

17.249

17,250

01-00-WTW-002 01-97-14-714 58-6015195

4,269
549,468
19],252
3.796.298 (R) 139,718 144 (R)
3,936,160
58356,659
1,7]4,960
167,770
14,009,453 28,938 69,844
14,108,235
897,533,318 (I)
2,028,665
9,522,8] ]
1,63 ],025 927
1,631,952
439,073 66,950
506,023
860,086 (R) 124,394 70,923 43,440 52,902
839 9,238 1,]61,822

E - 14

Georgia
Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROl'GH ENTITY IDENTlFYI'IG
NUMBER

MONETARY EXPENDITURES

Labor, V. S. Department of
Welfare-toWork Grants to States and Localities Direct Through East Central Georgia Consortium Through Job Training Unlimited, Incorporated Through Northeast Georgia Regional Development Center
Workforce Investment Act DIrect Through Atlanta Workforce Development Agency Through CIty of Columbus Consolidated Government Through Coosa Valley Regional Development (enter
Through Fulton County Through MIddle Flint Regional Development Center Through Mlddle Georgia Consortium, Incorporated Through North Georgia Regional Development Center Through South Georgia Regional Development Center Through Southwest Georgia
RegIonal Development Center
OneSmp Career Center Initiative Through: Job Training Unlimited, Incorporated
WlA Adult Program (WIA) Through: RichmondJBurke Job Training Authority Through: Job Trainmg Unlimited, Incorporated Through: South Georgia Regional Development Center
\VIA Youth Activities (WlA) Through: Job Training Unlimited, Incorporated
\VIA Dislocated Workers (WIA) Through: Job Training Unlimited, Incorporated Through: RichmondlBurke Job Training Authooty Through: South Georgia Regional Development Center
Employment and Traming Administration Evaluations Direct
Occupanonal Safety and Health Susan Harwood Training Grants Direct
Consultation Agreements Direct
I\.1ine Health and Safety Grants Direct
DISabled Veterans' Outreach Program (DVOPj (ESC) Direct
Local Veterans' Employment Representative Program (ESq DlTect

17.253

17255

CLKI4 114233-00
01-01-15-002

17.257 17.258
17259 17.260
17262 i7 502 17504 17.600 17.801 17.804

3.330.601 12,092
198.290 288,719 3,829.702
71,375.678 5.405
181.347 151,057 145.073 114.194 219.197 82.528
16,808 79.677 375,169 72,746.133
60,343
119.646 11.742
127,469 258,857
1,305,523
42,491 709
104.496 147.696
357,686
4,969
14,744
229,714
1,842,142
1,199,619

NONMONETARY EXPENDITURES

E - 15

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30. 2002
CFDA NUMBER

PASS-TIlROVGH ENTIn' IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Labor, LT. S. Department of
Other Federal Assistance Direct Through: Atlanta Workforce Development Agency
Through Cornell University Through Georgia Tech Research Corporation Through Youth Empowerment Council
AGENCY TOTAL
State. U. S. Department of
College and University Partnerships Program Direct
College and University Affiliations Program Direct
Other Federal Assistance Direct Through Eurasia Foundation Through Institute of International Education Through International Research & Exchanges Board Through' United Negro College Fund
AGENCY TOTAL
Transportation, U. S. Department of
Boanng Safety Financial Assistance Direct
Auport Improvement Program Direct
Highway Planning and Construction (HPCC) Direct
Highway Training and Education Direct
Motor Carner Safety Direct
National Motor Carrier Safety Direct
Local Rail Freight Assistance Direct
Federal Transit - Capital Improvement Grants (FTC) Direct
Federal Transit - Metropolitan Planning Grants Direct
Federal Transit - Formula Grants (FTC) Direct
Formula Grants for Other Than Urbanized Areas DIrect

17XXX

BLV97 BLF62 CLF92 CLC61
AL955

19.405 19.406 19 XXX

AL941 ALZ78 CLC88 ALV89

20.004 20106 20205 20.215 20217 20.218 20308 20500 20.505 20.507 20.509

-33 8.538 106.709 19.860 4.004 (R) 1,226.721 (R)
238 1,366,037
1.011.738.721
-850 (R)
144,576 (R)
2,537,041 (R) 75,867 2,768 4.327 84,376
2,704,379
2.848,105
827,796
4,823)06
874.910.211
22.812
345)30
4,243,157
54,135
227,179
987,846
12,509.528 (I)
5,351,516

E - 16

Schedule of Expenditures of Federal Awards
For the fiscaL Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTfn' IDENTIFYI1'iG
NUMBER

MONETARY EXPENDITURES

NONMO'IETARY EXPENDlTlCRES

Transportation, U. S. Department of Federal T Tanslt Technical Assistance Through: Atlanta ReglOnaJ Commission Capital Assistance Program for Elderly Persons and Persons With Disabihties Direct Job Access v Re\.'erse Commute Direct State and Community Highway Safety (HSC) Direct Pipeline Safety Direct
Other Federal Assistance Direct Through Atlanta Regional Commission Through Georgia Tech Applied Research Corporatlon Through: Georgia Tech Research Corporation Through South Carolina State University Through University of Georgia Research Foundation Through University of Tennessee
AGENCY TOTAL
Treasury, U. S. Department of the Other Federal Assistance Direct Through University of Georgia Research Foundation
AGENCY TOTAL
Postal Service, V. S. Other Federal Assistance Direct
AGENCY TOTAL
Appalachian Regional Commission Appalachian Regional Development Direct Appalachian Area Development Direct Appalachian State Research, Technical Assistance, and Demonstratlon Projects Direct Other Federal Assistance Through: Georgia Tech Applied Research Corporation
AGENCY TOTAL

20.512 20.513 20.516 20600 20700 20 XXX
2I.XXX
22 XXX
23001 23002 23.011 23 XXX

DTNH-OO-OO- I 0 I ALD40

77,041

1.991.223

234.448

16.595.981

350.878

1.730.020 29.950
575.785 2.060.532
39.876 60,275 30,179

(R), (I)
(R) (R)
(R) (R)

4,526.617

928,079,004

FfP099 I 758

73,562 _ _ _ _ _---'-1 7 (R)
73,545
73,545

10,700 10,700

183,776 1,386,310
298.839 -167
1.868,758

1,307.609 (3) 1,307,609

E - 17

Schedule of Expenditures of Federal Awards For the fiscaL Year Ended June 30, 2002
eFDA
NUMBER

PASS-THROUGH E:'\TIIT IDEJI<IIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Equal Employment Opportunity Commission
Employment Discrimination - Title vn of the
Civil Rights Act of 1964 Direct
AGENCY TOTAL
General Services Administration
Donation of Federal Surplus Personal Property Direct
Other Federal Assistance Through Georgia Tech Applied Research Corporation Through: Georgia Tech Research Corporation
AGENCY TOTAL
National Aeronautics and Space Administration
Aerospace Education Services Program Direct
Technology Transfer Through: Georgia Tech Research Corporation
Other Federal Assistance Direct Through: Georgia Tech Applied Research Corporation Through Georgia Tech Research Corporation Through Jet Propulsion Laboratories Through Le'Wis Research Center Through: Space Telescope Science Institute Through' United Negro College FWld Through UniversitIes Space Research Association Through UniverSity of Georgia Research Foundation Through: University of Tennessee
AGENCY TOTAL
National Foundation on the Arts and the Humanities Promotion of the Arts - Grants to Organizations and indiVlduais Dlrect Promotion of the Arts - Partnership Agreements Direct Promotion of the Arts - Leadership Inittatives Through: Georgia Council for the Arts Promotion of the Humanities - Federal/State Partnership Direct Through: Georgia Humanities COWlcii
Through: University of Georgia Research Foundation

30.001
39.003 39.XXX

43001 43002 43.XXX

BLF57
BLF50
E16T35GIIINGT540116 Various

45024
45025 45.026 45.129

GHC200Q060G BLC32 Various
GHC2000032G

73.108
73,108
1,619.084 (R) 492.897 (R)
2,111.981
2,111,981
141.090 (R)
5.000 (R)
833,762 (R) 1,795,231 (R) 10,185,188 (R)
65,401 (R) 144,715 (R) 113,930 (R) 79,589
12,793 (R) 525,613 (R)
It.l23 13,767,445
13,913,535

12,553.749 12,553,749

40,421 (R)
515.099
3,000
78,156 29,403 (R)
2.659 876
13,473 (R) 5000 (R) 129,567

E - 18

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30,2002
eFDA NUMBER

PASS-THROUGH ENTIlY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

National Foundation on the Arts and the Humanities
Promonon of the Humanities - Challenge Grants Direct
Promotion of the Humanitles Education Development and DemonstratIOn Through Georgia Tech Research Corporation Through: University of Cahfornla
Promotion of the Humanities - Seminars and Institutes Direct
Promotion of the Humanities - Extending the Reach Grants to Presidentially - Designated Minority Institutlons
Direct
Museum Assessment Program Duect
State Library Program Direct
Institute of Museum and Library Services National Leadership Grants Direct
Other Federal ASSistance Direct Through: Georgia Council for the Ans
Through Georgia Tech Research Corporation
AGENCY TOTAL
National Science foundation
Engineering Grants Direct Through Georgia Tech Applied Research Corporation Through Georgia Tech Research Corporation Through" University of Georgia Research Foundation Through" University of Massachusetts
Mathematical and Physlcal Sciences Direct Through Georgia Tech Research Corporation Through Jet Propulsion Laboratories Through Uruversity of Georgia Research Foundation Through Umversity of North Carolina - Wilmington
Geosciences Direct Through" Georgia Tech Research Corporation Through University of Georgia Research Foundation

45.130 45162

45 163 45.167 45.302 45310 45312 45 XXX

41-02-0012 FY02

47.041 47049 47050

NSF-0004257
BLFI5 Various BLA59
Various

2.018 (R)
15.417 (R) 25.615 41.032
45.932
-2.079
1.650
4,495.651
20.836
271.848 (R) 16.230
100,609 (R) 13.383 (R)
402.070
5.695,197
66.359 (R) 131,575 (R) 12,966.938 (R) 131.182 (R) 21.160 13.317,214
609,677 (R) 3.629.836 (R)
42.226 (R) 1,539,574 (R)
74.972 (R) 5,896,285
394,928 (R) 2.316,584 (R) 1,040.747 (R) 3,752.259

E - 19

GEOrgia
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPE'iDITI:RES

National Science Foundation
Computer and Information Science and Engineering Direct Through Georgia Tech Research Corporation Through Umverslty of Georgia Research Foundation Through University ofYirginia
Biologlcal Sciences Direct Through Georgla Tech Research Corporation Through Medical College of Georgia Research Institute Through Texas A&M Research Foundation Through Umversity of Georgia Research Foundation
Social. Beha'vioraL and Economic Sciences Direct Through Emory University Through" Georgia Tech Research Corporation Through University of GeorgIa Research Foundation Through: University of Virginia
Education and Human Resources Direct Through Clark Atlanta University Through" GeorgIa Tech Research Corporation Through University of Georgia Research Foundation Through: University of Pennsylvania
Polar Programs Through Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Other Federal Assistance Direct Through" Florida Agricultural and Mechanical University Through: Georgia Tech Research Corporation Through: S...."3Jthmore College Through University of Georgia Research Foundation Through University of South Carolina
AGENCY TOTAL
Small Business Administration
Business Development Assistance to Small Business Direct
Small Business Development Center Duect
Other Federal Assistance Direct Through: GeorgIa Tech Research Corporation
AGENCY TOTAL

47070 47074 47075 47076 47078 47XXX
59005 59.037 59 XXX

Various BLA76
AL789 Various
ALW99 97-98 CLG91
ALX24 Various CLH41
383761
C-9549 REC-96 18223
Vanous ALZ95

489,270 (R) 7,440,475 (R)
285,264 (R) 39,670 (R) 8,254,679
650,204 (R) 872,460 (R)
77,994 (R) 2,222 (R)
3.850,905 (R) 5,453,785
95,271 (R) 916,367 (R) 822,947 (R) 166,603 (R)
9,438 (R) 2.010,626
1.644,581 (R) 49,053 (R)
3,22\'448 (R) 488,322 (R) 83,905 (R)
5,487,309
145,226 (R) 6,140 (R)
151,366
3,909,704 (R) 42,608
2,614,899 (R) -4,348 (R)
6.603,474 (R) 28,005 (R)
13,194,342
57.517,865
155 (R)
2,501,698 (R)
26,366 (R) 145,767 (R) 172,133
2,673,986

E - 20

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA "UMBER

PASS-THROUGH ENTIn' IDENTIFYING
Nl:MBER

MONETARY EXPENDITURES

NO!\'MONETARY EXPENOmrRES

Tennessee Valley Authority
Other Federal Assistance Direct
AGENCY TOTAL
Veterans Affairs. V. S. Department of
Veterans State Domiciliary' Care Direct
Veterans State Nursmg Home Care Dlfect
Veterans Educational Assistance Direct
PostVietnam Era Veterans' Educational Assistance Direct
Other Federal ASSistance DIrect Through Georgia Tech Applied Research Corporation Through Georgia Tech Research Corporation
AGENCY TOTAL
Environmental Protection Agency
State Indoor Radon Grants Direct
Construction Grants for Wastewater Treatment Works Direct
State Public Water System SupeT\.1sion Direct
Construction Management Assistance Direct
Water Quality Management Planning Direct Through Flonda Department ofEnvironmental Protection Through Florida Fish & Wildlife Conservation Commission
Capitalization Grants for State Revohring FWlds Direct
Nonpoint Source Implementation Grants Direct
Wetlands Grants Direct
Water Quality Cooperative Agreements Direct
Capitalization Grants for Drinking Water State Revolving FWld Direct
Hardship Grants Program for RuraJ Communities Direct

62 XXX
64 0]4 640]5 64.]] 1 64.120 64 XXX
66.032 664]8 66432 66438 66454
66458 66460 6646] 66.463 66.468 66.470

DEP" 1V1R162 99030

3.288 3,288

955.976
9,47] ,401
388,801
965
1,389,281 (R) 41 (R)
33,458 (R) ].422. 780
]2,239,923

15,398 ],807.018
]23,374 336,024 2,988.718
-]5 (R) 1,]54 (R) 2,989.857 2],750,506 (3) 63,065 (R) ]42,470 ]40,898
] 1,233,]54 (3) 69],109

294.233,327 (3) 25.38],]47 (3)

E - 21

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NIIMBER

PASS-THROUGH EO'ITllY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMO!'OETARY EXPENDITURES

Environmental Protection Agency
Environmental Protection - Consolidated Research Direct Through: Georgia Tech Applied Research Corporation Through" Georgia Tech Research Corporation Through: Umversity of Georgia Research FoundatIOn
Performance Partnership Grant Direct
Surveys, Studies, Investigations and Special Purpose Grants Direct Through" Florida Fish & Wildlife ConservatIon CommissIon Through" Georgia Tech Research Corporation
Traming and Fellowships for the Emironmental Protection Agency Direct Through: GeorgIa Tech Research Corporanon
One Stop Reporting Direct
Consolidated Pesticide Enforcement Cooperative Agreements Direct
TSCA Title IV State Lead Grants ~ Certificanon of Lead Based Paint ProfeSSIOnals Direct
Pollution Prevention Grants Program Direct Through: Georgia Tech Research Corporation
Pesticide Environmental StewardshIp - Regional Grants Direct
Hazardous Waste Management State Program Suppon Direct
Superfund State Site - Specific Cooperative Agreements Direct
Leaking Underground Storage Tank Trust Fund Program Direct
Solid Waste Management Assistance Direct
CEPP Technical Assistance Grants Program Direct
Brownfield Pilots Cooperative Agreements Direct

66.500
66605 66.606
66.607
66608 66.700 66707 66.708
66.714 66.801 66.802 66.805 66.808 66.810 66.811

Various 57701617229

58.914 (R) 17,407 (R) 1,402,860 (R) 571.707 (R) 2.050.888
16,488,684
687,060 (R) 117,880 (R) 40,342 (R) 845,282
9,397 (R) 89.726 (R) 99,123
98,264
604,294
568,399
93,202 26,090 (R) 119,292
7,879 (R)
485,729
991,128
1,318,665
2,877
25,340
42,914

E - 22

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30,2002
CFDA NUMBER

PASS-THROUGH ENTm IDENTIFYING
NVMBER

MONETARY EXPENDITURES

IoiO'lMONETARY EXPENDITURES

Environmental Protection Agency
Other Federal Assistance Direct Through Georgia Tech Applied Research Corporation Through: Georgia Teeh Research Corporanon Through" EmiTonmental Protection Di...ision. Georgia Through Middle Flint Regional Development Commission Through university of Georgia Research Foundation

66 XXX

AGENCY TOTAL
Energy, U. S. Department of
State Energy Program Direct
Weatherization Assistance for Low.lncome Persons Direct
Office of Science Financial ASSIstance Program Direct Through Georgia Tech Research Corporation Through Universlty of Georgia Research Foundation

81041 81.042 81049

Conservation Research and Development Through Georgia Tech Research Corporation Through: University of Georgia Research Foundation

81086

Renewable Energy Research and Development Through: Umversity of Georgia Research Foundation
Nuclear Energy, Reactor Systems, Development, and Technology
Direct
Office of Science and Technology for Environmental Management Direct Through: University of Georgia Research Foundation

81087 81095 81.104

University Nuclear Science and Reactor Support Through: Georgia Tech Research Corporanon
Science and Engineering Training to Support Dtversity-Related Programs Through Georgia Tech Research Corporanon Through: University of Georgia Research Foundation

81 114 81116

Various Various
Various DE-FCJ6-0IGOI0619
Various 1209-202-LO-A
Various

189.188 (R) 518.014 (R) 125.927 (R)
14.889 (R) 467
911.986 (R)
1.760.471
64.802.102

319614.474

968.781
2.122,432
291.753 (R) 1.287.856 (R) 1.718.929 (R) 3.298.538
55,455 (R) 160,786 (R) 216.241
48.049 (R)
265.638
475,987 1.586 (R)
477,573
24.821 (R)
44.515 (R) 1)83 (R)
45,898

E - 23

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITIIRES

NONMONETARY EXPENDITURES

Energy, LT. S. Department of
Other Federal ASSistance Direct Through Argonne National Laboratorv Through Atlanta Public Schools Through Brookhaven National Laboratory Through Georgia Tech Research Corporation Through Gwinnett County Schools Through Medical College of Georgia Research Institute Through Nationallnstttute for Petroleum and Energy Research Through Umversity of Georgia Research Foundation Through Uni'\'ersity of New Orleans
Through: Wackenhut Servlces, Incorporated
AGENCY TOTAL
Federal Emergency Management Agency
Hazardous Materials ASSIstance Program Direct
State Assistance Program Direct
Flood Iv1itigation Assistance Direct
Public Assistance Grants Direct
Disaster Housing Program DlTect
Hazard Mitigation Grant Direct
Project Impact - Building Disaster Resistant Communities Direct
Emergency Management Performance Grants Direct
Other Federal Assistance Direct
AGENCY TOTAL
Education, U. S. Department of
Adult Education State Grant Program Direct
Federal Supplemental Educational Opportunity Grants (SFA) Direct
Title I Grants to Local Educational Agencies Direct
Migrant Education Basic State Grant Program Direct Through: Southern Pine Migrant Educational Agency

81XXX
83012 83.501 83,536 83.544 83.545 83548 83551 83.552 83 XXX
84002 84007 84010 8401 I

OF-00605 ALY88 49580
AL976
G4P51609 Various CLC85 CLC87 Various

897,919 (R) 32,695 (R) 3,886 (R) 21,545 (R)
4,123,639 (R) 643 (R)
354,970 (R) -200
12,063.389 (R) 81 (R)
2Ai5 12,400 (R) 17.513,442
24,981413
4,669
299,876
40,43 I
-7,066,037
48,650
11,422,933
1,201
3,280,924
86,975
8,119,122
14,107,508
7,509,066
250,723,613
7,761,507 50.428
7,811,935

E - 24

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITlIRES

NONMONETARY EXPENDITURES

Education. Co S. Department of
Title I Program for Neglected and Delinquent Children Direct
Undergraduate International Studies and Foreign Language Programs DIrect
internatiOnal Research and Studies DIrect
International Overseas - Group Projects Abroad Direct
lntematlOnal Overseas - Doctoral Dissertation Through" University of Georgia Research Foundation
Special Education -Innovation and Development Direct
Special Education - Grants to States (SEC) Direct
Higher EducatIon - Institutional Aid Direct
Federal Family Education Loans (SFA) Direct
Federal Work-Study Program (SFA) Direct
Public Library Services Direct
Federal Perkins Loan Program Federal Capital Contnbutions (SFA) Direct
TRlO . Student Support Services (TRIO) Direct
TRIO - Talent Search (TRIO) Direct
TRIO Upward Bound (TRIO) Direct
Vocational Education Basic Grants to States Direct
Federal Pell Grant Program (SFA) Direct
TRIO - Educational Opportunity Centers (TRIO) Direct
Leveraging Educational Assistance Pannership DIrect
Special EducatIon - Postsecondary Education Programs for Persons with Disabilities Through: University ofTennessee
Fund for the Improvement of Postsecondary Education Direct Through: Association of American Colleges and Universities Through New England Conservatory Through Portland State University Through" University of Arkansas

84013 84016 84017 84021 84.022 84.013 84027 84.031 84032 84033 84034 84038
84.042 84044 84.047 84.048 84.063 84.066 84069 84078
84.116

1'022AOOO038
866602-03 CLF96 CLC84
SA021 174

2.629.761 80.205 (R) 87.984 (R) 89.623 (R) 612 (R) 45.805 (R)
158.294.639 (R) 7.097.761 (R)
45,111,030 (3) 8,992,787 (R) -7,130
597,466 (3) 2,020,865 (R) 1,416.136 (R) 2,963.259 (R) 30,693,851 169,858.406
965,941 (R) 568.222
31,877 653,325 (R)
23,676 5,486 568 (R) 4.855 (R)
687,910

1.430.571,000 (3) 37,786,341 (3)

E - 25

ScheduLe of Expenditures of FederaL Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
;-.lUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDlTVRES

Education. ll. S. Department of
Educational Research and Development Direct
Minority Science and Engineering Improvement DlTect
Rehabilitation Serv"ices Vocational Rehabilitation Grants to States Dnect
Rehabilitation long-Term Training Direct Through: University of North Texas Foundation
National Institute on Disability and Rehabilitation Research Direct Through Georgia Tech Research Corporation Through: Unrversity of Georgia Research Foundation
Migrant Education - High School Equivalency Program Direct
Mgrant Education College Assistance Migrant Program Direct
International Business Education Direct
Public Library Construction and Teclmology Enhancement 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 and Science Education State Grants Direct Through: MU5Cogee County Board of Education
Independent Living - State Grants Direct
Special Education Preschool Grants (SEC) Direct
Rehabilitation Services ~ Independent Living Services for Older Individuals Who are Blind
Direct
Special Education Grants for Infants and Families with Disabilities Direct
Byrd Honors Scholarships Direct
Safe and Drug-Free Schools and Communities ~ State Grants Direct

84.117 84.120 84126 84.129
84,133
84.141 84149 84.153 84154 84.160 84.161 84.162 84.164

CLG73 CLJ32 HI33G980023-00
7835-03-03

84.169 84.173 84.177 84.181 84.185 84.186
E - 26

11,875 195,767
65.425.015 199.831 (R) 16.843 19.029 23\703 -18,527 433.474 (R) 113,359 (R) 528,306 217,405 355,157 40,589 238.849
6,177 40,654 3,592,202
-2,371 5,646 (I) 3.275 928,466 9,926,030
666,229
8,201,411 1,150,500 11,660,021

Georgia.
Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA 'lUMBER

PASS-THROUGH ENTm' IDE'ITIFYING
NUMBER

MONETARY EXPENDlTl'RES

"ONMO",ETARY EXPENDITURES

Education. V. S. Department of
Supported Employment Services for Individuals v.ith Severe Disabilities Direct
Bilingual Education Support Servlces Direct
Bilingual Education Professional Development Direct
Education for Homeless Children and Youth Direct
Graduate Assistance in Areas of~ational Need Direct Through: Georgia Tech Research Corporation
Even Start State EducatIOnal Agencies DIrect
Fund for the Improvement of Education Direct Through: GSURF- Um...'ersity of New Orleans
McNair Post-Baccalaureate Achievement (TRIO) Direct
Assistive Technology Direct
Income Contingent Loan Program Direct
Rehabilitation Services Demonstration and Training Special Demonstration Programs Direct
Tech-Prep Education Direct
Rehabilitation Training - Continumg Education Direct
Rehabilitation Training - State Vocational Rehabilitation Unit In-Service Training Direct
Federal DIrect Ulan (SFA) Direct
Goals 2000 - State and Local Education Systemic Improvement Grants Direct
Eisenhower Professional Development State Grants Direct Through: Georgia Tech Research Corporation
Charter Schools Direct Through: Oglethorpe County Board of Education
Innovative Education Program Strategies Direct

84187
84194 84.195 84.196 84200

84213 84215
84.217 84.224 84226 84235 84243 84.264 84265 84.268 84.276 84.281

BLC08

84.282

84298
E - 27

563372 9L105 51.863 999,710 190,136 273,974 (R) 464,110 6,374,330 169,215 2,907 172,122 410,681 470,187
159,411 (R) 2,718,024
888,543
165,942 (R) 269,509,158
617,089 10,652,497 (R)
,2,452 (R) 10,650,045
1,251,634 73,667
1,325,301 10,233,539

134,233 (3)

Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTm' IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Education. l;. S. Department of
National Institute on Student Achievement, Curnculum, and Assessment Through New Yark University Through UniverSity of Georgia Research Foundation
Technology Literacy Challenge Fund Grants Direct
Eisenhov,,"er Regional Mathematics and Science Education Consortia Through: Georgia Tech Research Corporation
Special Education - State Program Improvement Grants for Children v.ith Disabilities Direct
Special Education - Research and Innovation to Improve Services and Results for Children with Disabilities Direct Through: University of Georgia Research Foundation
Special Education - Personnel Preparation to Improve Services and Results for Children v.ith Disabilities
Direct
Special Education - Technical Assistance and Disseminanon to Improve Services and Results for Children .....ith Disabilities Direct
Special Educanon - Technology and Media Services for Individuals with Disabilities Direct
Advanced Placement Incentive Program Direct
Grants to States for Incarcerated Youth Offenders Direct
Comprehensive School Reform Demonstration Direct
Gaining Early Awareness and Readiness for Undergraduate Programs Direct
Child Care Access Means Parents in School Direct
Teacher Quality Enhancement Grants Direct
Reading Excellence Direct
Learning Anytime Anywhere Partrlerships Through: University of Georgia Research Foundation
Class Size Reduction Direct
Preparing Tomorrow's Teachers to Use Technology Direct Through Georgia Tech Research Corporation Through Pennsylvania State University

84.305
84.318 84.3 19 84,323 84.324
84325 84.326 84.327 84.330 84.331 84.332 84.334 84.335 84.336 84.338 84.339 84.340 84.342

CLG66 Various H32WN010029
10209-0147 1897-UG-USDE-OO 14

11,594 (R) 317,074 (R) 328,668 12.127.127 35,749 (R)
987,989
290,208 (R) 43,003 (R)
333.211
614.907 (R)
238,219
237,414 (R) 418,076 456.567 5,771,213
576,599 90.798
3,720,471 (R) 567,033 26,301 (R)
39,928,826 2,557,398 (R) 166,823 (R) 1.503 (R) 2,725,724

E - 28

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

"lONMONETARY EXPEND miRES

Education. U. S. Department of
TRlO Disseminanon Through: UniversHy of South Florida
Occupational and Employment lnformation State Grants Direct
Tltle I Accountability Grants Duect
Early Childhood Educator Professional Development Through university of Georgia Research Foundation
Other Federal Assistance Direct Through elly of Atlanta Board of Education Through Georgia Tech Research Corporation Through Hart County Board of Education Through MPR ASSOCIates Through NatIonal Wnting Project Corporation
Through" University of Georgia Research Foundation Through University System of Georgia Foundation
AGENCY TOTAL
Consumer Product Safet}' Commission, U. S.
Other Federal Assistance Direct
AGENCY TOTAL
National Archives and Records Administration
National Historical Publications and Records Grants Direct Through: Georgia Tech Applied Research Corporation
AGENCY TOTAL
Health and Human Services, U. S. Department of
Public Health and Social Services Emergency Fund Direct
Cooperative Agreements to Improve the Health Status of J\.1inority Populations Direct
State and Territorial and Technical Assistance Capacity Development Minority mY/AIDS Demonstration Program
Direct Special Programs for the Aging - Title YD., Chapter 3
Programs for Prevention of Elder Abuse, Neglect, and Exploltanon Direct
Special Programs for the Aging Title vn, Chapter 2 -
LongTenn Care Ombudsman Services for Older Individuals Direct

84.344 84.346 84348 84349 84.XXX

S349AOI0167
MOA AL796 84-928A'94-GA03 F002736 .-\.LV24

87 XXX 89.003

93.003 93.004 93006 93.041 93042
E - 29

4.930
105.340
6.668.215
84.544 (R)
618.425 (R) 28 (R)
3.101.046 (R) 1 (R)
15.054 (R) 45,560 (R) 55,091 32.839 80ji3 (R)
205
3.948.822
1201.664.038

1.468,491.574

3.248 3.248

8.013 7.223 (R) 15.236
15.236

10,396 5.000 153.646 110.037 285,557

ScheduLe of Expenditures of FederaL Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTm' IDENTIFYv<G
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPE);DITURES

Health and Human Services. U. S. Department of
Special Programs for the Aging. Title ill, Part F - Disease Prevention and Health Promotion Services
Direct
Special Programs for the Aging - Title ill, Part B Grants for Supporttve Sef\ices and Senior Centers (AC)
Direct
Special Programs for the Aging - Title ill, Part C Nutrition Services (AC) Direct
Special Programs for the Aging - Title ill, Part 0 - InHome Services for Frail Older Individuals
Direct
Special Programs for the Aging Title IV Training, Research and Discretionary Projects and Programs Direct
Nation Family Caregiver Support Program Direct
Health Disparities Grants in Minority Health Through Mercer University School of Medicine Through: Violence Intervention Program
Food and Drug Administration Research Direct Through: University of Georgia Research Foundation
Comprehensive Commumty Mental Health Servtces for Children with Serious Emotional Disturbances (SED) Through: GRN Community Service Board
Maternal and Child Health Federal Consolidated Programs Direct Through: Regents of the University System of Minnesota
Biological Response to Environmental Health Hazards Through Georgia Tech Research Corporation Through: University of Georgia Research Corporation
Biometry and Risk Estimation. Health Risks from EnvlTonmental Exposures Through Georgia Tech Research Corporation Through: Midwestern University
Project Grants and Cooperative Agreements for Tuberculosis Control Programs Direct
Oral Diseases and Disorders Research Through Georgia Tech Research Corporation Through: Medical College of Georgta Research Institute Through: University of Georgia Research Foundation
Nurse Anesthetist Traineeships Through: Medical College of Georgia Research Institute

93043 93.044 93045 93.046 93048 93 052 93100
91103
93104 93110
93.113 93 115
93.116 93.121
93124

AL385 BLA75 Various
CUl5I ES09403-03
CLH72
5 ROI DE13982-03

475,590
6,960,229
13)15.062
-825
406,782
117,939 (R)
50,931 (R) 15,703 66,634
58,661 548.048 (R) 606,709
56,565 (R)
224.202 17.344 (R)
241.546 178.635 (R) 92,064 (R) 270,699
12.000 (R) 3,548 (R) 15,548
2,767,740 8,053 (R)
432,237 (R) 221)98 (R) 661,688
38.117

131,835

E - 30

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30. 2002
CFDA "'UMBER

PASS-THROUGH ENTIn' IDENTIFYING
NUMBER

MONETARY EXPENDITURES

"iO"MONETARY EXPENDmJRES

Health and Human Sen-ices. r. S. Department of
Emergency Medical Services for Children Direct
Primary Care Services Resource Coordination and Development Primary Care Offices Direct
Centers for Research and Demonstration for Health Promotion and Disease Prevention DIrect Through: Morehouse School of Medicine
Injur!' Pre,,'ention and Control Research and State and Community Based Programs Direct Through: University of Georgia Research Corporation
Projects for Assistance in TranSItion from Homelessness (PATH) Direct
Coordinated HIV Services and Access to Research for ChIldren. Youth, Women, and Families Direct
Grants for State Loan Repayment Direct
International Cooperative Biodiversity Groups Program Through: University of Georgia Research CorporatIOn
Human Genome Research Direct Through Georgia Tech Research Corporation Through University of Georgta Research Foundation
Research Related to Deafness and Communication Disorders DIrect Through Georgia Tech Research Corporanon Through Medical College of Georgia Research Institute Through" University of Georgia Research Foundation
Nursing Workforce Diversity Direct
Alhed Health Projects Direct
Childhood Lead Poisoning Prevention Projects - State and Local Childhood Lead POisoning Prevention and Surveillance of Blood Lead Levels in Children Direct
Human Health Studies Applied Research and Development Direct Through: UniverSity of Georgia Research Foundation
Rural Telemedicine Grants Direct

93.127 93.130 93 ]35
93.136
93.150 93 153 93. ]65 93 168 93 172
93 173
93 ]78 93.191 93. ]97 93.206
93.211

ALD25 Various
TWOI009 HG02191A DC048J8-01AI
U50/CCU420515-01

84,080
153,3 ]6
58,740 (R) 255,806 (R) 314,546
1.022,66] 1.178.444 (R) 2,201,105
618,163
468,196
75,000
112,910 (R)
45,798 (R) 10,000 (R) 292,883 (R) 348,681
482,765 (R) 115,984 (R) 202,862 (R)
9.459 (R) 81 ],070
326,603
206,140
279,546
10.442 (R) 28,336 38,778
17,100

E - 31

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-TIlROUGH ENTITY IDENTIFYING
Nt:MBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Health and Human Services, U. S. Department of
Research and Training in Alternative Medicine Through Georgia Tech Research CorporatIon Through: Medical College of Georgia Research Institute

93.213

Hansen's Disease National Ambulatory Care Program Direct
Family Planning - Services Direct
National Research Service Awards - Health Services Research Training Through: Morehouse School of Medicine Through' South Carolina Department of Social SelVlce

93215 93217 93.225

Research on Healthcare Costs, Quality and Outcomes DIrect Through' Georgia Tech Research CorporatIon Through: Medical College of Georgia Research Institute Through' University of Alabama at Binningham Through: University of Georgia Research Foundation

93.226

Consolidated Knowledge Development and Application (KD&A) Program Direct Through: Morehouse School of Medicine

93230

Traumatic Brain Injury State Demonstration Grant Program Direct
Abstinence Education Direct
Cooperative Agreements for State Treannent Outcomes and Performance Pilot Studies Enhancement Direct
State Capacity Building Direct
State Rural Hospital Flexibility Program Direct
Mental Health Research Grants Direct Through Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation

93.234 93.235 93.238
93.240 93.241 93.242

Health Centers Grants for Migrant and Seasonal Farrnworkers (CHCC) Direct
Advanced Education Nursing Grant Program Direct
Universal Newborn Hearing Screening Direct

93.246 93.247 93.251

BLD99 CLG74 ALDZO HSI0815 CU09
Vanous

162,737 (R) 148.433 (R) 311.170
154.288
7.551.639
62,311 (R) 25.563 (R) 87,874
609,495 59.720 (R) 34,173 (R) 41,540 (R) 51,984 (R)
796,912
1.566 23.243 (R) 24,809
11.866
2,957,125 (R)
903.912
79,265
299,835
1,406,391 (R) 147.331 (R) 739,818 (R)
1,591,975 (R) 3,885,515
1,061,906
320,440
142,506

E - 32

Georgia
Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH Er>TITY IDE"TIFYING
NUMBER

M01'iETARY EXPENDITURES

NONMONETARY EXPE1'iDITURES

Health and Human Services. Li. S. Department of
Occupational Safety and Health Research Grants Through Association of Teachers of Preventwe Medicine Through Georgia Tech Applied Research Corporation Through University of Georgia Research Foundation
Immunization Grants Direct
Alcohol National Research Service A'.I.'ards for Research Training Through: University of Georgia Research Foundation
Alcohol Research Programs Through Georgia Tech Research Corporation Through: University of Georgia Research Foundation
Drug Abuse Scientist Development Awards. Research SCientist Development Awards, and Research Scientist Awards Direct
Drug Abuse National Research Sen-ice Awards for Research Training Through Georgia Tech Research Corporation 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 Avvards Direct
Mental Health National Research Service AVo'ards for Research Training Direct Through: Georgia Tech Research Corporanon
Centers for Disease Control and Prevention Investigations and Technical Assistance Direct Through" AsSOCiation of Teachers of Preventive Medicine
Through University of Georgia Research Foundation
Nurse Practitioner and Nurse-Midwifery Education Programs Direct
Comparative Medicine Direct Through Medical College of Georgia Research Institute Through UniverSIty of Georgia Research FOWldation

93262
93.268 93,272 93273 93.277 93278
93279
93281 93282

ALA02 OH373701
5T32AA0747314 Vanous
F32DAI416501 Vanous

93283
93298 93306

BLH02 CLH52 1965UGDHHS9514
RRll733

5.339 (R) 5.422 (R) 265,146 (R) 275.907
6,075,923 (R)
155.988 (R)
35.156 (R) 700,331 (R) 735,487
82,629
16.488 (R) 14.819 26.195 (R) 57.502
553,897 (R) 427.051 (R) 378,857 (R) 1.165,093 (R) 2,524,898
44,417
93,007 23.917 116,924
5,598,299 61,492 (R)
232,530 (R) 48.090
5,940,411
264,316
454.955 (R) 14.457 16,990 (R)
486,402

17,770,925 (4)

E - 33

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Health and Human Services, U. S. Department of
Health Professions Student Loans, Including Primal)' Care Loans/Loans for Disadvantaged Students (SFA) Direct
Ad...anced Education Nurse Traineeships Direct
Basic Nurse Education and Practice Grants DIrect
Nursmg Research Direct
Nursmg Student Loans (SFA) Direct
Biomedical Technology Direct Through GeorgIa Tech Research Corporation Through: University of Georgia Research Foundation
Mnority Biomedical Research Support Direct Through: New Mexico State University
Grants for Graduate Training in Family Medicine Direct
Cancer Cause and Prevention Research Direct Through Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Cancer Treatment Research Direct Through Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Cancer BIology Research Through: Medical College of Georgia Research Institute Through" Thomas Jefferson University Through University of Georgia Research Foundation
Cancer Research Manpower Through: University of Georgia Research Foundation
Cancer Control Through: Medical College of Georgia Research Institute
Abandoned Infants Direct
Promoting Safe and Stable Families Direct Through: County of Clarke/Athens

93342 93.358 93359 93361 93.364 93J71
93375
93379 93393
93.395
93396
93398 93.399 93551 93.556

Vanous CLK04
Various 5 VOl CA91295-02
CLH48 5 RO I CA 64462-06
CA68073B
200202900500

-667.014 (3)
343.920 (R)
283
88.056 (R)
24.185 (3)
14.538 (R) 34336 (R) 787.220 (R) 836.094
166,087 22,267 (R) 188354
-6,641
184,350 (R) 1,843 (R)
32,755 234,577 (R) 453,525
9,486 95,516 (R) 225,022 (R) 388.869 (R) 718,893
299,450 (R) 186,422 (R) 132,008 (R) 617,880
20,977 (R)
58.960 (R)
48,921
7,931,317 (R) 42,221 (R)
7.973,538

2.427.510 (3) 1.252.069 (3)

E - 34

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30,2002
CFDA NUMBER

PASS-THROUGH EI'.TITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Health and Human Services, U. S. Department of
Temporary ASSistance for Needy Families Direct Through: Goodv.ill Industnes of the Coastal Empire
Child Support Enforcement Direct
Refugee and Entrant Assistance State Administered Programs Direct
LowIncome Home Energy Assistance DIrect
Community Servlces Block Giant Direct
Community Services Block Grant - Discretlonary Awards Direct Through: National Collegiate AthletIc Association
CommWlity Sen-ices Block Grant Discretionary Awards Commumty Food and Nutntlon Direct
Child Care and Development Block Grant (Ceq
Direct Through Georgia Child Care CouncIl Through Kids Advocacy Coalinon Through United Way of Metro Atlanta
Refugee and Entrant Assistance DiscretIonary Grants DIrect
Repatriation Program Direct
Refugee and Entrant Assistance - Targeted Assistance Direct Through: University of Georgia Research Foundation
State Court Improvement Program Direct
Community-Based Family Resource and Support Grants Direct
Family Violence Prevention and Services/Grants for Battered Women's Shelter - Discretionary Grants Direct Through: Association of Teachers of Preventive Medicme
Child Care Mandatory and Matching Funds of the Child Care and Development Fund (CCC) Direct
Grants to States for Access and Visitation Programs Direct

93558
93563 93566 93568 93.569 93.570
93.571 93.575
93.576 93.579 93584
93.586 93.590 93.592
93.596 93.597

Various CU35
01-497
ClH71

315.944.437 22.405
315.966,842
91,828.299
6.708.018
19,733.480
16,508,395
49,731 177.430 227,161
112,455
79,361,482 98,405 21,472 175,587 (R)
79,656,946
717,468
275
L717,94 1 7,303 (R)
1,725,244
121,045
609,698
-5,076 30,108 (R) 25,032
99,212,730
96,352

E - 35

Schedule of Expenditures of Federal Awards
For the fiscaL Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Health and Human Services. U. S. Department of
Head Start Direct Through Ninth District Opportunity. Incorporated Through Sumter Head Stan Through University of Georgia Research Foundation
Adoption Incentive Payments Direct
Developmental Disabilities Basic Support and Advocacy Grants Direct Through: Georgia Council on Development Disabilities
Developmental Disabilities Projects of National Sigmficance Direct
Developmental Disabilities University Affiliated Programs Direct
Children's Justice Grants to States Direct
Child Welfare Services State Grants Direct
Social SefVlces Research and Demonstration Direct Through: University of Georgia Research Foundation
Child Welfare Services Training Grants Direct
Adoption Opportunities Direct
Foster Care - Title IVE Direct
Adoption Assistance Direct
Social Sef'\.;ces Block Grant Direct
Child Abuse and Neglect State Grants Direct Through: University of Georgia Research Foundation
Child Abuse and Neglect Discretionary Activities Direct
Family Violence Prevention and Services/Grants for Battered Women's Shelters - Grants to States and Indian Tribes Direct
Independent Living Direct
State Children's Insurance Program Direct

93.600
93603 93630
93631 93,632 93.643 93.645 93,647
93,648 93,652 93.658 93659 93667 93.669
93670 93671 93674 93767

Vanous 417-9391824 90YE0034/0 1
000121

2,415,800 (R) 134,389 6,622 -1,263 (R)
2,555,548
1.266,886
1,939,098 (R) 638 (R)
1,939,736
194,549 (R)
25,544 (R)
264,736
7,684,360
77,985 (R) 59,898 (R) 137,883
73,675 (R)
54,279
69,168,349
31,156,230
68,914,904
393,877 2,910 (R)
396,787
11,784
2,376,876
2,640.189
99,733,655

E - 36
----,,,----_.,,,._--

Schedule of Expenditures of Federal Awards For the fiscaL Year Ended June 3D, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPENDITURES

NO;\,MONETARY EXPENDITURES

Health and Human Services. C. S. Department of
Medicaid Infrastructure Grants To Support the Competitive EmplOyment of People with DisabIlities Direct
Medicare - Hospital Insurance Direct
Medicare - Supplementary Medical Insurance Direct
Stare Medicaid Fraud Conrrol UOIts (Me) Direct
State Survey and Certificanon of Health Care PrO\-lders and Suppliers (Me) Direct
Medical Assistance Program (Me) Direct
Health Care Financing Research. Demonstrations and Evaluations Direct
Scholarships 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
Health Careers Opportunity Program Direct Through Morehouse School of Medicine Through Regents of the University System of Minnesota
BaslciCore Area Health Education Centers Direct
Heart and Vascular Diseases Research Through: Georgia Tech Applied Research Corporation Through: GeorgIa Tech Research CorporatIon Through Medical College of Georgia Research Institute Through University of Georgia Research Foundation
Lung Diseases Research Direct Through Medical College of Georgia Research Institute Through University of Georgia Research FoundatIon
Blood Diseases and Resources Research Direct Through Georgia Tech Research Corporation Through Medical College of GeorgIa Research Institute Through University of Georgia Research Foundation

93768 93773 93.774 93775 93.777 93778 93779 93820 93821
93.822
93.824 93837
93.838
93839

Various BLGI8 ALA04
Vanous Various

227.4&8
4,140,323
8.379.662
2.972.445
2,740,789
3,936,035.565
533,894
9,062
945,548 (R) 372.112 (R) 6983,783 (R) 8.301,443
277,636 36,911 15,238 (R)
329,785
1,139,183
39,779 (R) 438,537 (R) 6.519,886 (R) 196,081 (R) 7,194,283
277,664 (R) 232,746 (R) 169,440 (R) 679,850
88,325 (R) 193,945 (R) 4,195,079 (R)
1,129 (R) 4,478.478

E - 37

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH E",ITV IDENTIFYING
NUMBER

MONETARY EXPENDITURES

SONMONETARY EXPENDITVRES

Health and Human Services! U. S. Department of
Arthritis. Musculoskeletal and Skin Diseases Research Through Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through University of Georgia Research Foundation
Diabetes, Endocrinology and Metabolism Research Through Georgia Tech Research CorporatIon Through: University of Georgia Research foundation
Digestlve Diseases and Nutrition Research Direct Through Medical College of Georgta Research Institute Through University of Georgia Research Foundation
Kidney Diseases, Urology and Hematology Research Through Medical College of Georgia Research Institute Through: University of Georgia Research Foundation
Extramural Research Programs m the Neurosciences and Neurological Disorders Direct Through" Clark Atlanta University
Through Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through Umversity of Georgia Research Foundation Through University of Louisville Research
Allergy, Immunology and Transplantation Research Through" Georgia Tech Research Corporation Through: Medical College of Georgia Research Institute
Microbiology and Infectious Diseases Research Direct Through Emory University Through' Medical College of Georgia Research Institute Through Neural Signals., Inc Through: University of North Carolina Through University of Georgia Research Foundation
Pharmacology, Physiology, and Biorelated Chemistry Research Direct Through Georgia Tech Research Corporation Through University of Georgia Research Foundation
Genetics and Developmental Biology Research and Research Training Direct Through' Georgia Tech Research Corporation Through Medical College of Georgia Research Institute Through University of Georgia Research Foundation

93.846 93.847 93848 93849 93.853
93855 93856
93859 93862

Vanous
Various
Vanous
ALX56 AL735 Various BLA62
ALX49 BLF34 BLF40 Various
Various
Various

12.488 (R) 78.703 (R) 34,682 (R)
125,873
139,773 (R) 560,040 (R)
699,813
392.529 (R) 883,544 (R) 391,113 (R)
1,667,186
459,403 (R) 177,322 (R)
636,725
879,634 (R) 17,591 (R)
137.966 (R) 47,035 (R) 1.549.465 (R) 14,218 (R) 24.277 (R)
2,670,186
695,983 (R) 1,199,834 (R)
1,895.817
997,868 (R) 70,496 (R) 517,576 (R) 70,426 (R)
201,467 (R) 3,920,545 (R)
5,778,378
380,822 (R) 498,517 (R) 2,201,451 (R)
3,080,790
11,660 (R) 77,088 (R) 279,811 (R) 1,372,308 (R)
1,740,867

E - 38

Georgia
Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
eFDA
MeMBER

PASS-rnROUGH E:'ITm' IDENTIFYING
'IIl'MBER

MONETARY EXPENDITURES

NONMO'liETARY EXPENDITl'RES

Health and Human Sen'ices. U. S. Department of
Population Research Direct Through Medical College of Georgia Research Institute Through University of Georgia Research Foundation
Center for Research for Mothers and Children Direct Through Georgta Tech Research Corporation Through Medical College of Georgia Research Institute Through" University of Georgta Research Foundation Through Yale UniverSity
Aging Research Direct Through" Georgia Tech Research Corporation Through" Umversity of Georgia Research Foundation
Vision Research DIrect Through: Medical College of Georgia Research Institute
Minority Access to Research Careers Through: University of Georgia Research Foundation
Grants for Residency Training in General Internal MediCine and/or General Pediatrics Direct
Physician ASSlstant Training in Primary Care Direct
Resource and Manpov.er Development in the Environmental Health Sciences Direct Through: University of Georgia Research Foundation
Grants for Faculty Development in Family Medicine Direct
Predoctoral Training In Primary Care (Family Medicine, General Internal MediCine/General Pediatrics) Direct
Rural Health Medical Education Demonstration Projects Direct
Rural Health Outreach and Rural Network Development Program Direct
Grants to States for Operation of Offices of Rural Health Direct
I-UV CaTe Formula Grants Direct
Grants to Provide Outpatient EaTty Intervention Services
with Respect to mv Disease
Direct

93864
93865
93866
93867
93.880 93884 93886 93894
93895 93896 93.906 93912 93.913 93.917 93.918

Various Vanous CLH43 Various
GM20095-02
Vanous

19,952 (R) 340,952 (R)
45342 (R) 406,246
3205.978 (R) 90,452 (R)
493246 (R) 1,640,719 (R)
-2391 (R) 5,428.004
610,200 (R) 796,100 (R) 688,651 (R) 2,094.951
222,725 (R) 1,990,663 (R) 2,113,388
26,481 (R)
191,910
39,260
32,914 (R) 49,634 (R) 82,548
145,069
186.181
180,463
185,462
47,989
30,355,676
706,097

E - 39

Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH ENTITY IDENTIFYING
NUMBER

MONETARY EXPE!'iDmRES

NONMO!'iETARY EXPENDITURES

Health and Human Sen'ices. U. S. Department of
Cooperative Agreements for StateBased Comprehensive Breast and Cervical Cancer Early DetectlOn Programs Direct
Scholarships for Health Professions Students from Disadvantaged Backgrounds (SFA)
Direct
Healthy Start Initiative Direct
Center for Medical RehabilItation Research Through: University of Georgia Research Foundation
Fogarty International Research Collaboration Award Direct Through Georgia Tech Research Corporation Through: University of Georgia Research Foundation
CooperatIve Agreements to Support Comprehensive School Health Programs to Prevent the Spread ofHIV and Other Important Health Problems Direct
mv Prevention Actnrities - Health Department Based
Direct
HIV Demonstration, Research, Public and Professional Education Projects Direct Through: University of Illinois at Chicago
Eptdemiologic Research Studies of Acquired Immunodeficiency Syndrome (AIDS) and Human
ImmunodeficIency Virus (HIV) Infection in Selected Population Groups
Through: University of Georgia Research Foundation
Human ImmWlOdeficiency Virus (HIV)/Acquired Immunodeficiency Virus Syndrome (AIDS) Surveillance Direct
Assistance Program for Chronic Disease Prevention and Control
Direct
Demonstration Grants to States with Respect to Alzheimer's Disease Direct
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
Health Administration Trameeships and Special Projects Program
Direct

93.919 93925 93926 93929 93934
93.938 93.940 93.941
93943
93944 93.945 93951 93.958 93.959
93960 93.962

Various Various
ALX57 Various
Various

3.932.628
198.149 (R) 281.528 208,603 (R) 45.788 (R)
30 (R) 13.400 (R) 59.218
142,626 6.493.385
917.219 206,270 (R) 1,123.489
921,751 (R)
552,900
1.020,361
-446 11.786,096
50,337,918 17.497
50,355,415 115.137
18.473

E - 40

Georgia
Schedule of Expenditures of Federal Awards
For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROVGH ENTITY IDENTIFYING
'IIlIMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITl'RES

Health and Human Sen-ices, U. S. Department of

Preventive Health Services - Sexually Transmined Diseases Control Grants Direct

93977

Mental Health Dlsaster Assistance and Emergency Mental Health Direct

93982

Academic Administrative COlts in Primary Care Direct

93984

Cooperative Agreements for StateBased Diabetes Comrol Programs and Evaluation of Surveillance Systems Direct

93.988

Semor Internatlonal Fellowships Through: Medical College of Georgia Research Institute

93.989

Preventive Health and Health Services Block Grant Direct

93,991

Maternal and Child Health Servlces Block Grant to the States Direct

93994

Other Federal Assistance DIrect Through American Council on Education Through City of Albany Through' Emory University Through Family Matters Consulting. Incorporation Through Georgia Association for Pnmary' Health Care Through Georgia Tech Applied Research Corporation Through Georgia Tech Research Corporation Through Metro Atlanta Council on Alcohol Through National ASSOCiation of Equal Opportunity in Higher Education Through NatlOnal Collegiate Athletic Association Through' Science Applications Intemational Group Through University of GeorgIa Research Foundation Through: U. S. Ukraine Foundation Through' Virginia Tech Through World Learning, Incorporated

93 XXX

AL790
ALW09
Various US-UF-C-CPP-O 1-008
CR-I9295-425215

AGENCY TOTAL
Corporation for National and Community Service
Retired and Senior Volunteer Program Direct
State Commissions Direct
Learn and Serve America School and Community Based Programs Direct
Learn and Serve America ~ Higher Education Direct Through: Georgia Tech Research Corporation

94002 94003 94004 94.005

AmeriCorps Direct Through The Georgia Commission for National/Community Service

94006

OFHNUNN029MULCT

E - 41

3,505,063

-15.627 67.627

208.932 1,090
5,089.375

16,826,278

462,660 58,770 65,789
157,274 151,405
983 101,539 2,696,536
13,879 2,624 82,167 3,694 6,086,487 19,421 4,024 17,168

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

9,924.420

5,151,079,181

268.923
300,270 (3) 300,270 22,151,532

110,045 (R)
284,716
378,893
4,968 11,359 (R) 16,327
5,835,084 19,722 (R)
5,854,806

Georgia.
Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30, 2002
CFDA NUMBER

PASS-THROUGH EI'TITY IDENTIFYING
NUMBER

Corporation for National and Community Service Planning and Program Development Grants Direct Training and Technical ASSIstance Direct Foster Grandparent Program (FGCC) Direct Senior Companion Program (FGCC) DIrect
AGENCY TOTAL
Social Security Administration Social Secunty - Disability Insurance (DlISSI) Direct
AGENCY TOTAL
GRAND TOTAL EXPENDITURES OF FEDERAL AWARDS

94007 94009 94011 94.016
96.001

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

292.103 (R) 146,024 256.778 (R) 266.461 (R) 7,606.153

46,343,803 46)43,803 9,591,578,419

2,458)22,260

E - 42

Notes to the ScheduLe of Expenditures of FederaL Awards For the Fiscal Year Ended June 30, 2002

PURPOSE OF THE SCHEDlJLE

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).

SIGNIFICA.~T ACCOUNTING POLICIES

Reporting Entity - The accompanying schedule includes all Federal financial assistance programs administered by the State of Georgia for the fiscal year ended June 30, 2002. Refer to Appendix "A" for a comprehensive listing of organizational units comprising the financial 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 defined as assistance that 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 of 1996 and OMB Circular A-133 established a risk-based

approach for defining Major Federal financial assistance programs. This approach resulted in 15 of 26 Type A

programs and 1 Type B program being selected as major programs for the State of Georgia. For the fiscal year

ended June 30, 2002, a Type A program is defined as any Federal program which exceeded $30,000,000 in

expenditures/disbursements/issuances.

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 Basic 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 ofreporting expenditures/expenses results in an overstatement of the aggregate level of Federal expenditures/expenses. Therefore, net Federal expenditures/expenses is reported in the schedule.

OTHER

Thefollowing Notes provide additional pertinent information regarding Federalfinancial assistance.

(1) Expenditures for these programs includes Federal, state and/or other fimds. In addition, the Unemployment Insurance program (CFDA NO. 17.225) includes Federal expenditures of $162,834,903 and State expenditures of $734,698,415.

(2) During the fiscal year ended June 30, 2002, the Georgia Department of Human Resources received $52,206,247 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. 10.557). 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 WIC benefit costs. The rebate contract allowed the Department to serve approximately 90,244 additional persons per month during fiscal year 2002.

E - 43

Notes to the ScheduLe of Expenditures of FederaL Awards For the fiscaL Year Ended June 30, 2002
(3) Federally funded loan programs incurred the following current fiscal year monetary and nonmonetary expenditures:

eFDA NlJMBER

GRANT PROGRAM

MONETARY

NEW FEDERAL CAPITAL

FEDERAL REIMBURSEMENT

ADMINISTRATIVE COSTS

NONMONETARY

LOANS OUTSTANDING
AT 06130102

LOANS MADE DURING YEAR

23011
66458 66468 84032 84.038 84.226 93.342
93.364 93 XXX 93 XX-X

Appalachian State Research, Technical Assistance, and Demonstration Projects (**)
Capitalization Grants fOT State Revolving Funds
Capitalization Grants for Drinking Water State Revolving Funds
Federal Family Education Loans (..... )
Federal Perkins Loan Program. Federal Capital Contributions
Income Contingent Loan Program
Health Professions Student Loans. Including Primary Care Loans/Loans for Disadvantaged Students
Nursing Student Loans
Pharmacy Loans (*"')
Veterinary Medicine Loans (**)

0$
21.405.596 $ 10.858,782
0$ -206.421
0S -667,014 $
20,514 -97,780 -96,660

0$
0$ 0$ 43,751.176 S 479.420 0$ 0$ 690 0$ 0$

46,116 $
344.910 $ 374.372
0$ 324,468
0$ 0$ 2.980 .762 $ 0$

1.307.609 $
294,233,327 $ 25,381.147 $
1,430.571.000 $ 37,786,341 134,233 2,427.510 $ 1,252,069 116.907 $ 183,363

200.000
7.019,406 4,837,266 234.575.370 6,336,084
-135 13.636 300,506

(**) 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.
(4) 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 two 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 stamp benefits a household receives depends on the household's size and financial circumstances. The Georgia Department of Human Resources is responsible for determining eligibility for participation in the Food Stamp Program. For the year under review, the total value of food stamp benefits distributed as approved by the Department was $593,138,530.
The amount reported represents the U. S. Department of Health and Human Services assigned value of immunizations f0r vaccine-preventable diseases to eligible individuals.

E - 44

Georgia
Notes to the Schedule of Expenditures of Federal Awards For the Fiscal Year Ended June 30,2002

(5) Cluster programs are detailed on the Schedule ofCluster Programs and identified as follows on the Schedule ofExpenditures ofFederal Awards:

(AC) (CCC) (CNC) (CHCC) (DI/SSI) (EFAC) (ESC) (ESCC) (FTC) (FWC) (FSC) (FGCC) (HPCC) (HSC) (MC) (R) (SEC) (SFA) (TRIO) (WIA)

Aging Child Care Child Nutrition Consolidated Health Centers Disability Insurance/SSI Emergency Food Assistance Employment Service CDBG - Entitlement and (HUD-Administered) Small Cities Federal Transit Fish and Wildlife Food Stamp Foster Grandparent/Senior Companion Highway Planning and Construction Highway Safety Medicaid Research and Development Special Education Student Financial Aid TRIO WIA

(6) Circular A-133 requires the Schedule ofExpenditures afFederal 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 66% of total Federal expenditures for the State ofGeorgia, Provided below is the amount of major programs awards provided to subrecipients:

CFDA NUMBER
14.239
66.458 66.468 66.470 84.048 93.558

GRANT PROGRAM
Food Stamp Cluster HOME lovestment Partnerships Program Highway Planning and Construction Cluster Capitalization Grants for State Revolving Funds Capitalization Grants for Drinking Water State Revolving Fund Hardship Grants Program for Rural Communities Vocational Education - Basic Grants to States Temporary Assistance for Needy Families Research and Development Cluster
Total

AMOUNT PROVIDED TO SUBRECIPIENTS

$

118

2,356,130

1.181.280 20,130,573 10,858,782
691,109 13,415,082 2,148,877 31,75I.770

$

82,533,721

E - 45

(This page intentionaLLy Left bLank)

~CHEDULE OF CLUSTER PR~RAlv1S

(This page intentionaLLy Left bLank)
,----- "---", ---

Georgia.
Schedule of Cluster Programs For the Fiscal Year Ended June 30, 2002
Aging Cluster (AC)
Special Programs for the Aging - Title ilL Part B Grants for Supportive Services and Senior Centers
Special Programs for the Aging - Title 1II, Part C Nutrition Services
Child Care Cluster (CCC)
Child Care and Development Block Grant Child Care Mandatory and Matching Funds of the Child
Care and Development Fund
Child Nutrition Cluster (CNC)
School Breakfast Program National School Lunch Program Special Milk Program for Children Summer Food Service Program for Children
Consolidated Health Centers Cluster (CHCC)
Health Centers Grants for Migrant and Seasonal Farmworkers
Disability Insurance/SSI Cluster (DIISSI)
Social Security - Disability Insurance
Emergency Food Assistance Cluster (EFAC)
Emergency Food Assistance Program (Administrative Costs)
Emergency Food Assistance Program (Food Commodities)
Employment Service Cluster (ESC)
Employment Service Disabled Veterans' Outreach Program (DVOP) Local Veterans' Employment Representative Program
CDBG - Entitlement and (HUD-Administered) Small Cities Cluster (ESCC)
Community Development Block GrantslEntitiement Grants Community Development Block Grants/Small Cities
Program

CFDA NUMBER

MONETARY EXPENDITURES

:,\,ONMONETARY EXPE:,\,DITURES

93.044 $
93.045
$

6,960,229 13,315,062 20,275,291

93575 $ 93.596
$

79,656,946 99,212.730 178,869.676

10.553 $ 10.555 10.556 10.559
$

67,085,394 227,812,973
19,559 10,321,612
305,239,538

93.246 $

1,061,906

96.001 $

46,343,803

10.568 $
10.569
$
17.207 $ 17801 17.804
$

778,548 267,903 $ 1,046,451 $
14,108,236 1,842,142 1,199,619
17,149,997

7,680,653 7,680,653

14.218 $ 14219
$

-372 1,737,631 1,737,259

E - 49

GEDrgia.
ScheduLe of CLuster Programs For the Fiscal Year Ended June 30, 2002
Federal Transit Cluster (FfC) Federal Transit - Capital Improvement Grants Federal Transit - Formula Grants
Fish and Wildlife Cluster (FWC) Sport Fish Restoration Wildlife Restoration
Food Stamp Cluster (FSC) Food Stamps State Administrative Matching Grants for Food Stamp Program
Foster Grandparent/Senior Companion Cluster (FGCC) Foster Grandparent Program Senior Companion Program
Highway Planning and Construction Cluster (HPCC) Highway Planning and Construction
Highway Safety Cluster (HSC) State and Community Highway Safety
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) Other Federal Assistance Agricultural Research - Basic and Applied Research Plant and Animal Disease, Pest Control, and Animal Care Wildlife Services Grants for Agricultural Research, Special Research Grants Cooperative Forestry Research Payments to Agricultural Experiment Stations Under the Hatch Act Grants for Agricultural Research Competitive Research Grants Higher Education Challenge Grants Biotechnology Risk Assessment Research

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

20.500 $ 20.507
$

227,179 12,509,528
12,736,707

15.605 $ 15.611
$

5,330,562 5,367,183
10,697,745

10.551 10.561
$
$

$ 59,610,012 59,610,012 $

593,138,530 593,138,530

94.011 $ 94016
$

256,778 266,461
523,239

20.205 $

874,910,211

20.600 $

16,595,981

93.775 $ 93.777
93.778
$

2,972,445 2,740,789
3,936,035,565
3,941,748,799

04. XXX $ 10.001 10.025 10.028 10.200 10.202 10.203
10.206
10.217 10.219

100 905,863 156,928
13,445 3,677,391
797,434
4,614,367
2,579,503 139,641 -2

E - 50

Georgia
Schedule of Cluster Programs For the Fiscal Year Ended June 30, 2002

CFDA NlJMBER

MO"lETARY EXPENDITURES

Research and Development Cluster (R)
Funds for Rural America - Research, Education, and Extension Activities
Initiative for Future Agriculture and Food Systems Integrated Programs Cooperative Extension Service Summer Food Service Program for Children (CNC) Commodity Supplemental Food Program Forestry Research Cooperative Forestry Assistance Soil and Water Conservation Scientific Cooperation Program Other Federal Ass istance ITA Special Projects Economic Development - Technical Assistance Trade Adjustment Assistance Sea Grant Support Coastal Zone Management Estuarine Research Reserves Climate and Atmospheric Research Pacific Coast Salmon Recovery - Pacific Salmon Treaty Program Marine Research - Regional Programs Center for Sponsored Coastal Ocean Program - Coastal Ocean Program Measurement and Engineering Research and Standards Other Federal Assistance Aquatic Plant Control Collaborative Research and Development Basic and Applied Scientific Research Military Medical Research and Development Basic Scientific Research International Education - U.S. Colleges and Universities Community Economic Adjustment 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 Community Development Block GrantslEntitlement Grants (ESCC) Community Outreach Partnership Center Program Other Federal Assistance Fish and Wildlife Management Assistance Cooperative Endangered Species Conservation Fund Wildlife Conservation and Appreciation Assistance to State Water Resources Research Institutes Earthquake Hazards Reduction Program U.S. Geological Survey - Research and Data Acquisition Historic Preservation Fund Grants-In-Aid National Historic Landmark Outdoor Recreation - Acquisition, Development and Planning National Center for Preservation Technology and Training Other Federal Assistance Law Enforcement Assistance - FBI Advanced Police Training

10.224 $
10.302 10.303 10.500 10559 10565 10.652 10.664 10.902 10.961 10.XXX II 113 11.303 11.313 11.417 11.420 11.431 11.438 11.464 11.478 11.609 I1.XXX 12.100 12.114 12.300 12.420 12.431 12.550 12600 12.630
12.800 12.901 12910 12.XXX 14.218 14.511 14 XXX 15.608 15.615 15.617 15.805 15.807 15.808 15.904 15.912 15.916 15.923 15.XXX 16.300

36,760 482,952 556,384 10,262,326
13,085 -71
875.018 337,258
6.178 24,509 2,630,038 48,169
I 838.461 998,693 47,319 44,408 25.477 263,298 126,656 161,031 6.419,306 5,741,382 91,508 9,591,879 194,532 150,636 163,112
85,522
386,096 6,032,016
14,642 2,490,494 85,077,565
-372 939 273,138 9,816 11,642 63,150 160,011 105,135 257,588 54,229 3,000 23,647 1,829 1,186,126 71,857

NO"lMO"lETARY EXPENDITURES

E - 51

Schedule of Cluster Programs For the Fiscal Year Ended June 30, 2002

CFDA NUMBER

MONETARY EXPENDITURES

Research and Development Cluster (R)

National Institute for Juvenile Justice and Delinquency

16.542

Prevention

$

National Institute of Justice WEB. DuBois Fellowship Program

16.566

Other Federal Assistance

16.XXX

Job Training Partnership Act

17.250

Other Federal Assistance

17.XXX

College and University Partnerships Program

19.405

College and University Affiliations Program

19.406

Other Federal Assistance

19 XXX

Other Federal Assistance

20.XXX

Other Federal Assistance

2 LXXX

Other Federal Assistance

39. XXX

Aerospace Education Services Program

43001

Technology Transfer

43002

Other Federal Assistance

43.XXX

Promotion of the Arts - Grants to Organizations

45.024

and Individuals

Promotion of the Humanities - Federal/State Partnership

45.129

Promotion of the Humanities - Challenge Grants

45.130

Promotion of the Humanities - Education Development and

45.162

Demonstration

Other Federal Assistance

45.XXX

Engineering Grants

47.041

Mathematical and Physical Sciences

47049

Geosciences

47.050

Computer and Information Science and Engineering

47.070

Biological Sciences

47.074

Social, Behavioral, and Economic Sciences

47.075

Education and Human Resources

47.076

Polar Programs

47.078

Other Federal Assistance

47.XXX

Business Development Assistance to Small Business

59,005

Small Business Development Center

59.037

Other Federal Assistance

59.XXX

Other Federal Assistance

64 XXX

Water Quality Management Planning

66.454

Nonpoint Source Implementation Grants

66.460

Environmental Protection - Consolidated Research

66.500

Surveys, Studies, Investigations and Special Purpose Grants

66606

Training and Fellowships for the Environmental

66.607

Protection Agency

Pollution Prevention Grants Program

66.708

Pesticide Environmental Stewardship - Regional Grants

66.714

Other Federal Assistance

66. XXX

Office of Science Financial Assistance Program

81.049

Conservation Research and Development

81.086

Renewable Energy Research and Development

81.087

Office of Science and Technology for Environmental Management

8Ll04

University Nuclear Science and Reactor Support

81114

Science and Engineering Training to Support Diversity-Related Programs 81116

Other Federal Assistance

8 LXXX

Undergraduate International Studies and Foreign Language Programs

84016

International Research and Studies

84.017

125260 23,592 IILl43 62.182 1,230,725
-850 144,576 2.408,611 2,777,911
-17 2.111.98 I
140,543 5,000
13,607,768
24,891 41,701
2,018
15,417 385,840 13,296,055 5,864,423 3,520,323 8,254,047 5,453,785 2,010,625 5,133,319 151,367 11,853,913
155 2,386,091
172,134 1,420,996
1,139 63,065 1,992,801 166,613
99,123 26,090
7,879 1,685,205 3,098,069
216,241 48,049 1,586 24,821 45,898
17,297,892 80,205 87,984

NONMONETARY EXPENDITURES

E - 52

Georgia.
ScheduLe of CLuster Programs For the fiscaL Year Ended June 30. 2002
Research and Development Cluster (R)
International: Overseas - Group Projects Abroad International: Overseas - Doctoral Dissertation Special Education - Innovation and Development Special Education - Grants to States (SEC) Higher Education - Institutional Aid Federal Work-Study Program (SFA) TRIO - Student Support Services (TRIO) TRIO - Talent Search (TRIO) TRIO - Upward Bound (TRIO) TRIO - Educational Opportunity Centers (TRIO) Fund for the Improvement of Postsecondary Education Rehabilitation Long-Term Training National Institute on Disability and Rehabilitation Research Graduate Assistance in Areas of National Need Rehabilitation Services Demonstration and Training -
Special Demonstration Programs Rehabilitation Training - State Vocational Rehabilitation
Unit In-Service Training Eisenhower Professional Development State Grants National Institute on Student Achievement, Curriculum, and
Assessment Eisenhower Regional Mathematics and Science Education Consortia Special Education - Research and Innovation to Improve
Services and Results for Children with Disabilities Special Education - Personnel Preparation to Improve
Services and Results for Children with Disabilities Special Education - Technology and Media Services for Individuals
with Disabilities Teacher Quality Enhancement Grants Learning Anytime Anywhere Partnerships Preparing Tomorrow's Teachers to Use Technology Early Childhood Educator Professional Development Other Federal Assistance National Historical Publications and Records Grants Nation Family Caregiver Support Program Health Disparities Grants in Minority Health Food and Drug Administration - Research Comprehensive Community Mental Health Services for
Children with Serious Emotional Disturbances (SED) Maternal and Child Health Federal Consolidated Programs Biological Response to Environmental Health Hazards Biometry and Risk Estimation - Health Risks from
Environmental Exposures Oral Diseases and Disorders Research Centers for Research and Demonstration for Health Promotion and
Disease Prevention Injury Prevention and Control Research and State and
Community Based Programs International Cooperative Biodiversity Groups Program Human Genome Research Research Related to Deafness and Communication Disorders Human Health Studies - Applied Research and Development Research and Training in Alternative Medicine

CFDA NUMBER

MONETARY EXPENDITURES

:'IIONMONETARY EXPENDITURES

84.021 $ 84.022 84.023 84.027 84.031 84.033 84.042 84.044 84.047 84.066 84.116 84.129 84.133 84.200 84.235
84.265
84.281 84.305
84.3 I9 84.324
84.325
84.327
84.336 84.339 84.342 84.349 84.XXX 89.003 93.052 93.100 93.103 93.104
93.110 93.1 13 93.115
93.121 93.135
93.136
93.168 93.172 93.173 93.206 93.213

25,623 612
45,805 219.434 2,725,625 778.850 249.267 678,755 1,047,754 406.284
50,941 130.453 546,833 273,974
159,41 I
17,842 1,466,230
328,668 35,749
333,210
614,907
237,414 755,194
26,301 418,017
84,544 3,645,786
7,223 71,544 50,931 548,048
56,565 17,344 270,700
15,548 661,687
314,545
1,178,444 112,910 332,568 811,070 10,442 311,170

E - 53

Schedule of Cluster Programs For the Fiscal Year Ended June 30, 2002

CFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

Research and Development Cluster (R)

National Research Service Awards - Health Services Research

93.225

Training

$

Research on Healthcare Costs, Quality and Outcomes

93.226

Consolidated Knowledge Development and Application (KD&A) Program 93230

Abstinence Education

93.235

Mental Health Research Grants

93242

Occupational Safety and Health Research Grants

93262

Immunization Grants

93.268

Alcohol National Research Service Awards for

93272

Research Training

Alcohol Research Programs

93273

Drug Abuse National Research Service Awards

93.278

for Research Training

Drug Abuse Research Programs

93.279

Centers for Disease Control and Prevention - Investigations

93283

and Technical Assistance

Comparative Medicine

93.306

Advanced Education Nurse Traineeships

93358

Nursing Research

93.361

Biomedical Technology

93.371

Minority Biomedical Research Support

93.375

Cancer Cause and Prevention Research

93.393

Cancer Treatment Research

93395

Cancer Biology Research

93.396

Cancer Research Manpower

93398

Cancer Control

93399

Promoting Safe and Stable Families

93.556

Child Care and Development Block Grant (Ccq

93.575

Refugee and Entrant Assistance - Targeted Assistance

93.584

Family Violence Prevention and Services/Grants for Battered

93592

Women's Shelter - Discretionary Grants

Head Start

93.600

Developmental Disabilities Basic Support and

93.630

Advocacy Grants

Developmental Disabilities Projects of National Significance

93631

Developmental Disabilities University Affiliated Programs

93.632

Social Services Research and Demonstration

93.647

Child Welfare Services Training Grants

93.648

Child Abuse and Neglect State Grants

93.669

Cell Biology and Biophysics Research

93821

Health Careers Opportunity Program

93.822

Heart and Vascular Diseases Research

93.837

Lung Diseases Research

93838

Blood Diseases and Resources Research

93.839

Arthritis, Musculoskeletal and Skin Diseases Research

93.846

Diabetes, Endocrinology and Metabolism Research

93.847

Digestive Diseases and Nutrition Research

93.848

Kidney Diseases, Urology and Hematology Research

93.849

Extramural Research Programs in the Neurosciences and

93.853

Neurological Disorders

Allergy, Immunology and Transplantation Research

93.855

Microbiology and Infectious Diseases Research

93.856

87,874 187,416 23,243 19.610 3,885.515 275,907 49,167
155,988 735.487
42,683 2,524,897
294,023 471,945
14,611 88,056 836,094 22,267 420,769 709,407 617,879 20,977 58,960 123,195 175,587 7,303
30,108 8,821
339,233 56,975 25,544 137,883 73,675 2,910
8,301,442 15,238
7,194,283 679,850
4,478.478 125,874 699,813
1,667,186 636,725
2,263,960 1,895,817 5,758,599

E - 54

Schedule of Cluster Programs For the Fiscal Year Ended June 30, 2002

Research and Development Cluster (R) Pharmacology, Physiology, and Biorelated Chemistry Research Genetics and Developmental Biology Research and Research Training Population Research Center for Research for Mothers and Children Aging Research Vision Research Minority Access to Research Careers Resource and Manpower Development in the Environmental Health Sciences Scholarships for Health Professions Students from Disadvantaged Backgrounds (SFA) Center for Medical Rehabilitation Research Fogarty International Research Collaboration Award HIV Demonstration. Research, Public and Professional Education Projects Epidemiologic Research Studies of Acquired Immunodeficiency Syndrome (AIDS) and Human Immunodeficiency Virus (HIV) Infection in Selected Population Groups Other Federal Assistance Retired and Senior Volunteer Program Leam and Serve America - Higher Education AmeriCorps Planning and Program Development Grants Foster Grandparent Program (FGCC) Senior Companion Program (FGCC)
Special Education Cluster (SEC) Special Education - Grants to States Special Education - Preschool Grants
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 Loan Health Professions Student Loans, Including Primary Care Loans/Loans for Disadvantaged Students Nursing Student Loans Scholarships for Students of Exceptional Financial Need Scholarships for Health Professions Students from Disadvantaged Backgrounds

CFDA "'liMBER

MONETARY EXPENDITllRES

NONMO",ETARY EXPENDITl'RES

93.859 $
93.862 93.864 93.865 93.866 93.867 93.880 93894
93.925
93929 93.934 93.941
93943

3,080.789 1,740,866
406.246 5,428.004 1,748.844 2,213.388
26.481
82.547
59.063 208,603
59.218
206,270

93.XXX 94.002 94.005 94.006 94.007 94.01 I 94.016
$

921,751 9,530,399
110,045 11,359 19,722
196,262 251.040
86.818
349,704,441

84.027 $ 84.173
$

158.294,639.00 9,926,030.00
168,220,669.00

84.007 $ 84.032 84.033 84.038
84.063 84.268 93.342
93364 93.820 93.925
$

7,509,066 45,111,030 $
8,992,787
597.466 169,858,406 269,509,158
-667,014 24,185 9,062
198,149
501,142,295 $

1,430,571,000 37,786.341
2,427,510 1,252,069
1,472,036,920

E - 55

Schedule of Cluster Programs For the fiscaL Year Ended June 30, 2002
TRIO Cluster (TRIO)
TRIO - Student Support Services TRIO - Talent Search TRIO - Upward Bound TRIO - Educational Opportunity Centers McNair Post-Baccalaureate Achievement
WIA Cluster (WIA)
WIA Adult Program WIA Youth Activities WIA Dislocated Workers

eFDA NUMBER

MONETARY EXPENDITURES

NONMONETARY EXPENDITURES

84042 $ 84044 84047 84.066 84.217
$

2,020,865 1,416,136 2,963,259
965,941 410,681
7,776,882

17.258 $ 17.259 17.260
$

258,857 1,305,523
147,696
I,712,076

E - 56

S;;UMMARY ScHEDULE OF PRIOR YEAR FINDINGS AND QuESTIONED ~

(This page intentionally left blank)

Summary ScheduLe of Prior Year Findings and Questioned Costs For the FiscaL Year Ended June 30, 2002

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

COMMENTS

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Department ofAdministrative Services

FS-40 I-00-0 I Further Action Not Warranted

FS-40 1-00-02 See Georgia Technology Authority

FS-40 I-0 I-0 1 Unresolved

See Comments - Page F-ll

Department ofInsurance

FS-408-0 1-0 1 Previously Reported Corrective Action Implemented

FS-408-0 1-02 Previously Reported Corrective Action Implemented

FS-408-0 1-03 Previously Reported Corrective Action Implemented

Department ofEducation

FS-414-00-06 Further Action Not Warranted

FS-414-0 1-0 1 Partially Resolved

See Comments - Page F-11

FS-414-0 1-02 Partially Resolved

See Comments - Page F-l1

Department ofHuman Resources

FS-427-00-01 Further Action Not Warranted

FS-427-01-01 Previously Reported Corrective Action Implemented

FS-427-01-02 Previously Reported Corrective Action Implemented

Judicial Branch

FS-430-0 1-0 1 Previously Reported Corrective Action Implemented

FS-430-0 1-04 Previously Reported Corrective Action Implemented

Department ofLabor

FS-440-0 1-02 Unresolved

See Comments - Page F-14

FS-440-0 1-03 Unresolved

See Comments - Page F-15

Department ofNatural Resources

FS-462-00-01 Further Action Not Warranted

FS-462-0 1-0 1 Partially Resolved

See Comments - Page F-15

Department ofPublic Safety

FS-466-0 1-04 Previously Reported Corrective Action Implemented

FS-466-0 1-05 Partially Resolved

See Comments - Page F-16

Department ofCorrections

FS-467-00-01 Further Action Not Warranted

FS-467-0 1-0 1 Partially Resolved

See Comments - Page F-16

FS-467-01-02 Previously Reported Corrective Action Implemented

Office ofSchool Readiness

FS-414-00-04 Previously Reported Corrective Action Implemented

FS-469-0 1-0 1 Previously Reported Corrective Action Implemented

Board ofRegents of the University System ofGeorgia

FS-472-01-02 Further Action Not Warranted

FS-472-01-03 Further Action Not Warranted

Department ofRevenue

FS-474-00-01 Further Action Not Warranted

FS-474-00-02 Further Action Not Warranted

FS-474-00-03 Further Action Not Warranted

FS-474-01-01 Previously Reported Corrective Action Implemented

FS-474-01-02 Partially Resolved

See Comments - Page F-17

FS-474-01-03 Unresolved

See Comments - Page F-17

F-5

Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

Georgia Student Finance Commission

FS-476-0 1-0 I Previously Reported Corrective Action Implemented

FS-476-01-02 Previously Reported Corrective Action Implemented

FS-476-01-04 Previously Reported Corrective Action Implemented

FS-476-01-07 Partially Resolved

FS-476-0 1-09 Previously Reported Corrective Action Implemented

Department o/Transportation

FS-484-00-02 Previously Reported Corrective Action Implemented

FS-484-0 1-01 Previously Reported Corrective Action Implemented

Georgia Institute o/Technology

FS-503-0 1-01 Previously Reported Corrective Action Implemented

University 0/Georgia

FS-518-0 1-0 1 Previously Reported Corrective Action Implemented

FS-518-0 1-02 Previously Reported Corrective Action Implemented

Albany State University

FS-521-01-01 Previously Reported Corrective Action Implemented

Clayton College and State University

FS-528-00-01 Further Action Not Warranted

FS-528-0 1-0 1 Partially Resolved

Fort Valley State University

FS-533-0 1-05 Unresolved

Georgia Southern University

539-96-01

Partially Resolved

FS-539-00-01 Previously Reported Corrective Action Implemented

FS-539-01-01 Previously Reported Corrective Action Implemented

Kennesaw State University

543-96-01

Previously Reported Corrective Action Implemented

Savannah State University

FS-548-0 1-0 I Partially Resolved

Atlanta Metropolitan College

561-96-01

Unresolved

561-96-02

Unresolved

Floyd College

FS-573-97-02 Unresolved

Georgia Military College

FS-590-00-02 Further Action Not Warranted

FS-590-01-01 Previously Reported Corrective Action Implemented

West Georgia Technical College

FS-819-00-02 Further Action Not Warranted

FS-819-0 1-02 Previously Reported Corrective Action Implemented

Atlanta Technical College

FS-823-00-01 Further Action Not Warranted

FS-823-0 1-0 1 Previously Reported Corrective Action Implemented

Augusta Technical College

FS-824-97-02 Partially Resolved

COMMENTS See Comments - Page F-17
See Comments - Page F-18 See Comments - Page F-19 See Comments - Page F-20 See Comments - Page F-20 See Comments - Page F-23 See Comments - Page F-23 See Comments - Page F-24
See Comments - Page F-24

F-6

Georgia.
Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

DeKalb Technical College FS-830-00-01 Further Action Not Warranted FS-830-0 1-0 1 Partially Resolved Appalachian Technical College FS-840-00-0 1 Previously Reported Corrective Action Implemented Georgia Public Telecommunications Commission FS-977-01-01 unresolved Georgia Technology Authority FS-40 1-00-02 Previously Reported Corrective Action Implemented Northlvest Georgia Regional Educational Service Agency FS-8504-00-0 I Further Action Not Warranted FS-8504-0 1-0 1 Previously Reported Corrective Action Implemented North Georgia Regional Educational Service Agency FS-8524-00-03 Previously Reported Corrective Action Implemented FS-8524-0 1-02 Previously Reported Corrective Action Implemented AIetropolitan Regional Educational Service Agency FS-8564-0 1-0 I Unresolved West Georgia Regional Educational Service Agency FS-8604-00-01 Further Action Not Warranted FS-8604-0 1-0 1 Unresolved Oconee Regional Educational Service Agency FS-8664-00-01 Further Action Not Warranted FS-8664-0 1-0 I Unresolved Chattahoochee-Flint Regional Educational Service Agency FS-8724-00-01 Further Action Not Warranted FS-8724-0 1-0 1 Unresolved Heart o/Georgia Regional Educational Service Agency FS-8764-00-01 Further Action Not Warranted FS-8764-0 1-0 I Unresolved First District Regional Educational Service Agency FS-8804-00-01 Further Action Not Warranted FS-8804-01-01 Further Action Not Warranted

COMMENTS See Comments - Page F-25 See Comments - Page F-26
See Comments - Page F-27 See Comments - Page F-27 See Comments - Page F-28 See Comments - Page F-28 See Comments - Page F-28 See Comments - Page F-28

F-7

Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

PRIOR YEAR FEDERAL AWARDS FINDINGS AND QUESTIONED COSTS
Department 0/ Education

FA-414-00-01 Further Action Not Warranted

FA-414-00-04 Further Action Not Warranted

FA-414-0 I -0 1 Partially Resolved

FA-414-01-02 Unresolved

FA-414-01-03 Unresolved

Department o/Technical and Adult Education

FA-415-99-02 Further Action Not Warranted
* Department o/Community Health

FA-419-01-01 Previously Reported Corrective Action Implemented
Department 0/Human Resources

FA-427-00-01 Further Action Not Warranted

FA-427-00-02 Further Action Not Warranted

FA-427-00-03 Further Action Not Warranted

FA-427-00-04 Further Action Not Warranted

FA-427-0 1-01 Further Action Not Warranted

FA-427-01-02 Further Action Not Warranted

FA-427-01-03 Further Action Not Warranted

FA-427-01-04 Previously Reported Corrective Action Implemented

Office o/School Readiness

FA-414-00-04 Further Action Not Warranted

FA-469-01-01 Partially Resolved

Department o/Transportation

FA-484-01-01 Previously Reported Corrective Action Implemented
* Georgia Institute o/Technology

FA-503-01-02 Previously Reported Corrective Action Implemented

FA-503-01-03 Previously Reported Corrective Action Implemented

FA-503-01-04 Previously Reported Corrective Action Implemented

FA-503-01-05 Previously Reported Corrective Action Implemented
* University 0/Georgia

FA-518-0 1-0 1 Previously Reported Corrective Action Implemented

FA-518-01-02 Previously Reported Corrective Action Implemented

Albany State University

FA-521-00-03 Partially Resolved

FA-521-0 1-0 1 Unresolved

Augusta State University

FA-527-99-01 Previously Reported Corrective Action Implemented

FA-527-01-01 Previously Reported Corrective Action Implemented

Columbus State University

FA-530-00-01 Previously Reported Corrective Action Implemented

Fort Valley State University

533-96-14

Further Action Not Warranted

533-96- 15

Further Action Not Warranted

533-96-16

Further Action Not Warranted

533-96-18

Further Action Not Warranted

533-96-19

Further Action Not Warranted

F-8

COMMENTS
See Comments - Page F-1 I See Comments - Page F-12 See Comments - Page F-12
See Comments - Page F-13 See Comments - Page F-13 See Comments - Page F-13 See Comments - Page F-13 See Comments - Page F-14 See Comments - Page F-14 See Comments - Page F-14
See Comments - Page F-16
See Comments - Page F-18 See Comments - Page F-18

Summary ScheduLe of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

FA-533-98-02 Further Action Not Warranted

FA-533-98-03 Further Action Not Warranted

FA-533-98-04 Further Action Not Warranted

FA-533-98-05 Further Action Not Warranted

FA-533-98-06 Further Action Not Warranted

FA-533-98-07 Further Action Not Warranted

FA-533-98-08 Further Action Not Warranted

FA-533-98-09 Further Action Not Warranted

FA-533-99-01 Further Action Not Warranted

FA-533-99-02 Further Action Not Warranted

FA-533-99-03 Further Action Not Warranted

FA-533-99-04 Further Action Not Warranted

FA-533-99-05 Further Action Not Warranted

FA-533-99-06 Further Action Not Warranted

FA-533-99-07 Further Action Not Warranted

FA-533-99-08 Further Action Not Warranted

FA-533-00-01 Further Action Not Warranted

FA-533-00-02 Further Action Not Warranted

FA-533-00-03 Further Action Not Warranted

FA-533-00-04 Further Action Not Warranted

FA-533-00-05 Further Action Not Warranted

FA-533-01-01 Unresolved

FA-533-01-02 Previously Reported Corrective Action Implemented

FA-533-01-03 Previously Reported Corrective Action Implemented

FA-533-01-04 Previously Reported Corrective Action Implemented

FA-533-01-05 Unresolved

FA-533-01-06 Unresolved

Savannah State University

FA-548-99-07 Previously Reported Corrective Action Implemented

FA-548-00-0 1 Previously Reported Corrective Action Implemented

FA-548-00-03 Previously Reported Corrective Action Implemented

FA-548-00-04 Further Action Not Warranted

FA-548-00-06 Previously Reported Corrective Action Implemented

FA-548-0 1-0 1 Previously Reported Corrective Action Implemented

FA-548-0I-02 Partially Resolved

FA-548-0 1-03 Previously Reported Corrective Action Implemented

FA-548-0 1-04 Unresolved

FA-548-01-05 Partially Resolved

FA-548-01-06 Partially Resolved

FA-548-01-07 Partially Resolved

Southern Polytechnic State University

FA-550-00-04 Partially Resolved

Atlanta Metropolitan College

561-96-01

Unresolved

561-96-02

Unresolved

561-96-04

Partially Resolved

FA-561-0 1-0 1 Previously Reported Corrective Action Implemented

F-9

COMMENTS
See Comments - Page F-19 See Comments - Page F-19 See Comments - Page F-19
See Comments - Page F-20 See Comments - Page F-21 See Comments - Page F-21 See Comments - Page F-21 See Comments - Page F-22 See Comments - Page F-23 See Comments - Page F-23 See Comments - Page F-23 See Comments - Page F-24

Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

FINDING CONTROL NUMBER

AUDITEE RESPONSE/STATUS

Okefenokee Technical College

FA-818-01-01 Previously Reported Corrective Action Implemented

Augusta Technical College

FA-824-98-01 Previously Reported Corrective Action Implemented

FA-824-99-01 Previously Reported Corrective Action Implemented

Chattahoochee Technical College

827-95-03

Partially Resolved

827-96-03

Partially Resolved

FA-827-97-03 Partially Resolved

DeKalb Technical College

FA-830-98-0 I Previously Reported Corrective Action Implemented

Savannah Technical College

FA-841-98-0 I Previously Reported Corrective Action Implemented

FA-84 I-98-02 Partially Resolved

* Georgia Higher Education Assistance Corporation

FA-918-0 1-0 I Previously Reported Corrective Action Implemented

FA-918-0 1-02 Previously Reported Corrective Action Implemented

FA-918-0 1-03 Previously Reported Corrective Action Implemented

North Georgia Regional Educational Service Agency

FA-8524-00-03 Unresolved

FA-8524-0 1-0 I Unresolved

FA-8524-0 1-02 Previously Reported Corrective Action Implemented

COMMENTS
See Comments - Page F-24 See Comments - Page F-24 See Comments - Page F-25
See Comments - Page F-25 See Comments - Page F-25 See Comments - Page F-26 See Comments - Page F-26 See Comments - Page F-26 See Comments - Page F-27

*Audit Follow-up was performed by Other Auditors.

F-IO

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
DEPARTMENT OF ADMINISTRATIVE SERVICES
Finding Control Number: FS-401-01-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
We concur with the finding. Transfer of assets between DOAS (40100) to GTA (98000) and the new DOAS (40300) has been substantially completed, pursuant to the Governor's Executive Order of May 24, 2001 which states in part "That the responsibility for providing information technology and telecommunications services to state agencies be transferred to the Georgia Technology Authority including all associated positions, equipment and resources effective July 1,2001".
The entire Asset Management Group with responsibilities over General Fixed Asset Inventory has also been transferred to GTA effective July 1, 2001. The GTA Asset Management Group has completed the initial reconciliation of assets to be maintained by DOAS including those assets that have been surplused and not removed from inventory. Note, assets remaining with DOAS 40100 will be physically inventoried and then transferred to the new business unit Agency 40300. Any assets unaccounted for will remain in the old business unit Agency 40100 to be disposed as appropriate. DOAS is currently conducting an agency-wide inventory of assets that are remaining in the old reporting unit of 40100. As the assets are verified, a new asset ID is assigned in the new DOAS Agency 40300 along with a new location address and custodian. It is anticipated that the physical inventory of the new reporting unit (40300) will be completed by December 31,2002.
DEPARTMENT OF EDUCATION
Finding Control Number: FS-414-01-0l EXPENDITURES/LIABILITIESIDISBURSEMENTS Information Systems Not Accessible to Employees and Not Properly Documented
We concur with this finding. Department personnel have discussed with personnel from the Legislative Budget Office the deficiencies sited in the finding and requested funds to develop additional software programs and operator manual so department personnel can operate the QBE allotment and payment system independent of the contractors that developed the system.
Finding Control Number: FS-414-01-02 GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
See our corrective action/responses to finding number FA-414-01-01 in the Prior Year Federal Awards Findings and Questioned Costs.
Finding Control Number: FA-414-01-01 EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
1) Reconciliation of equipment for this department is conducted by the following: All purchase orders (PO) are screened for proper accountability in PeopleSoft's Asset Management for alI equipment purchases for the Department. All incorrect expense account numbers are emailed to the initiator of the PO for correction: the Agency Procurement Officer is carbon copied (cc:) on the email. A copy of the PO's lines and distribution are printed by PrintScreen on the computer. If equipment is under $1,000.00 and is not accounted for on Asset Management, a green Property of Decal is mailed to the property manager of the unit that initiated the PO. If the equipment is $1,000.00 or greater, or if under $1,000.00 but is deemed to be accounted for, the copy will be kept until the signed PO is received in this office for generating the DE Form 0513, Receipt of
F-ll

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
Equipment form. This equipment will have the DOE barcode decal affixed. When the DE Form 0513 is received from the unit that generated the PO, it is entered into the DOE Property System with the costs that are reflected on the PO. These costs are checked against the PO's Receiving Report when received in this office prior to sending to DOE Accounting Services for payment.
2) References #00183061, Dell Computer Corp, PO 41400-652-0000026777, showed $44,022.00 on Query OAP005 and Report AM506 indicated $48,857.75. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The twenty-nine Dell Optiplex GX400 Computers, that were originally acquired on 06/26/2001 at $1,684.75 each, was later changed to $1,518.00 each by Dell Invoice received in this office on 07/0612001 enroute to Accounting Services, for a total of $44,022.00 on Asset Management which agrees with Query OAP005. No audit exception exists.
Reference #00158803, Apple Computer Corp, PO 41400-053-0000026141, showed $12,204.00 on Query OAP005 and Report AM506 indicated $10,612.00. Asset Management AM506 shows only the Acquired Cost: not Adjusted Cost. There was no change in Cost within Asset Management. However, the PO Price changed for Line Item 1-1, 2-1, and 3-1, due and Apple Invoice in this office on 04/0612001 enroute to Accounting Services, reducing original cost from $1,368.00 to $1,169.00 at Line Item 1-1, $4,047.00 at Line Item 2-1, and $6,192.00 to $5,396.00 at line Item 3-1, for a total of $10,612.00. The audit exception exists with Accounting Services not applying the discounts to their payment to Apple Computer Corp. No audit exception exists in Asset Management.
Physical Inspection: 1) Failure by unit property manager to properly account for their inventory whether the item was moved by an employee of the unit or Technology Services without a paper trail to DOE Property Control.
2) Failure by unit property manager to properly account for their inventory whether the item was moved by an employee of the unit or Technology Services without a paper trail to DOE Property Control.
3) A unit property manager who fails to properly inventory equipment can result in equipment being indicated as "missing". Most often, this occurs when inventories are completed quickly.
Finding Control Number: FA-414-01-02 SUBRECIPIENT MONITORING Approval for Improper Expenditures
We concur with this finding. We agree with the recommendation that the United States Department of Education review this matter to determine the manner in which the questioned costs should be resolved. We have been pursuing this avenue since September 2001.
A letter of supporting information was sent to the United States Department of Education, dated September 4, 2001, regarding the issues raised in the audit finding. We have subsequently spoken with representatives of the United States Department of Education and are anxiously awaiting a response from this agency.
Finding Control Number: FA-414-01-03 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period
We concur with this finding. The Department of Education is responsible for tracking and reviewing the audits oflocal units of administration (LUA), a term used to identify boards of education. Because LUAs receive a majority of their funding from the state, the Georgia Department of Audits and Accounts is required by state law to audit the LUAs. Currently, the LUAs are audited after state agencies, commissions, etc., and for that reason and due to the large number of LUAs audited, the Department of Audits and Accounts has been unable to complete the audits in the time period
F-12

Auditee's Response Summary ScheduLe of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30,2002
AUDITEE'S COMMENTS
required by OMB Circular A-133. The U.S. Department of Education is aware of this problem and realizes that the Department of Audits and Accounts is working towards a viable resolution to the finding in the near future. Effective January 2002, the Department of Audits and Accounts reorganized in an effort to address this matter and has adopted a plan to meet OMB Circular A-133 deadlines for fiscal year 2004 LUA audits.
DEPARTMENT OF COMMUNITY HEALTH
Finding Control Number: FA-419-01-01 REPORTING Reports not Properly Reconciled to the Accounting Records Medicaid Cluster Program
Medical Assistance Program (CFDA 93.778) State Children's Health Insurance Program (CFDA 93.767) Questioned Cost: $526,974.00
The Georgia Department of Community Health developed and implemented procedures to review and reconcile the quarterly HCFA-64 and HCFA-21 reports to the quarterly amounts in the schedule offederal awards.
DEPARTMENT OF HUMAN RESOURCES
Finding Control Number: FA-427-00-01 ELIGIBILITY Deficiencies in File Maintenance Temporary Assistance for Needy Families (CFDA 93.558) Questioned Cost: $12,573 .00
Subsequent to the fiscal year under review, the U. S. Department of Health and Human Services (HHS) was paid back for the questioned costs cited in the finding.
Finding Control Number: FA-427-00-02 ELIGIBILITY Deficiencies in File Maintenance Child Care Cluster
Child Care and Development Block Grant (CFDA 93.575) Child Care Mandatory and Matching Funds of the Child Care and Development Fund (CFDA 93.596) Questioned Cost: $11,768.00
Subsequent to the fiscal year under review, the U. S. Department of Health and Human Services (HHS) was paid back for the questioned costs cited in the finding.
Finding Control Number: FA-427-00-03 ELIGIBILITY Deficiencies in File Maintenance Food Stamps (CFDA 10.551) State Administrative Matching Grants for Food Stamp Program (CFDA 10.561) Questioned Cost: $12,946.00
The Federal agency never requested this payment, so no payment was made. Discussions were held between the DHR Funds Management reporting staff and the U.S. Department of Agriculture (USDA). USDA was to bill the Department if repayment was to be required. No billing was received from USDA.
F-13

Auditee's Response Summary ScheduLe of Prior Year Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
AUDITEE'S COMMENTS
Finding Control Number: FA-427-01-01 ELIGIBILITY Deficiencies in File Maintenance Temporary Assistance to Needy Families (CFDA 93.558) Questioned Cost: $ 13,107.00
Subsequent to the fiscal year under review, the U S. Department of Health and Human Services (HHS) was paid back for the questioned costs cited in the finding.
Finding Control Number: FA-427-01-02 ELIGIBILITY Deficiencies in File Maintenance Child Care Cluster
Child Care and Development Block Grant (CFDA 93.575) Child Care Mandatory and Matching Funds of the Child Care and Development Fund (CFDA 93.596) Questioned Cost: $1,387.00
Subsequent to the fiscal year under review, the U S. Department of Health and Human Services (HHS) was paid back for the questioned costs cited in the finding.
Finding Control Number: FA-427-01-03 ELIGIBILITY Deficiencies in File Maintenance Food Stamp Cluster
Food Stamps (CFDA 10.551) State Administrative Matching Grants for Food Stamp Program (CFDA 10.561) Questioned Cost: $13,585.00
The Federal agency never requested this payment, so no payment was made. Discussions were held between the DHR Funds Management reporting staff and the US. Department of Agriculture (USDA). USDA was to bill the Department if repayment was to be required. No billing was received from USDA.
DEPARTMENT OF LABOR
Finding Control Number: FS-440-01-02 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
We concur with this finding. While the Department's internal procedures required reconciliation after receipt of bank statements and closing of accounts for the month, they did not establish a timeline or due date for completion. The administrative reviews that should have insured completion were negatively impacted by the enormous workloads required for the transfer of the Rehabilitation Services Division of the Department of Human Resources to the Department of Labor effective July 1, 2001. This transfer effectively doubled the size of the Department of Labor and its financial operations, but the work required was accomplished with existing Labor staff. This financial workload has continued to exist through the first half of FY2002 since few financial staff was transferred from the Department of Human Resources. The Department is now addressing this need by increasing staff to adequately support the higher workloads. We feel that this is alsopart of the corrective action needed.
In addition, internal controls have been revised to ensure reconciliation of all bank statements are completed by designated accounting personnel within 15 days of receiving the statements and the closing of accounts books for the month. The reconciliations will be presented to the Finance Director for approval.
F-14

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
At the time of the reconciliation all variances will be identified and the appropriate journal entry will be recorded in the department's accounting records. However, if variances are bank errors, correspondence to the bank notifying them of the error will be attached to the bank reconciliation.
Finding Control Number: FS-440-01-03 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
We concur with this finding. Because the Department had recognized the need for an improved management tool to assist in maintaining equipment inventories in accordance with the provisions of State laws and regulations, we developed and implemented a system using automated reports from the Financial Accounting and Reporting System (FARS) and the Property Management System. Subsequently, after further clarification of what was needed to successfully address this finding, we found this approach to be insufficient to fully reconcile general ledger expenditure accounts with equipment inventories.
Our corrective action to provide a proper reconciliation between equipment additions to inventories recorded by the Property Management System and equipment expenditure accounts on the general ledger (SA251O Trial Balance) will be as follows:
1) For State GAAP account codes 016-643-100 Equipment Purchases Greater than $999 (FARS ObjectiSubobject 5010) and 019-643-100 Computer Equipment Purchases Greater than $999 (FARS ObjectiSubobject 5235) which appear on the SA251 0 Report, create a file of class 5 expenditure records by document number, document line number, and dollar amount from the FARS detail transaction file.
2) Create a file of equipment inventory records that meet the statutory definition of $1 000 or more from the Property Management System by document number and dollar amount.
3) Match the records of these two files by document number and produce a comparative report that displays document numbers and amounts. Where the amounts agree, reconciliation has occurred. Where the amounts do not agree, we shall reconcile the differences, which should result from price changes, freight charges, and discounts, by using ad hoc reports.
4) Make corrections to the Property Management System equipment inventory records where original cost amounts don't agree with the SA2510 equipment expenditure accounts.
5) Reconcile the SA2410 equipment expenditure accounts to the SA2510 equipment expenditure accounts; the differences should be resources on order.
DEPARTMENT OF NATURAL RESOURCES
Finding Control Number: FS-462-01-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
We concur with this finding. Steps are underway to ensure that all surplus items are removed from the equipment inventory records when the documentation is received and that all inventory items have the proper decal and are recorded in the property management system in accordance with State laws and regulations. In the past year we have reassigned the responsibility of inventory management to another associate within the department. The department is in the process of conducting complete inventories at all office sites throughout the state and making appropriate entries into the asset management system from these inventories. This process (the complete inventories) was started in June 2000. We anticipate all inventories will be complete and the property management system will be accurate and up to date before the end ofFY 2003.
F-15

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the FiscaL Year Ended June 30, 2002
AUDITEE'S COMMENTS
DEPARTMENT OF PUBLIC SAFETY
Finding Control Number: FS-466-01-05 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
The Property Management System maintains information correctly. The information going into the system must be entered correctly however. The Department placed considerable effort to ensure the assets identified in the Property Management System are carried at the correct amount and can be located appropriately.
DEPARTMENT OF CORRECTIONS
Finding Control Number: FS-467-01-01 EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures
Health Services has developed Accounting Procedures for the processing of vendor payments. These written procedures were implemented April 2, 2002 and will be updated November 1, 2002. Changes will include: tighter controls over authorization of payments, random checks to ensure accuracy of drug invoices (drugs submitted for reimbursement and mathematical accuracy of claim) and review of Journal Vouchers by supervisory personnel. In addition, a copy of the GDC Drug Formulary has been provided to the Administrative Operations Coordinator and Assistant Administrator. The Drug Formulary will be referenced in the written procedures.
Health Services continues to work with the vendors and staff in processing of payments to ensure that supporting documentation and computations are reviewed according to the established Accounting Procedures. Health Services will continue to produce and implement a more efficient reconciliation process.
Health Services and the Budget Office are working together to track payments and to ensure payments to the vendors are made according to the contractual agreements.
OFFICE OF SCHOOL READINESS
Finding Control Number: FA-469-01-01 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received and Not Followed-up on Deficiencies Within the Required Time Period
We concur with this finding. The Office of School Readiness is responsible for tracking and reviewing the audits of its subrecipients most of which are local units of administration (LUA), a term used to identify boards of education. Because LUAs receive a majority of their funding from the state, the Georgia Department of Audits and Accounts is required by state law to audit the LUAs. Currently, the LUAs are audited after state agencies, commissions, etc., and for that reason and due to the large number of LUAs audited, the Department of Audits and Accounts has been unable to complete the audits in the time period required by OMB Circular A-133. The U.S. Department of Agriculture is aware of this problem, and realizes that the Department of Audits and Accounts is working towards a viable resolution to the finding in the near future. Effective January 2002, the Department of Audits and Accounts reorganized in an effort to address this matter and has adopted a plan to meet OMB Circular A-133 deadlines for fiscal year 2004 LUA audits.
F-16

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
DEPARTMENT OF REVENUE
Finding Control Number: FS-474-01-02 REVENUE/RECEIVABLES/RECEIPTS Deficiencies in the State Revenue Collections Fund (Overall)
The Department implemented a PeopleSoft revenue collections system on July I, 2001. I) Deficiency number 1 - Previously reported corrective actions implemented 2) Deficiency number 2 - Previously reported corrective actions implemented 3) Deficiency number 3 - Previously reported corrective actions partially resolved. Policies and procedures have been put into place during the current fiscal year. The Sales Tax Division subsidiary ledgers are now being reconciled to the PeopleSoft general ledger. We are currently working with other divisions to address the reconciliation deficiency and similar policies and procedures will be implemented. 4) Deficiency number 4 - The Department recognizes its deficiencies in this area and we are looking into a more feasible and agreeable resolution to the problem. 5) Deficiency number 5 - Policies and procedures have been put into place during the subsequent fiscal year. Mail cash and EFT collections are reconciled daily to the general ledger.
Finding Control Number: FS-474-01-03 REVENUE/RECEIVABLES/RECEIPTS Deficiencies in the Income Tax Division Subsidiary Records
We concur with this finding. However, the feasibility, practicality and financial responsibility of capturing withholding information for approximately 3 million (+) individual tax returns with present resources would be a shift in the strategic direction of the Department of Revenue.
Previously, the Department did a limited manual sampling of comparing business W-2 information to individual tax returns. This sampling indicated extremely low non-compliance. The Department has agreed, within budget restraints, to expand this pilot program to a limited systematic matching of electronic W-2 information to individual filings.
GEORGIA STUDENT FINANCE COMMISSION
Finding Control Number: FS-476-01-07 GENERAL LEDGER Failure to Reconcile General Ledger to Grant and Scholarships Subsystems
The Georgia Student Finance Commission investigated all variances identified in the fiscal year 200 I audit report and made corrections as appropriate by June 30, 2002. In addition, the Scholarships and Grants Division and the Accounting Services Division will place into operations a procedure to ensure that the amounts awarded to students by the institutions and the amounts recorded in the "disbursements by institution" subsystem reconcile to the amounts recorded on the general ledger at the end of the award year. This procedure will be in place and operating as of June 30, 2003.
F-17

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
AUDITEE'S COMMENTS
ALBANY STATE UNIVERSITY
Finding Control Number: FA-521-00-03 SPECIAL TESTS AND PROVISIONS Deficiencies In Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $1,188.75
Management has implemented procedures to ensure that refunds are calculated for all "unofficial withdrawals". Additionally, the U. S. Department of Education was contacted regarding resolution of this finding.
Finding Control Number: FA-521-01-01 CASH MANAGEMENT Excessive Cash Balances Student Financial Aid Cluster Program
Management will implement procedures to ensure that cash draws do not exceed the University's immediate need.
CLAYTON COLLEGE AND STATE UNIVERSITY
Finding Control Number: FS-528-01-01 GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Deficiencies in Accounting Procedures
Beginning in January 2002, the University replaced employees in the following positions: Director of Business Services, Accounting Manager, Project Coordinator - Accounts Payable, Accountant I, and Budget Analyst. The University, interrupted by conversion to PeopleSoft financial systems, began restoring accounting procedures to ensure appropriate internal control. The University took specific action as follows:
General Fixed Assets/Property Management During fiscal year 2002 the University contracted with American Appraisal Association, Inc. to perform a physical inventory and tag equipment to facilitate future inventory control. Conversion to PeopleSoft Financial Systems during fiscal year 2002 and the use of American Appraisal Association values and inventory lists as revised/corrected by University personnel in the conversion completed adjustment of the book value of the inventory. The physical inventory process completed by American Appraisal Association, under contract with the University was insufficient to reconcile the University's reported equipment value to reported values from prior years. The University will complete action as follows to complete reconciliation of the physical equipment inventory to prior year reports:
l) The University will complete a thorough comparison of the inventory detail prior to and after conversion to PeopleSoft to complete identification and analysis of variances.
2) The University will complete a physical inventory to validate inventory listings.
3) The University will identify and document variances and attempt to reconcile inventory amounts to prior year reports.
4) The University will make appropriate adjustments to correct reported inventory where required.
Target date for completion is June 30, 2003.
F-18

Auditee's Response Summary ScheduLe of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
FORT VALLEY STATE UNIVERSITY
Finding Control Number: FS-S33-01-0S GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequate Equipment Inventory Records
The Office of Auxiliary Services has worked with American Appraisals Associates in the process of completing the current physical inventory of equipment for the conversion to PeopleS oft Financial. The campus inventory staff has completed another physical equipment inventory, making adjustments to the inventory and adding missing decals.
Following are control measures implemented by the University to ensure accountability and the use of proper procedures in transferring or disposing of inventory items:
1) Perfonn random monthly inspections of inventory 2) Require institutional fonns to be completed and approved prior to inventory transfers or disposals 3) Designate an individual in each department to maintain the inventory in his or her area 4) Ensure all surplus equipment is properly stored until it is disposed
Finding Control Number: FA-S33-01-01 CASH MANAGEMENT Excess Cash Balances
When taking into account all Federal Programs that owe funds to the University a deficit balance of Federal funds should exist.
Finding Control Number: FA-S33-01-0S REPORTING Expenditures in Excess of Authorization
The Pell Grant Program expenditures are being reconciled to identify the student awards that must be increased to justify the expenditure of$9,976.75 over the total Pell Grant for Fiscal Year 2001.
The University has responded to the U. S. Department of Education on the audit finding (see letter to the U. S. Department of Education, dated September 25,2002) and will take action based on final determination of the finding.
Finding Control Number: FA-S33-01-06 REPORTING Reports Not Reconciled
The University has set up procedures for reconciling all financial aid programs, for Fiscal Year 2002, within the three systems: Banner Financial, Banner Student Accounts and the Accounting System. Representatives from all three areas are working together on the reconciling process.
The reconciling process for Fiscal Year 2001 will take place during Fiscal Year 2003.
The University has responded to the U. S. Department of Education on the audit finding (see letter to the U. S. Department of Education, dated September25, 2002) and will take action based on final determination of the finding.
F-19

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002
AUDITEE'S COMMENTS
GEORGIA SOUTHERN UNIVERSITY
Finding Control Number: 539-96-01 REVENUES/RECEIVABLES/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 financial aid.
Procedures to collect outstanding accounts receivable balances have been implemented. 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 University has placed a financial record hold on the academic records of students who have outstanding accounts receivable balances.
SAVANNAH STATE UNIVERSITY
Finding Control Number: FS-548-01-01 ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties
Internal control and separation of functions are being addressed in the reorganization of the Office of Student Accounts and Cashiering. The reorganization was completed on December 1, 2002.
The University is in the process of preparing a Cash Operations Manual. The following are excerpts from this manual that address the University's stance on this issue. The format of the manual states the University's policy followed by an outlined procedure to ensure adherence to the policy. The expected completion date of this manual is January 31, 2003. Upon completion it will be distributed to all University staff involved in the cash handling process.
Separation of Duties Separation of duties is the one internal control which most effectively assures the secure handling of cash. This is attained by having a different individual receive cash, prepare the transmittal, and reconcile the ledger sheets. This allows each person to serve as a control over the others, catching mistakes and preventing the misappropriation of funds.
In a small office where separation of duties is difficult, it is imperative that the supervisor review cash operations each day.
Finding Control Number: FA-548-01-02 ALLOWABLE COSTS/COST PRINCIPLES Excessive and Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031)
We do not concur with this finding. Funds were expended for Image Building activities as approved by the Department of Education. The DOE in its letter of December 7, 2001, has authorized that expenditures incurred due to obligations made prior to June 27, 2001, are allowable. Our office is currently corresponding with the DOE Audit Resolution Department to assist with determinations on these findings. We have submitted several financial records requested by the DOE in support of the questionable expenditures cited in the findings. We anticipate a determination will be reached before the end of the current Fiscal Year June 2003.
F-20
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Georgia
Auditee's Response Summary ScheduLe of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
Finding Control Number: FA-S48-01-04 ELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Internal Controls Student Financial Aid Cluster Program
Internal control and separation of functions are being addressed in the reorganization of the Office of Student Accounts and Cashiering. The reorganization was completed on December 1,2002.
The internal control issue relating to the distribution of checks was addressed in the separation of the Cashier's Office and the Office of Student Accounts. Procedures have been put in place to segregate the duties and limit access to the checks. The theft of funds is still being investigated by the Georgia Bureau of Investigation.
The University is in the process of preparing a Cash Operations Manual. The following are excerpts from this manual that address the University's position on this issue. The format of the manual states the University's policy followed by an outlined procedure to ensure adherence to the policy. The expected completion date of this manual is January 31, 2003. Upon completion, it will be distributed to all University staff involved in the cash handling process.
Separation of Duties Separation of duties is the one internal control which most effectively assures the secure handling of cash. This is attained by having a different individual receive cash, prepare the transmittal, and reconcile the ledger sheets. This allows each person to serve as a control over the others, catching mistakes and preventing the misappropriation of funds. In a small office where separation of duties is difficult, it is imperative that the supervisor review cash operations each day.
Safeguarding of Assets Cash is prone to theft or misplacement. Accordingly, it is important to have internal controls in place to safeguard these assets so that access is limited to authorized personnel only.
Finding Control Number: FA-S48-01-0S EQUIPMENT AND REAL PROPERTY Inadequacies in Operation of Property Management System Higher Education - Institutional Aid (CFDA 84.031)
I) The University maintains an equipment inventory numbering system that identifies pieces of equipment as Federally funded. With the conversion to the PeopleSoft Asset Management software, we are allocating a field to house the program number. Unfortunately, the software is still not functioning properly to date. We are expecting completion of this project by June 2003.
2) We do not concur with this finding. Equipment mentioned are part of the Title III funded Achievement Lab at the Library and the NROTC Building.
Finding Control Number: FA-548-01-06 SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program
The University has implemented the following process to ensure refunds and repayments are processed correctly and in a timely manner.
F-21

Georgia
Auditee's Response Summary ScheduLe of Prior Year Findings and Questioned Costs For the fiscaL Year Ended June 30, 2002
AUDITEE'S COMMENTS
Codes were set up in the Banner Student System to identify those students that have never attended class. This code is used to capture students that have unofficially withdrawn from the University. A report is generated from this code by the Registrar and disseminated to the various offices for processing.
Students that officially withdraw from the University complete a withdrawal form in the Office of the Vice President for Academic Affairs. This form is then circulated to the various offices for processing. Once the Registrar's Office enters the code and effective date, fees are assessed again which adjusts the charges to the student's account if necessary. The Office of Student Accounts perfonns a calculation to determine if the student has excess funds remaining on their account. This credit balance is analyzed to determine if the funds should be refunded to the student or sent back to the grantor. A refund request is processed to cut a check, if the funds are due to the student. An adjustment fonn is forwarded to the appropriate office to reverse the aid and return the funds, if due back to the grantor.
Finding Control Number: FA-548-01-07 PERIOD OF AVAILABILITY Deficit Fund Balances Student Financial Aid Cluster Program
Fiscal Year 2000 and 2001 are reconciled for both PELL and Direct Lending Programs. We are working very hard to find an easy way ofreconciling our books with that of the Federal government records for Fiscal Year 1998 and 1999. It has become difficult and time consuming to find records for transactions that occurred prior to the conversion to Banner. Two staff members are working on this project. It is projected that the reconciliation process will be completed by the end of Fiscal Year 2003.
The following steps are used in the reconciliation process:
1) Generate financial aid disbursement record from Banner.
2) Generate expenditure history record from accounting (CUFA) system.
3) Generate LOC 732 in the case of Direct Loan and Year to Date Pell government records.
4) Copy these data into flat files and convert it to Excel spreadsheet.
5) Process a three-way match of these records using student social security numbers and/or names.
6) Verify the discrepancies in these three records. Make the necessary adjustments.
Some of the errors we identified so far are:
a) Adjustments of one Fiscal Year were posted into another year (debit or credit).
b) Corrections were not sent to the DOE on time and therefore, loans were not booked. In such circumstances, the loans become institutional loans. The Cashier's Office will establish a receivable account and will attempt to collect.
c) Students never attended school but the financial aid was not adjusted, which results in sending back the money to the government. Etc ...
F-22

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002

AUDITEE'S COMMENTS

SOUTHERN POLYTECHNIC STATE UNIVERSITY

Finding Control Number: FA-550-00-04 SPECIAL TESTS AND PROVISIONS Failure to Reconcile Program Reports William D. Ford Federal Direct Loan Program (CFDA 84.286)

The University has reconciled the open program years for the William D. Ford Federal Direct Loan Program as follows:

1997-1998 1998-1999 1999-2000 2000-2001

Closed by the LOC (Loan Origination Center) $26,189.44, remaining loans to be booked by the LOC $110,329.75, remaining loans to be booked by the LOC $23,323.00, remaining loans to be booked by the LOC

All borrower's additions, adjustments and/or corrections have been identified and reported to the Loan Origination Center (LOC) since February 2002; therefore there is no further action to be taken by the University at this time.

In June 2002, the Department of Education suspended electronic transfer of data for prior years; thus requiring the LOC to manually process each borrower's records. This manual process is both labor intensive and time consuming. Once all transactions have been recorded by the LOC, the University will then receive permission from the Department of Education to request reimbursement in the amount of$159,842.19 as noted above.

ATLANTA METROPOLITAN COLLEGE
Finding Control Number: 561-96-01 FUND EQUITIES REPORTING Deficit Fund Balance
In addition to previous unsuccessful efforts made by the College to have the fiscal year 1994 Pell Grant Program deficit in the amount of $34,363.31 funded; on August 15, 2002, the College once more contacted the U. S. Department of Education for resolution and closure to the finding, but no response has been forthcoming. As a result of this and also, based on the length of time this finding has been outstanding, the College will move the deficit balance during the 2003 fiscal year, out of the Sponsored Operations fund group in to the General Operations fund group. Following that, the College will make one more final attempt at collecting the funds directly from the students who were paid these funds and if unsuccessful, the College will then write off the deficit as bad debt at the end of the 2003 fiscal year.
Finding Control Number: 561-96-02 FUND EQUITIES REPORTING Deficit Fund Balance
In addition to previous unsuccessful efforts made by the College to have the fiscal year 1995 Pell Grant Program deficit in the amount of $64,595.20 funded; on August 15, 2002, the College once more contacted the U. S. Department of Education for resolution and closure to the finding but no response has been forthcoming. As a result of this and also, based on the length of time this finding has been outstanding, the College will move the deficit balance during the 2003 fiscal year, out of the Sponsored Operations fund group in to the General Operations fund group. Following that, the College will make one more final attempt at collecting the funds directly from the students who were paid these funds and if unsuccessful, the College will then write off the deficit as bad debt at the end of the 2003 fiscal year.

F-23

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
Finding Control Number: 561-96-04 REPORTING Incorrect Student Payment Summary Report
In addition to previous unsuccessful efforts made by the College to have the 1996 excess Pell Grant expenditures in the amount of $41,529.14 fully funded; on August 15, 2002, the College once more contacted the U. S. Department of Education for resolution and closure to the finding but no response has been forthcoming. As a result of this and also, based on the length of time this finding has been outstanding, the College will move the deficit balance during the 2003 fiscal year, out of the Sponsored Operations fund group in to the General Operations fund group. Following that, the College will make one more final attempt at collecting the funds directly from the students who were paid these funds and if unsuccessful, the College will then write off the deficit as bad debt at the end ofthe 2003 fiscal year.
FLOYD COLLEGE
Finding Control Number: FS-573-97-02 FUND EQUITIES Deficit Restricted Funds
We concur with this finding. The private funding agency has provided funding in the current year earmarked for Nursing. The receivable resulted from nursing scholarships in a prior year. A portion of the current funding will be used to satisfy the prior year receivable.
AUGUSTA TECHNICAL COLLEGE
Finding Control Number: FS-824-97-02 REVENUES/RECEIVABLES/RECEIPTS Inadequate Accounting Control Procedures
The College continues to monitor student receivables. Outstanding receivables are reviewed. Letters are sent to individuals. Student records are not released if a student owes an outstanding balance. Outstanding receivables continue to be pursued.
CHATTAHOOCHEE TECHNICAL COLLEGE
Finding Control Number: 827-95-03 REPORTING Incorrect Student Payment Summary Report
Final reconciliation of the adjustments to be made on the Student Payment Summary Report has been prepared and will be sent to the U. S. Department of Education by June 30, 2003, following procedures in Dear Colleague letter P-97-2.
Finding Control Number: 827-96-03 REPORTING Incorrect Student Payment Summary Report
The final step of the adjustment process has not been implemented. A final reconciliation of the student accounts must be completed and then sent to the U. S. Department of Education following the guidelines of Dear Colleague letter P-972 by June 30, 2003.
F-24

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
Finding Control Number: FA-827-97-03 REPORTING Incorrect Student Payment Summary Report Amount: $3,612.00
The College must have the student awards certified by the state auditors before submission to the U. S. Department of Education for adjustment. Arrangements will be made to have the certification performed in order to submit the adjustments before June 30, 2003, following the provisions in Dear Colleague letter P-97-2.
DEKALB TECHNICAL COLLEGE
Finding Control Number: FS-830-01-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Inadequacies in the Operation of Property Management System
DeKalb Technical College has established procedures to ensure that equipment inventories are maintained in accordance with State laws and regulations. These procedures involve weekly, as well as monthly, monitoring of assets acquired. In addition, a monthly reconciliation is performed to further assure that the inventories are properly maintained.
SAVANNAH TECHNICAL COLLEGE
Finding Control Number: FA-841-98-02 ALLOWABLE COSTS/COST PRINCIPLES Improper Overtime Payments Vocational Education - Basic Grants to States (CFDA 84.048) Questioned Costs: $5,872.00
The Georgia Department of Technical and Adult Education (DTAE) issued us a letter stating that no further action was required by Savannah Technical College. The letter dated January 11,2000, from the Assistant Commissioner ofDTAE Administrative Services has been provided to our auditors. As requested by our auditors, DTAE sent a letter dated March 17, 2000, to the U. S. Department of Education (USDOE) concerning final resolution of this finding. No response has been received from USDOE. Our DTAE office notified USDOE again in March 2002, regarding this unresolved finding. As of yet, no resolution has been made.
GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION
Finding Control Number: FA-918-01-01 REPORTING Data Submitted to ED not supported by the Records
In this particular case, the Corporation's records were changed to reflect paid in full for this borrower based on information provided by the lender. The Corporation continues to work diligently with all its lenders to improve reporting. The Corporation requires all its lenders to report NSLDS data monthly and it utilizes this data to update the Corporation's database. The U.S. Department of Education's (ED) data quality benchmark for the Corporation's reporting on lender held loans is 95%. In April 2002, the Corporation exceeded that goal and has done so each month thereafter achieving for November 2002 data quality of 98.5%. NSLDS reporting is also a lender program review compliance item for the Corporation's lender reviewer.
F-25

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
Finding Control Number: FA-918-01-02 REPORTING Data Submitted to ED not supported by the Records
Procedures are in place to ensure that ED Form 2000 is reviewed for correctness prior to submission.
Finding Control Number: FA-918-01-03 REPORTING Loan Not Properly Assigned
The Corporation reviewed and corrected all loans with "0%" interest rates in its portfolio and assigned those loans meeting the mandatory assignment criteria to ED.
GEORGIA PUBLIC TELECOMMUNICATIONS COMMISSION
Finding Control Number: FS-977-01-01 REVENUES/RECEIVABLES/RECEIPTS Control over Third Party Tower Rental
Georgia Public Broadcasting (GPB) does not concur with this finding. The Executive Director of the Georgia Technology Authority (GTA) in a letter dated January 31,2001, instructed GPB to refrain from efforts to establish new operating leases for non-GPB owned antenna equipment mounted on the transmitter towers. The GTA anticipated including the operation and maintenance of GPB's broadcast towers in the original Converged Communications Outsourcing Project (CCOP). In July 2002 the GTA restructured the CCOP Request for Proposal, and GPB's digital transition was not included as part of the revised bid process. Consequently, GPB became responsible for the maintenance and operations of all of its transmitter towers but not until after FY 2002 had ended. GPB had no alternative during the last half of FY 2001 and all of FY 2002 but to comply with GTA guidelines and suspended all contract negotiations that had been in progress during the early months ofFY 2001. Georgia Public Broadcasting should not be held responsible for this audit finding since the organization was compelled to comply with the directives of the GTA.
NORTH GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FA-8524-00-03 ALLOWABLE COSTS/COST PRINCIPLES Improper Indirect Cost Expenditures Vocational Education - Basic Grants to States (CFDA 84.048) Amount: $36,608.00
We do not concur with this finding. North Georgia RESA provided enumerable services to Vocational-Technical Education in the areas of State Administration, Leadership, and the Georgia Vocational Staff Development Consortium. The agreed upon and approved rate for providing these services to Vocational-Technical Education was 6.9% of the total grant for State Administration and Leadership, and 7.45% for the Georgia Vocational Staff Development Consortium. The agreed upon rates are documented by signed DE0448 grant budgets. These grant budgets were approved by the RESA official, the Vocational-Technical Education official and the Grants Accounting official.
This finding is currently under review by the U.S. Department of Education at the request of the Georgia Department of Education, Vocational-Technical Education Department.
F-26

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 30, 2002
AUDITEE'S COMMENTS
Finding Control Number: FA-8524-01-01 ALLOWABLE COSTS/COST PRINCIPLES Improper Indirect Cost Expenditures Vocational Education - Basic Grants to States (CFDA 84.048) Amount: $12,628.77
North Georgia RESA provided enumerable services to Vocational-Technical Education in the areas of State Administration, Leadership, and the Georgia Vocational Staff Development Consortium. The agreed upon and approved rate for providing these services to Vocational-Technical Education was 6.9% of the total grant for State Administration and Leadership, and 7.45% for the Georgia Vocational Staff Development Consortium. The agreed upon rates are documented by signed DE0448 grant budgets. These grant budgets were approved by the RESA official, the VocationalTechnical Education official, and the Grants Accounting official.
Paragraph three of the audit finding states that, "The GDOE approved rate of 8.56% would have been permitted if the RESA carried out all of the program services and administrative functions for these three program activities instead of merely acting as fiscal agent." In reference to the Georgia Vocational Staff Development Consortium for FYO I, RESA was responsible for all program services and administrative functions. The Executive Director of GVSDC was contracted by RESA. Employees were hired and housed by North Georgia RESA. The website was housed and maintained by RESA. Contracts with staff development providers were entered into on behalf of the consortium by RESA. All financial information for the consortia was maintained by RESA and provided to the board of directors of GVSDC.
Currently the Georgia Department of Education has requested a review of this finding by the U.S. Department of Education.
METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8564-01-01 GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
There was not an available Fixed Asset Accounting program to include fixed assets into the General Ledger.
WEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8604-01-01 GENERAL FIXED ASSETS/PROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group
It is the decision of the Board of Control that West Georgia RESA not address finding control number FS-8604-0 1-0 1 at the present time. The Board encourages the Department of Education to provide leadership and appropriations for RESA's in maintaining the General Fixed Assets Account Group. West Georgia RESA will continue to seek resources to accomplish this task.
F-27

Auditee's Response Summary Schedule of Prior Year Findings and Questioned Costs For the Fiscal Year Ended June 3D, 2002
AUDITEE'S COMMENTS OCONEE REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8664-01-01 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 and maintained by the Georgia Department of Education (GDOE). 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. However, Oconee Regional Educational Service Agency (RESA) does have an inventory procedure in place to be accountable for all equipment owned by the Agency which includes date acquired, acquisition cost, location, and description.
CHATTAHOOCHEE-FLINT REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8724-01-01 GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group We concur with this finding. At the present time we do not intend to address this issue.
HEART OF GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8764-01-01 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 financial statements.
FIRST DISTRICT REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8804-01-01 GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Failure to Maintain General Fixed Assets Account Group Auditor was provided a list of capital assets and a depreciation schedule.
F-28

CbRRECTIVE AcrION RESFDNSES TD CuRRENT YEAR FINDINGS AND
QuESTIONED 0=Ts

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Georgia

Corrective Action Responses to Current Year Findings and Questioned Costs TabLe of Contents For the Fiscal Year Ended June 30, 2002

ENTITY CODE

ORGANIZATIONAL UNIT

403 414 419
427
440 466 467 469 472 474 486
503 509 512 518 521 524 528 530 533 548 554 572 573
823 830 918
927
980
8564 8604 8664 8724 8764

Administrative Services, Department of Education, Department of.. Community Health, Department of Human Resources, Department of. Labor, Department of Public Safety, Department of Corrections, Department of School Readiness, Office of Regents of the University System of Georgia, Board of.. Revenue, Department of.. Treasury and Fiscal Services, Office of.. Colleges and Universities
Georgia Institute of Technology Georgia State University Medical College of Georgia University of Georgia Albany State University Armstrong Atlantic State University Clayton College and State University Columbus State University Fort Valley State University Savannah State University State University of West Georgia East Georgia College Floyd College Technical Colleges Atlanta Technical College DeKalb Technical College Higher Education Assistance Corporation, Georgia Road and Tollway Authority, State Technology Authority, Georgia Regional Educational Service Agencies Metropolitan Regional Educational Service Agency West Georgia Regional Educational Service Agency Oconee Regional Educational Service Agency Chattahoochee-Flint Regional Educational Service Agency Heart of Georgia Regional Educational Service Agency

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F-31

Auditee's Corrective Action PLans For the Fiscal Year Ended June 30, 2002
DEPARTMENT OF ADMINISTRATIVE SERVICES
Finding Control Number: FS-403-02-01 CAPITAL ASSETS Inadequacies in Operation of Property Management System
During the year under review, the Department of Administrative Services operated as two separate business units, the old DOAS (entity code 40100) and the new DOAS (entity code 40300) within the statewide accounting system. This was the result of the Governor's Executive Order of May 24, 2001 which states in part "That the responsibility for providing information technology and telecommunications services to state agencies be transferred to the Georgia Technology Authority including all associated positions, equipment and resources effective July l, 200 1". To this end, all assets in DOAS 40100 had to be inventoried, physically tagged as DOAS 40300 or GTA (entity code 98000), manually deleted by DOAS 40100, and added to entities DOAS 40300 and GTA 98000.
Transfer of assets between DOAS (entity code 40100) to GTA (entity code 98000) and the new DOAS (entity code 40300) has been substantially completed at this time and will be complete by the end of FY03. Through FY02 and FY03, DOAS has relied heavily on assistance from the GTA Asset Management Group in tagging, locating and transferring assets to both GTA 98000 and the new DOAS 40300. It should be noted that the entire Asset Management Group with responsibilities over Capital Asset inventory transferred from DOAS to GTA effective July1, 2001. At the time of the transfer, DOAS 40100 maintained three separate inventory systems with approximately 20,000 assets totaling $80 million in value with the majority of these assets being transferred to GTA 98000. DOAS has focused on the new DOAS 40300 and has continued to rely on assistance from GTA Asset Management for the successful transfer of assets from DOAS 40100 to GTA 98000 and DOAS 40300. The division of responsibility for asset management between DOAS and GTA did result in confusion during the Department of Audits review of DOAS assets for FY02. The Department of Audits worked with both GTA and DOAS to find assets assigned to DOAS. As a result of the split, the Department of Audits noted in its finding that twenty-one (21) items totaling $553,703.40 could not be located. In a follow-up meeting with the Department of Audits, DOAS was provided a detail list of twenty-one (21) assets totaling $547,703.40 that made up these items. Upon further review by DOAS it was noted that GTA Asset Management as a part of the transfer of assets had tagged DOAS 40100 assets with DOAS 40300 asset decal numbers and at the time of the review by the Department of Audits these assets had not been transferred to the new DOAS 40300 asset management system. DOAS has subsequently traced eighteen (18) of these assets totaling $525,844.90, verified the asset decal number and transferred the assets from DOAS 40100 to DOAS 40300 or has surplused the asset via assistance from GTA.
The review of assets also makes note of three (3) items of equipment were located which were not included in the equipment inventory records. Review of these items discloses that these assets had been tagged by the GTA Asset Management Group with DOAS 40300 tags. These assets were listed on the DOAS 40100 equipment inventory records and had not been transferred to DOAS 40300 at the time of the Department of Audit's review.
Since the transfer of assets is substantially complete as of this time, DOAS believes that full control and responsibility of the asset management function for DOAS now solely rests with the new DOAS 40300. DOAS wishes to express its' appreciation to the GTA Asset Management Group and the Department of Audits in the assistance provided for the successful transfer and reconciliation of assets from DOAS 40100 to GTA 98000 and the new DOAS 40300.
Contact Person: Charles Petty, Director of Fiscal Services Phone: (404) 657-9430; Fax: (404) 656-6279; E-mail: chpetty@doas.ga.gov
DEPARTMENT OF EDUCATION
Finding Control Number: FS-414-02-02 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Contracting Practices
We concur with this finding. The DOE is in the process of re-examining its current procedures, and will make any necessary changes. In addition, the department will be Ie-training its staff who handle contract matters.
F-32

Auditee's Corrective Action PLans For the Fiscal Year Ended June 30, 2002
Contact Person: Scott Austensen, Deputy State Superintendent of Finance and Business Operations Telephone: (404) 656-0816: Fax: (404) 656-0816; E-mail: saustensen@doe.kI2.ga.us
Finding Control Number: FS-414-02-03 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Grant Approval Practice
We concur with this finding. The correct amount paid to Richmond County Board of Education for the reading program was $1,010,500.00. This amount was funded with FY 2002 Title I administrative funds. The question was raised about board approval by the Supervisor of the Grants Accounting Unit and he was told by the Associate State Superintendent in charge of the Federal Accountability Unit that the payment was an adjustment to an existing grant that had board approval and the adjustment did not require additional approval. The current State Superintendent is requiring all grant allotments, whether new, amended, or adjusted be approved by the State Board before any payments are made to prevent a reoccurrence of this problem. The purchase of the reading program will also be reviewed by the department Title I personnel to ensure that the purchase met Title I requirements and that appropriate children are being served by the reading program.
Contact Person: Grant Rowe, Director Telephone: (404) 656-2497; Fax: (404) 657-5512; E-mail: growe@doe.kI2.ga.us
Finding Control Number: FS-414-02-04 EXPENDITURES/LIABILITIES/DISBURSEMENTS Inadequacies in Information System Operations, Changes to Applications, Security and Audit Trail Maintenance
We concur with this finding. GAORS
1. a) Configuration and Change Management
Presently there is an application and process available that documents and controls requests for system changes to the GAORS system as well as all other applications at DOE. This application is the 1/S Request for Services. It is an automated system that creates and tracks all requests from their creation through their final disposition. These requests are initiated by the user community for all their requested modifications and enhancements to the applications. The 1/S Manager, Program Managers, and DBAs can initiate requests for all other system changes. The first step in this process is the creation of the IS request. This first must be approved by the IS Manager. After approval, the Program Manager for the specified system assigns the requests to the appropriate developer. The developers assigned to the request review and analyze the specifications described in the IS request by the initiator. They then make the described modifications and enhancements needed to satisfy the request. Modifications and enhancements are made first in the development environment and unit tested by the developer to ensure compliance with the request and that the changes lead to no inadvertent negative behavior in the existing application. After unit testing is complete, the Program Manager forwards the request to the DBA for code migration to the test system. Once the code is in test system, and after DBA and developer signoff on the changes, selected requests then are sent to the QA staff for system testing. Once the QA staff has tested the application and given its approval to the modifications, a notification is sent to the initiator of the request for user testing of the changes. The developer is not involved in the user-testing process, unless the user requests additional resource support for the testing. Once the initiator is satisfied with the changes, the request will be sent to the Program Manager for production authorization. After approval by the Program Manager and IS Manager, the request is sent to the DBA for compilation and migration of the changes to production. Notifications are then sent to all involved parties documenting the production move.
The IS Request for Services process is being enhanced to include the use of an IS Request number in the remarks section of changed code. This will improve traceability of requests to actual code changes. The new development process for the QBE system is using the Rational Unified Process (RUP), which provides a new source code library system that will be used in conjunction with its change management tool. This will provide a more robust configuration management process. All new application development and all application redevelopment will use this new process.
F-33

Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
b) Quality Assurance and Testing
The user community tests all modifications to the GAORS application. No changes are put into production unless the user places a formal request for that change through the liS Request for Services application. In addition, this migration will not occur until the developer has performed unit testing and requested the changes be moved to the test system. Finally, the user is responsible for testing the changes made at their requests and for authorizing the code for production use.
At this time, users are not required to develop any formal testing documents, such as testing scripts and documented data. The DOE, with the addition of QA and testing personnel, is addressing the issue of formalizing the test process. This QA testing process was first used in the Student Record Data Collections System. DOE is in the process of rolling out a comprehensive QA function that will be responsible for creating and documenting test cases, testing the enhancements and modifications to the applications, and collecting the results. These results will be used by Project Managers to determine the effectiveness of the Development process.
c) Permissions
The appropriate changes have been instituted to ensure that only the developer and administrator responsible for the application can access the application source code. The IT LAN administrator controls this process.
2. Database Controls
Information has been provided the auditor by the DBA and no further feedback has been received.
Auditing
The GAORS application currently performs auditing on three forms, the Grants Master, Completion Report and the D147 report. This audit function tracks the user id, timestamp, and modifications made to these forms. This audit capability will be expanded to cover the entire application and is being analyzed to determine the impact and effort required to implement these modifications. Once the scope of this effort is determined, a report will be given to senior management for review and approval.
Contact Person: Billie Sherrod, Chief Information Officer Telephone: (404) 657-0810; Fax: (404) 656-0978; E-mail: bsherrod@doe.k12.ga.us
Finding Control Number: FS-414-02-05 CAPITAL ASSETS Inadequacies in Operation of Property Management System
We concur with this finding. The following is the FY 2002 audit findings for equipment and real property management for the department:
1) Equipment additions were not reconciled to the general ledger expenditure accounts.
The Department of Education will reconcile the Asset Management Module to the General Ledger. To facilitate this new process we have contacted GTA who is arranging a training team to work with DOE employees Ronald Thomas (DOE Property Manager) and Farisa James (DOE Accountant) to begin the process for reconciliation to the General Ledger from PeopleSoji inception. GTA has already provided the necessary Queries to begin the process.
2) Equipment inventory records for additions were updated incorrectly. Testing of current year additions revealed nine (9) additions that had been updated onto the equipment inventory records incorrectly by the amount of$8,012.60.
F-34

Georgia
Auditee's Corrective Action PLans For the Fiscal Year Ended June 30, 2002
All of the details under line item #2 were improperly evaluated. Each property transaction has an original cost and an adjusted cost. The auditors used Query AM506 which indicated the original cost, but the Query AM421 indicates the adjusted value. If the correct Query had been used the Asset Management and Accounts Payable comparisons would have matched.
Reference.' Item 1. PO' 052-0000026820, showed $53,384.08 on Quel}' AP005 and Report AM506 indicated $54, /92.68. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Quel}' AM42/ indicates an adjusted cost of$53,384.08. No variance exists.
Reference. Item 2. PO: 652-0000027426, showed $/2,237.00 on Query AP005 and Report AM506 indicated $/2,881.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Quel}' AM42/ indicates an adjusted cost of$/2,237.00. No variance exists.
Reference: Item 3. PO' 652-0000027495, showed $/2,237.00 on Quel}' AP005 and Report AM506 indicated $/2,88/.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM42/ indicates an adjusted cost of$/ 2,237.00. No variance exists.
Reference: Item 4. PO: 652-0000027495, showed $/7,938.00 on Query AP005 and Report AM506 indicated $/8,882.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM42/ indicates an adjusted cost of$/7,938. 00. No variance exists.
Reference.' Item 5. PO: 054-000002755/, showed $6,805.00 on Query AP005 and Report AM506 indicated $9,695.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM42 / indicates an adjusted cost of$9,745.00. The PO Activity Summary shows AP payments of $6,805.00 on 091/2/200/ and $2,940.00 on /0//7/200/,/or a total of$9, 745.00 paid. No variance exists.
Reference: Item 6. PO: 652-0000027876, showed $/2,237.00 on Query AP005 and Report AM506 indicated $/2,881.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM421 indicates an adjusted cost of$12,237.00. No variance exists.
Reference: Item 7. PO: 652-0000027886, showed $12,237.00 on Query AP005 and Report AM506 indicated $12,881.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM421 indicates an adjusted cost of$12,237.00. No variance exists.
Reference: Item 8. PO: 652-0000027921, showed $12,237.00 on Query AP005 and Report AM506 indicated $/2,88/.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM42/ indicates an adjusted cost of$12,237.00. No variance exists.
Reference: Item 9. PO: 052-0000028840, showed $9,999.00 on Query AP005 and Report AM506 indicated $10,/49.00. Asset Management Report AM506 shows only the Acquired Cost: not Adjusted Cost. The Query AM421 indicates an adjusted cost of$9,999.00. No variance exists.
In addition, one hundred eighty-three (183) equipment items were selected from certain locations to test the accuracy of the Department's property management records. These items contained a value of $2,537,182.14 out of a population of $15,296,340.10 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiencies were noted:
The items in this section were identified as Ill1ssmg and the auditor did not request a review of the supporting documentation from the Property Manager. As listed the proper form DE 0082 for Lost, Damaged, Destroyed or Stolen items was and is on file to support the missing items. Still these items account for $43,887.50 of lost inventory.
1) Eight (8) items totaling $43,887.50 could not be located.
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Reference: Item 1. Tag Number 000013058. Mountain Filesafe. This item was indicated on the FY 2001 and FY 2002 Physical InventOlY report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for each inventory period by Mr. Allan Meyer. No discrepancy exists.
Reference: Item 2. Tag Number 000030579, Compaq Prosigma. This item was indicated on the FY 2001 and FY 2002 Physical InventOlY report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for each inventOlY period by Mr. Allan Meyer. No discrepancy exists.
Reference: Item 3. Tag Number 00003773504, Compaq External Tape Drive. This item was indicated on the FY 2002 Physical Inventory report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for this inventOlY period by Mr. Allan Meyer. No discrepancy exists.
Reference: Item 4. Tag Number 000038076, Dell Latitude Laptop. This item was indicated on the FY 2001 and FY 2002 Physical InventOlY report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for each inventory period by Mr. Allan Meyer. No discrepancy exists.
Reference: Item 5. Tag Number 00003809105, Compaq External Tape Drive. This item was indicated on the FY 2002 Physical Inventory report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for this inventory period by Mr. Allan Meyer. No discrepancy exists.
Reference;' Item 6. Tag Number 00003823601, Compaq External Tape Drive. This item was indicated on the FY 2002 Physical Inventory report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for this inventory period by Mr. Allan Meyer. No discrepancy exists.
Reference: Item 7. Tag Number 00003823610, Compaq External Tape Drive. This item was indicated on the FY 2002 Physical Inventory report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completed for this inventory period by Mr. Allan Meyer. No discrepancy exists.
Reference: Item 8. Tag Number 00003823741, Compaq External Tape Drive. This item was indicated on the FY 2002 Physical Inventory report as being missing. A DE Form 0082, Report ofLost, Damaged, Destroyed, or Stolen Property, was completedfor this inventory period by Mr. Allan Meyer. No discrepancy exists.
2) Two (2) items were found in locations other than the location indicated in the equipment inventory records.
The following two items have been identified as missing by the Internal Technology department on 02/11/2003. These two findings were the failure by the unit manager to properly account for their inventory without the proper paper trail to DOE Property Control.
Reference: Item 1. Tag Number 00004147405, Internal 35170 Drive. This shows as an internal item to tag number 000041474 which shows as being located in the Server Room, Suite 1558 East Tower. A request was made to Mr. Tim Reynolds on 02/11/2003 for verification ofthis equipment. Mr. Reynolds referred Ms. Cathy Shaw to verifY this equipment on 02/12/2003. A request was made to Ms. Cathy Shaw on 02/17/2003 to verifY the equipment at the above location. A DE Form 0082, Report of Lost, Damaged, Destroyed, or Stolen Property, was received on 02/18/2003, signed by Ms. Cathy Shaw, indicating that this equipment is missing.
Reference: Item 2. Tag Number 0000042589, Infocus LP750 Projector. This shows a Property Transfer form received in this office on March 28, 2002, signed by Ms. Pam Adamson, unit 2110, GLC as losing signature on 1l/15/2001 and signed by Ms. Jane Royall, unit 6580, GLC, as gaining signature on 1l/14/2001. On 02/12/2003, Property Control office received a property transfer form signed by Cathy Shaw for both GLC/Education Technology and Internal Technology, moving the equipmentfrom 065800GLC to 0652002060.
Failure by unit property manager to properly account for their inventory whether the item was moved by an employee ofthe unit or Technology Services without a paper trail to DOE Property Control.
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 3D, 2002
Also, during the physical inspection testing, four (4) items of equipment were located in our test location, which were not included in the equipment inventory records for the particular location.
The first three items were removed from an existing rack within the server room and decaled as stand-alone item on 06/02/02 per Ms. Cathy Shaw and are on the Asset Management listing.
Reference: Item 1. Tag Number 000038244, 35170 DLT External. Added to AM on 06/05/2002 by Ron Thomas. No discrepancy exists.
Reference: Item 2. Tag Number 000038238, 35170 DLT External. Added to AM on 06/17/1999 by Frank Ford, GTA-AM. No discrepancy exists.
Reference: Item 3. Tag Number 000038270, 35/70 DLT External. Added to AM on 06/05/2002 by Ron Thomas. No discrepancy exists.
This school bus is in service at the Academy for the Blind in Macon Georgia and has been on the Asset Management Module since 11/0112001.
Reference: Item 4. Tag Number 0000047550, School Bus. Added to AM on 1110112001 by Ron Thomas. No discrepancy exists.
In the future the Property Manager will conduct a physical inventory to verify equipment location and existence. We will be drafting a plan to conduct a portion of the physical inventory each month to completely verify each area to include the three State Schools within one year and repeat the verification on the same plan each year. Also each Program Manager will be presented a list of all of the equipment with decal numbers one time annually, and required to verify within 30 days and provide their signature of acceptance to the Property Manager. This procedure for physical inventories by the Program Managers have been in-place with the department since fiscal year 1994 onward to include through fiscal year 2002.
Contact Person: David Childers, Purchasing Manager Telephone: (404) 657-2195; Fax: (404) 657-6821; E-mail: dchi1ders@doe.k12.ga.us
Finding Control Number: FA-414-02-01 EQUIPMENT AND REAL PROPERTY MANAGEMENT Inadequacies in Operation of Property Management System
See Response to FS-414-02-05
Contact Person: David Childers, Purchasing Manager Telephone: (404) 657-2195; Fax: (404) 657-6821; E-mail: dchilders@doe.kI2.ga.us
Finding Control Number: FA-414-02-02 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Expenditures Title VI - Innovative Education Program Strategies (CFDA 84.298)
We do not concur with this finding. The Title VI innovative funds guidelines were met by the five contracts identified in the audit. The department feels the funds were spent in support of local school system programs and activities, which meets Title VI regulations. The department ask U.S. Department of Education personnel to review the contracts to verify that they are within guidelines and regulations. Copies of the contracts were sent to Ms. Lynette Kee. Ms. Kee is a Title V (former Title VI) program coordinator with the U.S. Department of Education. She has agreed to review the contracts for compliance with Title VI regulations and guidelines.
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Contact Person: Grant Rowe, Director Telephone: (404) 656-2497; Fax: (404) 657-5512; E-mail: growe@doe.k12.ga.us
Finding Control Number: FA-414-02-03 EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Contracting Practices State Funds Title II - Dwight D. Eisenhower Professional Development Program (CFDA 84.281) Title VI - Innovative Education Program Strategies (CFDA 84.298)
See Response to FS-414-02-02
Contact Person: Scott Austensen, Deputy State Superintendent of Finance and Business Operations Telephone: (404) 657-3544; Fax (404) 565-0816; E-mail: saustensen@doe.k12.ga.us
Finding Control Number: FA-414-02-04 EXPENDITURES/LIABILITIESIDISBURSEMENTS Improper Contracting Practices Vocational Educational- Basic Grants to States (CFDA 84.048) Title II - Dwight D. Eisenhower Professional Development Program (CFDA 84.281) Title VI - Innovative Education Program Strategies (CFDA 84.298) Questioned Cost: FY 2002 - $ 82,493.50 Questioned Cost: FY 2003 - $ 581,394.00
We concur with this finding. This matter has been turned over to the US DOE for their review. In addition, the Georgia Attorney General's office is looking at this matter. DOE will follow whatever guidance is issued from these two agencies. The department will examine its policies and train staff accordingly.
Contact Person: Scott Austensen, Deputy State Superintendent of Finance and Business Operations Telephone: (404) 657-3544; Fax: (404) 565-0816; E-mail: saustensen@doe.k12.ga.us
Finding Control Number: FA-414-02-05 SUBRECIPIENT MONITORING Inappropriate Issuance of Management Decision Vocational Education - Basic Grants to States (CFDA 84.048)
We concur with this finding. The finding addresses concerns that were identified in prior year audits of four technical colleges. The Georgia Department of Education (GaDOE) is Georgia's eligible agency as defined in the Carl D. Perkins Vocational and Technical Education Act of 1998. Because of additional information that has been provided regarding the prior year audits, GADOE will re-open consideration of the concerns and in consultation with the Georgia Department of Audits, the United States Department of Education, and the Georgia Department of Technical and Adult Education, determine appropriate actions needed to resolve the issues at hand.
Contact Person: James Hogg, Director Telephone: (404) 657-8317; Fax: (404) 651-8984; E-mail: jhogg@doe.k12.ga.us
Finding Control Number: FA-414-02-06 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period
We concur with this finding. The Department of Education is responsible for tracking and reviewing the audits of local units of administration (LUA). However, 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,
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 3D, 2002
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 of the problem, and realizes there is not currently a viable solution to the finding. The LUA audits are normally completed within a 15-18 month time period. The department has a six-month resolution period to resolve findings in the LUA audits after being received from the Department of Audits.
Contact Person: Grant Rowe, Director Telephone: (404) 656-2497; Fax: (404) 657-5512; E-mail: growe@doe.k12.ga.us
DEPARTMENT OF COMMUNITY HEALTH
Finding Control Number: FA-419-02-01 ALLOWABLE COSTS/COST PRINCIPLES Pharmacy Benefit Claims
Management has developed procedures to review pharmacy claims periodically to ensure that Express Scripts, Inc. is processing claims properly. Express Scripts has implemented specific procedures to ensure pharmacy claims are reviewed for proper payment.
Contact Person: John Hankins, Director ofIntemal Audits and Program Evaluation Telephone: (404) 657-7880; E-mail: jhankins@dch.state.ga.us
DEPARTMENT OF HUMAN RESOURCES
Finding Control Number: FS-427-02-02 GENERAL LEDGER Inadequate Accounting Procedures
We concur with this finding. The Department of Human Resources (DHR) grant accounting staff have now been instructed to record grant awards as soon as they are received. However, since this instruction was not given to staff until April 2003, it is likely that some grant awards received in SFY03 were also recorded many days after receipt.
The Department will make a greater effort with the funding agencies to have the grant awards routed properly. We have developed a letter to go with the grant award application that indicates to the funding agency that the grant award notice be sent to the Commissioner's office. Once received in the Commissioner's office, copies will be routed to the Office of Financial Services, Office of Planning and Budget Services, and the appropriate Division.
In addition, when grant awards are sent to a different address than above, we will contact the granting agency to ask that any future awards for the grant be sent to the appropriate address. We will continue to monitor program codes when recognizing revenues to obtain any missing grant awards as quickly as possible.
In the past, DHR has not recorded grant award documents in the ledger for future periods. In response to this finding, DHR will begin this year to record revenues in the June fiscal period in advance of the receipt of grant awards if we expect to receive them in the subsequent quarter. Though funding is not available, this treatment is consistent with the accounting adjustments made by the Department of Audits in past years. In addition, the programmatic accountants in our Funds Management Section will monitor the program codes on a quarterly basis. They will resolve issues of missing grant awards during this reconciliation period.
Contact: John Sartain, Director of Financial Services Phone: (404) 656-7999; Fax: (404) 651-9337; E-mail: jfsartain@dhr.state.ga.us
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Auditee's Corrective Action Plans For the FiscaL Year Ended June 30, 2002
Finding Control Number: FS-427-02-03 EMPLOYEE COMPENSAnON Inadequacies in Maintenance of Attendance and Leave Records
We concur with this finding. Fulton County DFCS will ensure greater compliance with existing internal control plans regarding leave records and employee time sheets. This will be accomplished by having the accounting and personnel offices validating these reports: time sheets on a monthly basis and leave balances on a biannual basis. These two items will be emphasized in existing training for Fulton County DFCS employees. The trainings consist of new worker orientation and monthly/quarterly unit meeting at the various Fulton County DFCS locations.
Contact: Alan Davis, Director of Fiscal Services, DFCS Phone: (404) 463-7275; Fax: (404) 657-3270; E-mail: dadavis@dhr.state.ga.us
Finding Control Number: FS-427-02-04 CAPITAL ASSETS Inadequacies in Operation of Property Management System
We concur with this finding. Office of Facilities and Support Services (OFSS) and the Office of Financial Services (OFS) have developed a plan to address this audit finding. Key elements include:
Distribution of a memorandum dated October 1, 2002 that explained how equipment should be charged in the general ledger and in the Asset Management module of PeopleSoft. Included in this memo is a matrix to make it easier for staff to determine the appropriate classification in both the general ledger and the asset management modules. A copy of this memo is attached.
Prompt reconciliation between OFSS and OFS of items that OFSS does not accept into the asset management module from the purchasing module.
Requirement of appropriate documentation (purchase order or invoice) on all equipment inventory forms.
Continued education of staff on the above requirements and expectations.
Monthly reconciliation of the general ledger and asset management module beginning May 2003.
Contact: Bill Harris, Director of Office of Facilities and Support Services Phone: (404) 656-4427; Fax: (404) 656-0709; E-mail: wlharris@dhr.state.ga.us
Finding Control Number: FA-427-02-01 ELIGIBILITY Deficiencies in File Maintenance Temporary Assistance to Needy Families (CFDA 93.558) Questioned Cost: $ 4,610.00
We concur with this finding. The areas cited in the FY 2002 audit findings for the TANF and Food Stamp programs will be addressed by the sharing of results of this audit with county supervisors at their fourth quarter area supervisors' meeting that is conducted by program consultants.
County Eligibility Supervisors will be reminded of the importance of ensuring that TANF and Food Stamp eligibility requirements are adhered to as they do case record reviews.
County Eligibility Supervisors will be directed to provide in house ESSS Policy Manual refresher training on all required documentation and information required for complete and accurate case records by August 31, 2003.
Counties with problem cases identified in this audit will receive additional training to address the cited deficiencies.
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Auditee's Corrective Action PLans For the Fiscal Year Ended June 30, 2002
Contact: Howard Willis, Director of Economic Support, DFCS Phone: (404) 657-3702; Fax: (404) 657-3785; E-mail: howillis@dhr.state.ga.us
Finding Control Number: FA-427-02-02 ELIGIBILITY Deficiencies in File Maintenance Food Stamp Cluster Food Stamps (CFDA 10.551) State Administrative Matching Grants for Food Stamp Program (CFDA 10.561) Questioned Cost: $ 3,405.00
We concur with this finding. The areas cited in the FY 2002 audit findings for the TANF and Food Stamp programs will be addressed by the sharing of results of this audit with county supervisors at their fourth quarter area supervisors meeting that is conducted by program consultants.
County Eligibility Supervisors will be reminded of the importance of ensuring that TANF and Food Stamp eligibility requirements are adhered to as they do case record reviews.
County Eligibility Supervisors will be directed to provide in house ESSS Policy Manual refresher training on all required documentation and information required for complete and accurate case records by August 31, 2003.
Counties with problem cases identified in this audit will receive additional training to address the cited deficiencies.
Contact: Howard Willis, Director of Economic Support, DFCS Phone: (404) 657-3702; Fax: (404) 657-3785; E-mail: howillis@dhr.state.ga.us
Finding Control Number: FA-427-02-03 SUBRECIPIENT MONITORING Inadequate Monitoring of Subrecipients HlV Care Formula Grants (93.917)
We concur with this finding. Procedures are now in place to effectively monitor subrecipients. Site visit tools for administrative audit of Ryan White II programs were designed and implemented in June 2002. Using these tools, site visits have been conducted to 9 out of 17 subrecipient sites as of April 1, 2003. A comprehensive site visit tool is being developed and will be used in the remaining sites, so that administrative, medicaVnursing care and other audits and quality assurance efforts can be conducted simultaneously and a training and technical assistance plan for the subrecipient can be developed.
Contact: Barbara Wallace, Team Leader Phone: (404) 651-7370; Fax: (404) 463-6729; E-mail: bpwallace@dhr.state.ga.us
Finding Control Number: FA-427-02-04 MATCHING, LEVEL OF EFFORT, EARMARKING Failure to Establish Quality Management Program HlV Care Formula Grants (93.917)
We concur with this finding. Nursing guidelines for the management of HIV and AIDS are near completion, and a draft for clinical review by the HIV Medical Advisory Group (an identified group of experts and stakeholders) and the Division of Public Health will be available by April 15, 2003. The contents of the guidelines are consistent with Public Health Service recommendations for the treatment of HIV disease.
A monitoring tool to assess the level of care was developed in October 2002. Site visits using this tool have been conducted to 10 districts, and have identified areas of excellence as well as areas of concern. Results have been communicated with care providers, and a plan of action to address areas of deficiency has been agreed where needed.
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Auditee's Corrective Action Plans For the fiscaL Year Ended June 30, 2002
Contact: Barbara Wallace, Acting Director of HIV Section in Public Health Phone: (404) 657-3119; Fax: (404) 657-3134; E-mail: bpwallace@dhr.state.ga.us
Finding Control Number: FA-427-02-05 ELIGIBILITY Deficiencies in Eligibility Database/File Maintenance
mv Care Formula Grants (93.917)
We concur with this finding. Two major areas of deficiency were noted.
1) Absence of electronic data that could provide accurate and complete information on all recipients of the program.
At the time of the report, the HIV Section used EPI 6 as its database. This database has severe limitations in that it does not collect service utilization data, overwrites data thus deleting historical information, and tracks information by client status (active or closed) rather than by service category. When 2001 records were pulled for the audit, these records included closed cases with outdated information, since there was no need to recertify or update closed case information.
In January 2003, the HIV Section switched to Ryan White CAREWare. This database was developed by HRSA and can collect and provide information on client demographics and service utilization. District implementation of CAREWare is already well underway, and has enabled all Districts to successfully use the CAREWare program to complete their 2002 reports.
2) Absence of complete eligibility documentation in some files. Eligibility documentation rrnssmg included HIV positive status, income level, Medicaid emollment status, Georgia residency, CD4 counts, third party insurance information, appropriate date of application versus date of service, emollment application, evidence of proper review and approval of the file, evidence of six-monthly recertification.
Action: Clients are initially screened at the local level for Ryan White services, and much of the missing information is in fact available in the client's local level file. However, the ADAP application in use at the time of the Report did not require all this information to be submitted to the State HIV Section.
The issue of incomplete documentation at state level is being addressed in several stages.
The HIV Section has been using a checklist and template memo for two years to identify missing information in ADAP application forms and return these forms to the organization making the application. The organization applying on behalf of the client is required to complete the missing information and reapply. This checklist is currently in use for all new applicants. However, staff shortages in the state office and at subrecipient level, as well as the inability of the state's data system to indicate a need for recertification, led to inadequate recertification documentation being held at state level. In addition, Grady Infectious Disease Program formerly used an application form that did not include necessary eligibility information. Use of the state form is now required of all subrecipients and, as explained above; CAREWare will prompt recertification in future.
In March 2003, the HIV Section drafted a revised ADAP application with supporting documentation forms, instructions for completing the application, and a policy document giving details on the ADAP application policy and process. These forms are currently undergoing internal review. The application will require information on HIV positive status, CD4 count, income level with appropriate verification, Medicaid emollment status and eligibility assessment, Georgia residency with appropriate documentation, third party insurance information. The checklist and template letter will continue to be used to return incomplete application forms for further documentation. The new application also contains a section for DHR use that documents proper approval by the ADAP coordinator or designee. Use of this application form will be required of all organizations applying for Ryan White II ADAP services in Georgia, including Grady Infectious Disease Program.
The Ryan White CAREWare database has been customized to include a "recertification due date" field. This will enable the HIV Section to generate reports on a routine basis to identify clients whose application requires recertification. The
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Auditee's Corrective Action PLans For the fiscaL Year Ended June 30, 2002
previous database did not allow for this type of query. As recertification occurs, past records of clients with incomplete documentation will be brought into compliance.
Discussions about matching ADAP applications and current clients against the Medicaid roster are currently underway, led by the Division of Public Health's Medicaid liaison. Matching will allow the HIV Section to identify ADAP applicants who are ineligible because they are already enrolled in Medicaid, and will also enable the Section to identify ADAP enrollees who subsequently enroll in Medicaid. Although a tentative solution has been identified, progress has been slowed by Medicaid's switch to a new database as of April 1. This action item will proceed as quickly as Medicaid's systems allow.
It should be noted that in some cases, Medicaid benefits may be temporary due to pregnancy or limited due to spend down status, so ADAP coverage may still be required.
Finding: Deficiencies in Eligibility Database/File Maintenance - HICP
Incomplete eligibility determination findings were similar to those for ADAP, including incomplete documentation of eligibility criteria, Medicaid enrollment, review and approval of the file, and annual recertification. Although this information was generally held in the files of the organization applying for HICP on the client's behalf, it was not provided consistently to the State office in support of the application.
Action: A checklist and template memo is already in use, as noted above for ADAP. A revised HICP application form and policy document will be developed based on the new ADAP application form currently in draft. CAREWare will notify HIV Section staff of recertification due dates. The match against the Medicaid roster will be implemented as soon as possible after the new Medicaid data system is in place.
It should be noted that in some cases Medicaid benefits may be limited due to spend down status or temporary Medicaid coverage during pregnancy, so it may be necessary to pay the client's insurance premiums to ensure full health care coverage.
Contact: Barbara Wallace, Acting Director of HIV Section in Public Health Phone: (404) 657-3119; Fax: (404) 657-3134; E-mail: bpwallace@dhr.state.ga.us
Finding Control Number: FA-427-02-06 ALLOWABLE COSTS/COST PRINCIPLES Improper Health Insurance Continuation Program (HICP) Payments HIV Care Formula Grants (93.917)
We do not concur with this finding. The payment of family premiums, vision and dental premiums are allowable under the HICP. The letter provided to the auditors was from FY 2000 and was a notification to clients when they were set up on the program. This changed in FY 2001 and the FY 2001 letter reflected this. In addition, the Ryan White CARE Act Title II Manual states that the family premium is allowable. It also states that health insurance services that include comprehensive primary care and the full range of HIV treatments. In discussion with our federal partner, they indicate this includes the dental insurance. Our Federal partner has issued a letter to us dated April 28, 2003 that states all these insurance coverages are allowable.
Contact: Barbara Wallace, Acting Director of HIV Section in Public Health Phone: (404) 657-3119; Fax: (404) 657-3134; E-mail: bpwallace@dhr.state.ga.us
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
Finding Control Number: FA-427-02-07 ALLOWABLE COSTS/COST PRINCIPLES Inadequacies in Collection of Overpayments of Health Insurance Continuation Program (HICP) Premiums HIV Care Formula Grants (93.917)
We concur with this finding. The HIV Section makes every effort to collect refunded insurance premiums. The revised HICP application will include a pro-rated refund agreement, signed by the client, that further emphasizes that any refunds are due to DHR. Attempts to collect refunded premiums continue to be documented in the client records. Procedure for collections ofrefunds will be reviewed with the Office of Financial Services and changes made where appropriate.
Contact: Barbara Wallace, Acting Director of HIV Section in Public Health Phone: (404) 657-3119; Fax: (404) 657-3134; E-mail: bpwallace@dhr.state.ga.us
DEPARTMENT OF LABOR
Finding Control Number: FS-440-02-01 GENERAL LEDGER Inadequate Accounting Procedures
We concur with the finding. Department procedures have been reviewed to provide adequate internal controls to ensure that all deposits and bank accounts are maintained on the general ledger. The funds have been recorded on the general ledger as of the January 2003 accounting period.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
Finding Control Number: FS-440-02-02 CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures
We concur with the finding. Internal controls have been revised to ensure all bank reconciliations are completed in a timely manner by designated accounting personnel within 15 days of receiving the statements and closing of the books for the month.
As of March 2003, bank reconciliation for the payroll account, accounts payable, operating account, and benefit accounts have been performed; unidentified variances have been resolved and corrected for the operating account and the benefit account.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
Finding Control Number: FS-440-02-03 CASH AND CASH EQUIVALENTS CAPITAL ASSETS Protection of Assets
We concur with the finding. Department procedures were reviewed to ensure that all funds are deposited on a timely basis, the general ledger is accurately maintained, and capital asset records are appropriately updated.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
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Auditee's Corrective Action Plans For the fiscaL Year Ended June 3D, 2002
Finding control Number: FS-440-02-04 GENERAL LEDGER Inadequate Accounting Procedures (Overall)
We concur with the finding. Department procedures have been revised to ensure that general ledger is accurately maintained, reconciliations are performed in a timely manner, and variances between general ledger and subsidiary ledgers are resolved..
Additionally, the Department will ensure that each budget is maintained separately and accurately on the general ledger. Internal controls will be revised and updated to ensure periodic analysis of funds balances at the program and budget unit level.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
Finding Control Number: FS-440-02-05 REVENUE/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures
We concur with the finding. Internal controls have been revised to ensure that reconciliations are completed in a timely manner by designated accounting personnel within 15 days of the closing of the account books for the month.
Additionally, the Department will ensure that any variances noted are resolved in a timely manner to ensure that subsidiary ledgers accurately represent the financial activity and balances recorded in the general ledger.
As of April 2003, the general ledger balances have been corrected and accurately represent the financial activity for the month.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
Finding Control Number: FS-440-02-06 REVENUE/RECEIVABLES/RECEIPTS GENERAL LEDGER Inadequate Accounting Procedures
We concur with the finding. Department will ensure that the general ledger is accurately maintained and monitored on a monthly basis. In addition, Department internal controls will be revised to ensure that journal entries are properly documented; detail records supporting the general ledger are complete, accurate, and reliable.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johntWilliams@dol.state.ga.us
Finding Number: FS-440-02-07 EMPLOYEE COMPENSAnON GENERAL LEDGER Inadequate Accounting Procedures
We concur with the finding. The Department will establish procedures to ensure that the employee compensation reconciliation process is being performed in a timely basis. Controls will be put in place to prevent this from reoccurring.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johntWilliams@dol.state.ga.us
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
Finding Number: FS-440-02-08 GENERAL LEDGER Ending Balances in Balance Sheet Clearing Accounts
We concur with the finding. The Department will ensure that the general ledger is accurately maintained and monitored. The clearing account will be reviewed to zero out balances. Controls will be put in place to prevent this from reoccurring.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
Finding Control Number: FS-440-02-09 CAPITAL ASSETS Inadequacies in Operations of Property Management System
We concur with the finding. Controls will be put in place to ensure that equipment inventories are maintained in accordance with State Laws and regulations. We have developed and implemented a system using automated reports from the Financial Accounting Reporting System (FARS) and the Property Management System. Our corrective actions to provide a proper reconciliation between equipment additions to inventories recorded by the Property Management System and the equipment expenditure accounts on the general ledger (SA251 0 Trial Balance) will be as follows:
1) For State GAAP account codes 016-643-100 Equipment Purchases Greater than $5,000.00 (FARS Object/Subobject 5010) and 019-643-100 Computer Equipment Purchases Greater than $5,000.00 (FARS Object/Sub-object 5235) which appear on the SA2510 Report, create a file class 5 expenditure records by document number, document line number, and dollar amount from the FARS detail transaction file.
2) Create a file of equipment inventory records that meets the statutory definition of $5,000.00 or more from the Property Management System by document number and dollar amount.
3) Match the records of these two files by document and produce a comparative report that displays document numbers and amounts. Where the amounts agree, reconciliation is complete. Where the amounts do not agree, we shall reconcile the differences, which should result from price changes, freight changes, and discounts, by using ad hoc reports.
4) Make corrections to the Property Management System equipment inventory records where original cost amounts do not agree with SA251 0 equipment expenditure accounts.
5) Reconcile the SA2410 equipment expenditure accounts to SA2510 equipment expenditure accounts; the differences should be resources on order.
6) Reconcile the subsidiary to general ledger expenditures account on a monthly basis.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
Finding Control Number: FA-440-02-01 CASH MANAGEMENT Improper Fund Requests Disability Insurance/SSI Cluster Program (96.001) Questioned Cost: $36,316.32
We concur with the finding. Internal control procedures were reviewed to ensure that the cash draw downs of the Disability Insurance/SSI Cluster Program are made based on immediate cash needs. Controls will be put in place to prevent this from re-occurring.
F-46

Georgia
Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
As of April 2003, the $36,316.32 has been returned to the US Department of Treasury.
Contact Person: John T. Williams, Acting Director of Accounting Telephone: (404) 656-3188; Fax: (404) 651-6843; E-mail: johnt.Williams@dol.state.ga.us
DEPARTMENT OF PUBLIC SAFETY
Finding Control Number: FS-466-02-01 GENERAL LEDGER Inadequacies in Control Over Manual Journal Entries
We concur with this finding. The Accounts Receivable Module was not in balance at year-end due to the use of journal vouchers for corrections at fiscal year-end. These corrections should have been done through the Accounts Receivable Module, since journal voucher entries are not reflected in the individual modules. We needed to make numerous corrections at year-end after the AIR module had been closed. After the AIR and AlP modules ha\e been closed, journal vouchers are the only option available to make necessary corrections. Please note that the journal vouchers done at yearend during the "998" period were reversed at the beginning of FY03, and also entered properly into the Accounts Receivable Module. Procedures have now been developed and are currently being implemented to ensure that the AIR Module is balanced to the General Ledger on a monthly basis. Additionally, internal controls have been developed to ensure that supporting documentation is maintained for all adjustment and reconciling items.
Contact Person: Terry Landers, Chief Financial Officer Telephone: (404) 624-7850; Fax: (404) 624-7837; E-mail: tlanders@dps.state.ga
Finding Control Number: FS-466-02-04 CAPITAL ASSETS Inadequacies in Operation of Property Management System
We concur with this finding. The Georgia Public Safety Training Center is attached for administrative purposes only. The Department of Public Safety cannot directly dictate their internal procedures and controls. The GPS Training Center has initiated considerable effort to find and correct property discrepancies. Of the 10 items that were listed, most were actually located but were missing the decal to verify that they were the actual item. All exceptions have been corrected and procedures are being put in place at GPS Training Center to help prevent these errors in the future.
Contact Person: Terry Landers, Chief Financial Officer Telephone: (404) 624-7850; Fax: (404) 624-7837; E-mail: tlanders@dps.state.ga
DEPARTMENT OF CORRECTIONS
Finding Control Number: FS-467-02-01 EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures
We concur with the above finding. Corrective action has been taken, however. Written policies and procedures have been developed and implemented by the Office of Health Services (OHS) to address all accounting operations including, but not limited to audit findings. These written procedures will be reviewed and updated periodically based upon changes in contracts and accounting procedures. Specific corrective actions are as follows:
1) All Administrative Operations positions within the OHS were filled effective August 1,2002 (for a 12 month period surrounding the referenced audit period, one of the two Administrative Operations positions was vacant). This has enabled OHS to properly segregate employee duties and is reflected in the written procedures previously referenced.
FA7

Auditee's Corrective Action PLans For the fiscaL Year Ended June 30, 2002
2) Spreadsheets to support vendor payments have been reviewed and approved by appropriate Division employees. This finding specifically referenced the mechanism for tracking reimbursement for psychotropic medication. Accordingly, approved drug reimbursement spreadsheets were initiated in FY03 in order to address this concern.
3) The referenced Division employee worksheets are no longer used in OHS. All vendor invoices and supporting documentation, however, are now extended and footnoted to ensure accuracy. Verification is documented by employee signature.
4) Payments to vendors are now correctly tracked through Peoplesoft accounting systems with budget and expenditures being reconciled monthly.
5) OHS now maintains an up-to-date list of GDC employees authorized to approve supporting documentation submitted by the vendor along with invoices.
6) Invoices referencing medical services are now reviewed by employees who have been properly trained and oriented. In addition, with reference to the processing of drug reimbursement invoices, a copy of the GDC Drug Formulary has been provided to the Administrative Operations Coordinator for reference. Further, as questions arise, additional medical expertise within OHS has been made available to reviewers.
7) The Peoplesoft problems that the Medical College of Georgia encountered in the last six months ofFY02 have been corrected. Expenditures are now reported monthly by line item. Journal vouchers within OHS allocate expenditures by facility with an end-of-year reconciliation process planned, based on actual MCG expenditures by site.
Contact Person: Michael Spradlin, Administrator, Office of Health Services Telephone: (404) 656-6224; Fax: (404) 651-6414; E-mail: spradmOO@dcoLstate.ga.us
OFFICE OF SCHOOL READINESS
Finding Control Number: FA-469-02-01 SUBRECIPIENT MONITORING Subrecipient Audit Reports Not Received Within the Required Time Period
OSR concurs with this finding. The Office of School Readiness is responsible for tracking and reviewing the audits of its subrecipients most of which are local units of administration (LUA), a term used to identify boards of education. Because LUAs receive a majority of their funding from the state, the Georgia Department of Audits and Accounts is required by state law to audit the LUAs. Currently, the LUAs are audited after state agencies, commissions, etc., and for that reason and due to the large number of LUAs audited, the Department of Audits and Accounts has been unable to complete the audits in the time period required by OMB Circular A-133. The U.S. Department of Agriculture is aware of this problem, and realizes that the Department of Audits and Accounts is working towards a viable resolution to the finding in the near future. Effective January 2002, the Department of Audits and Accounts reorganized in an effort to address this matter and has adopted a plan to meet OMB Circular A-133 deadlines for fiscal year 2004 LUA audits.
Contact Person: Tanya Astin, Internal Auditor Telephone: (404) 656-6293; Fax: (404) 463-0976; E-mail: Tanya.Astin@mail.osLstate.ga.us
or Audit Contact Person: Margie Landers, Director of Finance and Human Resources Telephone: (404) 463-5031; Fax: (404) 463-0976: E-mail: Margie.Landers@mail.osLstate.ga.us
F-48

Georgia
Auditee's Corrective Action PLans For the fiscaL Year Ended June 30, 2002
BOARD OF REGENTS OF THE UNIVERSITY SYSTEM OF GEORGIA
Finding Control Number: FS-472-02-02 ACCOUNTING CONTROLS (OVERALL) Inadequate General Controls
We concur with this finding. During FY 2002, the University System of Georgia was in the process of converting 32 institutions and sites from the College University Financial Accounting (CUFA) system to PeopleSoft. The last group of institutions to implement the new software came on line in May 2002. Although this effort included the development of year-end closing procedures and training of institutional users, it was complicated by adjustments needed to meet new requirements mandated by the Governmental Accounting Standards Board (GASB), particularly as they concerned the accounting and reporting of capitalized assets.
The University System of Georgia has now developed and implemented new monthly closing procedures and has refined year-end procedures to meet new requirements. For FY 2003, institutions wiII be required to meet closing deadlines which wiII be consistent with those used prior to the implementation of PeopleSoft and ensure that financial data is ready for audit review in accordance with schedules established by the State of Georgia Department of Audits. Year-end closing procedures have been revamped and institutional training wiII commence in May to ensure that each institution is fully knowledgeable and capable of meeting deadlines.
Contact Person: William R. Bowes, Vice Chancellor for Fiscal Affairs/Treasurer Telephone: (404) 657-7581; Fax: (404) 657-7433; E-mail: william.bowes@usg.edu
Finding Control Number: FS-472-02-03 GENERAL LEDGER Inadequacies in Control Over Subsidiary Ledgers
We concur with this finding. The University System of Georgia is reviewing the conversion effort to correct any improper posting of transactions and will enforce business procedures that require institutions to post transactions to the appropriate subsidiary ledger. This will ensure that these ledgers can be reconciled with the general ledger for review by state auditors. This effort is underway.
In addition, the University System of Georgia wiII work with the state auditors to identify and correct the problems associated with the interface between the BANNER student information system and the PeopleSoft financial software system to ensure that appropriate detail is captured to record receivables which will reconcile with the PeopleSoft general ledger. The USG will work with the state auditors to develop appropriate queries and reports to facilitate the process of reconciling subsidiary ledgers with the general ledger. These changes will be supported by adjustments in business procedures for University System of Georgia institutions that wiII mandate regular reconciliation of financial records.
Contact Person: William R. Bowes, Vice Chancellor for Fiscal Affairs/Treasurer Telephone: (404)657-7581; Fax: (404)657-7433; E-mail: william.bowes@usg.edu
Finding Control Number: FS-472-02-04 BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Class Resident Instruction, "A" Budget
We concur with this finding. The Georgia Institute of Technology's original budget for the Office of Minority Business Enterprise was $500,000 in FY 2002. Subsequent to the distribution of these funds to a vendor at the completion of their contract, the budget was reduced as a state austerity measure by 2.5%, or $12,500. This austerity measure was approved by the General Assembly in the 2002 session, which ended in March 2002.
In the future, the institution will hold back a percentage of the original budget monies to cover any budget reductions that might occur and would cause the institution to exceed its budget authority.
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
Atlanta Metropolitan College had an overexpenditure of $165.81 for Office of Minority Business Enterprise and the Medical College of Georgia had an overexpenditure of $27,906.00 for the Student Education Emichment Program. These issues were discussed with the two institutions and they are developing procedures to more closely monitor their budget operations and expenditure class coding to prevent the expenditure of funds in excess of budget approval.
Contact Person: William R. Bowes, Vice Chancellor for Fiscal AffairslTreasurer Telephone: (404) 657-7581; Fax: (404) 657-7433; E-mail: william.bowes@usg.edu
Finding Control Number: FS-472-02-05 BUDGET PREPARAnON/EXECUTION Overexpenditure of Budget Unit Object Class Regents Central Office and Other Organized Activities, "B" Budget
We concur with this finding. The Regents Central Office's original budget for the Regents Opportunities Grant program was $600,000 in FY 2002. Subsequent to the distribution of these funds to institutions in August 2001 for granting of scholarships under the program, the budget was reduced as a state austerity measure by 2.5%, or $15,000. This austerity measure was approved by the General Assembly in the 2002 session, which ended in March 2002.
Since further budget reductions have occurred in this program for FY 2003, the Regents Central Office has taken steps to recover allocated funds from institutions. If necessary, institutions also will be asked to recover any funds distributed to students that would cause the Regents Central Office to exceed its budget authority and have those funds returned.
Contact Person: William R. Bowes, Vice Chancellor for Fiscal Affairs/Treasurer Telephone: (404) 657-7581; Fax: (404) 657-7433; E-mail: william.bowes@usg.edu
Finding Control Number: FS-472-02-06 BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Class Lottery for Education, "D" Budget
We concur with this finding. The overexpenditure on the Internet Connectivity Initiative was a result of a miscoding of class code during the conversion from CUFA to PeopleSoft that was not identified prior to year-end closing. This has since been corrected and procedures have been developed to ensure proper coding of expenditures to avoid this problem in the future.
The Technology Equipment Initiative at the University of Georgia Law School and the Georgia Public Library Service equipment overexpenditures concern Lottery funds that were allowed to be carried forward. The funds were incorrectly reported in FY 02 as prior year funds in Plant/Capital Funds by the University of Georgia and prior year funds in the "B" Budget for the Georgia Public Library Service instead of the appropriate classification. This issue has been addressed with the University of Georgia and the Georgia Public Library Service and procedures put in place to ensure appropriate reporting of any prior year funds in the future.
Contact Person: William R. Bowes, Vice Chancellor for Fiscal Affairs/Treasurer Telephone: (404) 657-7581; Fax: (404) 657-7433; E-mail: william.bowes@usg.edu
DEPARTMENT OF REVENUE
Finding Control Number: FS-474-02-01 REVENUE/RECEIVABLES/RECEIPTS Deficiencies in the State Revenue Collections Fund (Overall)
We concur with this finding.
F-50

Georgia
Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
1) The Department developed and began using the PeopleSoft Revenue Accounting System as of July 1, 2001. The purchase of PeopleSoft by the State was done without the Department of Revenue collection processes and accounting in mind. As a result, the development of this system was done solely by us without assistance from the Phoenix group. Beginning in calendar year 2002 and continuing during fiscal year 2003, edits were put into place to reduce the risk of erroneous journal voucher postings. The Department of Revenue is currently working with the Georgia Technology Authority to initiate an interface of all mail cash and EFT deposits directly to the accounts receivable module of the statewide Phoenix accounting system.
2) The Department's subsidiary ledger systems are independent and do not interface with the PeopleSoft Accounting System. During the Fiscal Year 2003 we have developed some policies and procedures to ensure our main sub-ledger (Mail Cash) ties in with the general ledger. Additionally, the Sales Tax Division subsidiary ledgers are now being reconciled to the PeopleSoft general ledger. Weare currently working with other divisions to address the reconciliation deficiency and similar policies and procedures will be implemented.
3) The Department recognizes its deficiencies in this area and we are looking into a more feasible and agreeable resolution to the problem.
4) Policies and procedures have been put into place during fiscal year 2003. Mail cash and EFT collections are reconciled daily to the general ledger.
5) Policies and procedures have been put into place during the current fiscal year to reconcile receipts by program to distributions by program remitted to the State treasury. Weare currently working with the treasury to initiate a direct interface between the two agencies.
Contact Person: Jeremie S. Peterkin, Controller Telephone: (404) 417-2213; Fax: (404) 417-2101; E-mail: jpeterkin@gatax.org.
Finding Control Number: FS-474-02-02 REVENUE/RECEIVABLES/RECEIPTS Deficiencies in the Income Tax Division Subsidiary Records
We concur with this finding. However, the feasibility, practicality and financial responsibility of capturing withholding information for approximately 3 million (+) individual tax returns with present resources would be a shift in the strategic direction of the Department of Revenue.
Previously, the Department did a limited manual sampling of comparing business W-2 information to individual tax returns. This sampling indicated extremely low non-compliance. The Department has agreed, within budget restraints, to expand this pilot program to a limited systematic matching of electronic W-2 information to individual filings.
Contact Person: Jerernie S. Peterkin, Controller Telephone: (404) 417-2213; Fax: (404) 417-2101; E-mail: jpeterkin@gatax.org.
OFFICE OF TREASURY AND FISCAL SERVICES
Finding Control Number: FA-486-02-01 CASH MANAGEMENT Failure to Adhere to Terms of the Cash Management Improvement Act Agreement Cash Management Improvement Act (CMIA)
We concur with this finding. The Office of Treasury and Fiscal Services will contract with an outside vendor to verify the accuracy of interest calculations and clearance patterns claimed by state agencies.
Contact Person: Steve Caffarelli, Assistant Director Telephone: (404) 656-2168; Fax: (404) 656-9048; E-mail: scaffar@otfs.state.ga.us
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002

GEORGIA INSTITUTE OF TECHNOLOGY

Finding Control Number: FS-503-02-01 CAPITAL ASSETS Inadequacies in Operation of Property Management System

We concur with this finding and corrective actions have been taken or initiated to address the weaknesses identified. In

March 2002, the Institute implemented a new Asset Management system with much improved controls, processes, and

reports to manage equipment assets and reconcile accounts used for equipment procurement. The following steps will be

taken to address the weaknesses identified above:

1) Utilize the features of the new Asset Management system, which provide on-line access for campus Property

Coordinators to enter all changes associated with an asset's disposition, in place of the previous system that relied

upon the submission of equipment changes by paper.

.

2) As part of the annual equipment inventory, the Institute's Capital Assets Accounting Department will sample unit equipment to verify the accuracy and completeness of the Institute's records.

These steps along with continued diligence by management address the weaknesses noted in the audit.

Contact Person: Hemy Spinks, Controller Telephone: (404) 894-6272; Fax: (404) 894-9135; E-mail: hemy.spinks@business.gatech.edu

Finding Control Number: FA-503-02-01 REPORTING Reports Not Submitted in a Timely Manner Research and Development Cluster

We concur with this finding and recommendation. Prior to June 30, 2003, a review will be performed to consider the possible need to improve the following efforts currently being made to ensure that all required contractual deliverables are submitted to the contracting agencies in a timely fashion:

I) The Office of Sponsored Programs (OSP) reviews all RFPs and solicitations to identify all contractual deliverable requirements, which are reviewed with the proposed Project DirectorlPrincipal Investigator (PDIPI) prior to proposal submission. Ifneeded, this review is completed again, prior to acceptance of the agreement.

2) As soon as a new sponsored project is received, OSP 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.

3) OSP prepares and distributes for all campus units a monthly report of deliverables due the following month to contracting agencies under all sponsored research projects.

4) OSP expanded efforts to provide a list of all project deliverable information to each PDIPI and all levels of management within a unit via a web-based query tool.

5) OSP also prepares and distributes to all campus units a quarterly report of overdue deliverables for all sponsored research projects. This is a list of all required deliverable items not known by OSP to be satisfied or submitted to the sponsoring agency. The report is copied to members of upper administration, including Deans, School Chairs and Lab/Center Directors.

6) OSP initiates special follow-up action by way of memos 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.

F-52
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Georgia
Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
7) 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.
Contact Person: G. Duane Hutchison, Director, Office of Sponsored Programs Telephone: (404) 894-4819; Fax: (404) 894-7002; E-mail: duane.hutchison@osp.gatech.edu
Finding Control Number: FA-503-02-02 REPORTING Reports Not Prepared for the Appropriate Period and/or Submitted at an Appropriate Date Research and Development Cluster
We concur with this finding and recommendation. Prior to June 30, 2003, a review will be performed to consider what the Office of Sponsored Programs (OSP) can do to improve the efforts currently being undertaken to ensure that all required contractual deliverables are prepared for the appropriate period and/or submitted to the contracting agencies at an appropriate date. With regard to one of the deliverables associated with this finding, the following information is provided:
1) A-56l7, Status Report (OSP deliverable #249) It has been determined that the submitting unit made a typographical error when the Date Mailed was entered on the Research Report Approval Sheet provided to OSP. The correct Date Mailed should have been 1120/02 instead of 11120/01. In reality, this report was prepared for the appropriate period and submitted on time.
Contact Person: G. Duane Hutchison, Director, Office of Sponsored Programs Telephone: (404) 894-4819; Fax: (404) 894-7002; E-mail: duane.hutchison@osp.gatech.edu
GEORGIA STATE UNIVERSITY
Finding Control Number: FA-509-02-01 ELIGIBILITY Student Direct Loan Disbursements Exceed Loan Limit Student Financial Aid Cluster Program Questioned Cost: $2,024.00
We concur with this finding. Corrective action had already been implemented. The Student Financial Aid office has started utilizing a new processing system provided by SCT Banner that prevent future instances. Current procedures incorporate the ability of the new system to check aggregate loan limits at the time of awarding. Accordingly, if a student has reached the aggregate limit, the system will not package a loan and produces an error code that identifies this as the reason. Prior to SCT Banner, this was a manual process.
Contact Person: David Bledsoe, Director Financial Aid Telephone: (404) 651-1581; Fax: (404) 651-1419; E-mail: fiadrb@langate.gsu.edu
MEDICAL COLLEGE OF GEORGIA
Finding Control Number: FS-512-02-06 CAPITAL ASSETS Inadequate Capital Assets Records
We concur with this finding. The July 1,2001 equipment inventory balance will be corrected to reflect the June 30, 2001 equipment inventory balance by May 16, 2003. The College will take the necessary steps to ensure that June 30, 2002 fiscal year ending inventory balances agree with the July 1, 2002 beginning inventory balances.
Beginning March 2003, the Asset Management module is being reconciled to the Capital Ledger on a monthly basis. This business process will ensure that the College's Asset Management module reconciles to the Capital Ledger at June 30, 2003.
F-53

Auditee's Corrective Action Plans For the Fiscal Year Ended June 30. 2002
During fiscal year 2002, the College recorded periodicals the same whether electronic license or hard copy. For fiscal year 2003, the College has implemented a process to record the capitalization of hard copy periodicals.
Contact Person: Gordon Prettelt, Interim Comptroller Telephone: (706) 721-2903; Fax: (706) 721-1648; E-mail: Gprettelt@mcg.edu
UNIVERSITY OF GEORGIA
Finding Control Number: FA-518-02-01 REPORTING Financial Reports Not Properly Filed
University staff members responsible for preparing financial reports have been reminded to carefully review the financial reporting requirements of each project. Computerized lists are generated to assist staff in assuring timely filing of Financial Reports.
Contact Person: Tracy Walters, Director of Contracts and Grants Department Telephone: (706)542-6889; E-mail: twaltOl@arches.uga.edu
ALBANY STATE UNIVERSITY
Finding Control Number: FS-521-02-02 CASH AND CASH EQUIVALENTS INVENTORIES REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures
Cash and Cash Equivalents We concur with this finding. The University has created and filled a position that is assigned to work exclusively on the bank reconciliations. Additionally, closer monitoring of the bank reconciliation process will take place and procedures will be reviewed and revised as necessary to ensure accounts are accurately reconciled to the general ledger in a timely manner, with proper documentation of any necessary adjustments.
Contact Person: Kenneth Dyer, Vice President for Fiscal Affairs Telephone: (229) 430-4608; Fax: (229) 430-2763; E-mail: kendyer@asurams.edu
Inventories We concur with this finding. The University will revise already established procedures to provide for the systematic and consistent mark-up of resale inventory and to ensure the timely inputting of resale inventory information into the pointof-sale system. The University's new computerized point-of-sale system is being enhanced such that management can ensure adequate monitoring of inventory costs throughout the fiscal year.
Contact Person: Lori Washington-Burnett Telephone: (229) 430-4609; Fax: (229) 430-2763; E-mail: lburnett@asurams.edu
Revenues/Receivables/Receipts We concur with this finding. The balance noted is an accumulation of a balance from previous fiscal years. The University will continue the practice of assigning certain accounts for collection by outside firms. Additionally, the University will continue to reserVe funds for those accounts determined to be uncollectible.
Contact Person: Lorraine Leary, Student Accounts Manager Telephone: (229) 430-4615; Fax: (229) 430-4696; E-mail: lleary@asurams.edu
F-54

Georgia
Auditee's Corrective Action Plans For the Fiscal Year Ended June 3D, 2002
Expenditures/Liabilities/Disbursements We concur with this finding. The University will review and revise its procedures as necessary such that both the Procurement and Inventory Management units will ensure that supporting documentation will be maintained and made readily available for all operating leases.
Contact Person: Liz Dotson. Director of Administrative Services Telephone: (229) 430-4607: Fax: (229) 430-3085: E-mail: ldotson@asurams.edu
Finding Control Number: FS-521-02-06 CAPITAL ASSETS Inadequate Capital Asset Records
We concur with this finding. The University has implemented procedures to strengthen the internal controls over the University's capital assets. The Asset Management Module will accurately reflect all University assets along with the any applicable depreciation. The procedures will ensure that all assets maintained on subsidiary capital asset reports will be located at its assigned location with the appropriate decals affixed. Additionally, capital assets will be added to and removed from the equipment inventory records in a timely manner.
Contact Person: Liz Dotson, Director of Administrative Services Telephone: (229) 430-4607; Fax: (229) 430-3085; E-mail: ldotson@asurams.edu
Finding Control Number: FA-521-02-01 CASH MANAGEMENT Excessive Cash Balances
We concur with this finding. The University will implement procedures to ensure that funds are not made in advance of immediate cash needs. The University will closely monitor cash draws to ensure that they are commensurate with the respective program needs in an effort to prevent excess cash balances.
Contact Person: Janice H. Jones, Director of Budgets and Contracts Telephone: (229) 430-6438; Fax: (229) 430-2763; E-mail: jhaywood@asurams.edu
Finding Control Number: FA-521-02-02 ELIGIBILITY Deficiencies in Student Financial Aid Disbursement Process Questioned Costs: $21,785.13
We concur with this finding. The University has implemented procedures to ensure that financial aid is properly calculated and disbursed to eligible students. Additionally, internal controls have been implemented to preclude the awarding and disbursing of financial aid assistance in excess of a student's financial need. The University has not received any correspondence from the U.S. Department of Education since submission of the audit report containing the audit findings.
Contact Person: Kathleen Caldwell, Director of Financial Aid Telephone: (229) 430-4650; Fax: (229) 430-3936; E-mail: kcaldwel@asurams.edu
ARMSTRONG ATLANTIC STATE UNIVERSITY
Finding Control Number: FS-524-02-04 CAPITAL ASSETS Inadequate Capital Asset Records
We agree with the four items listed in the finding. With regard to item 3, we did attempt to reconcile these items. It appeared some expense items under $5,000 were capitalized which caused the actual ledger to exceed the assets in the
F-55

Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
capital ledger. Concerning item 4, we did prepare a schedule supporting equipment items not covered in the Asset Management module but it was not 100% reconcilable.
Contact Person: Dan Harrell, Director of Business Services Telephone: (912) 927-5255; Fax: (912) 921-2366; E-mail: harrelda@mail.armstrong.edu
CLAYTON COLLEGE AND STATE UNIVERSITY
Finding Control Number: FS-528-02-03 CASH AND CASH EQUIVALENTS GENERAL LEDGER CAPITAL ASSETS Deficiencies in Accounting Procedures
We concur with the finding. Corrective action has been accomplished or is planned to remediate deficiencies in accounting procedures:
Cash and Cash Equivalents The University increased staffing levels as required, and has instituted procedures to ensure that delinquent operating account reconciliation is completed, and that subsequent reconciliation is completed in a timely manner. As of February 2003, operating account reconciliations are current. Prior to June 30, 2003, all required adjustments will be identified, documented, and booked appropriately to the general ledger.
General Ledger Unlocated variances between salary and travel payments reported to the State Department of Audits, and balances posted to the general ledger occurred in part from the University's conversion to the GeorgiaFIRST financial reporting system. The University continues to develop reconciliation methodology consistent with the new system, and has developed procedures to ensure completion of the reconciliation of continuous audit reporting.
Capital Assets The University has instituted procedures to ensure that monthly depreciation and additions/deletions to the institution's library collection are posted appropriately to the general ledger, and as required to subsidiary ledgers. Required adjustment to post library collection value and umecorded depreciation will be processed prior to June 30, 2003.
In response to prior year audits, the University reported that equipment values reported were irreconcilable, and that an outside appraisal firm would be employed to evaluate the equipment inventory and re-establish an appropriate book value. That process failed to adequately prove the equipment inventory value.
To re-establish with confidence an accurate valuation of the equipment inventory, the University will conduct a complete and thorough physical inventory of small value and capital equipment, and will attempt to reconcile current book values to values reported under the legacy accounting system, and to the exception reports provided by the outside appraisal firm. Even in the event that the values are again proven irreconcilable, the value proven by the physical inventory will establish and prove the inventory value for reporting purposes, and to which subsequent years activity is reconciled. The University will develop and institute procedures by which to maintain the asset inventory.
Contact: J. Blake Lanier, Director of Business Services Telephone: (770) 961-3602; Fax: (770) 961-3769; E-mail: blakelanier@mail.clayton.edu
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
COLUMBUS STATE UNIVERSITY
Finding Control Number: FS-530-02-01 CAPITAL ASSETS Inadequacies Capital Asset Records
Columbus State University concurs with the above stated audit finding for the fiscal year ending June 30, 2002.
1) In November 2002, the institution began conducting a physical inventory of all the institution's assets. That process has now been completed.
2) Corrections were made to the inventory records and to the Asset Management Module. 3) To ensure all personnel working with the Asset Management Module were proficient in their tasks and knowledge, the
institution sought the advise and instruction of Erika Chanin, Asset Management coordinator from the GeorgiaFirst team.
Contact Person: Lougene Brown, Comptroller, 2445 University Avenue, Columbus, Georgia 31907 Telephone: (706) 568-2003; E-mail: brown_lougene@colstate.edu
FORT VALLEY STATE UNIVERSITY
Finding Control Number: FS-533-02-06 GENERAL LEDGER Failure to Comply with Board of Regents' Requirements
The University had not made many of the journal entries by the closing of the books and records in order to adhere to the requested cut-off date; however, subsequent to that date, the BOR was provided with the necessary information to make adjustments to the fiscal reports to properly reflect the activity of FVSU for the fiscal year ending June 30, 2002.
Contact Person: Barbara W. Humphrey, Acting Vice President for Business and Finance Telephone: (478) 825-6400; Fax: (478) 825-6089; E-mail: humphryb@mail.fvsu.edu
Finding Control Number: FS-533-02-12 CAPITAL ASSETS Inadequacies in Operation of Property Management System and Equipment Inventory Records
The University did not prepare a corrective action plan to address this audit finding.
Contact Person: Barbara W. Humphrey, Acting Vice President for Business and Finance Telephone: (478) 825-6400; Fax: (478) 825-6089; E-mail: humphryb@mail.fvsu.edu
Finding Control Number: FA-533-02-01 ELIGIBILITY Overpayment of Student Financial Aid Student Financial Aid Cluster Program Questioned Costs: $24,489.00
We do not agree with the findings and submit the following:
At Fort Valley State University, Satisfactory Academic Progress (SAP) is evaluated on all students at the end of the Spring Semester every year to determine progress for the previous academic year and eligibility for the following period of emollment (POE).
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002

We submit the following relative to the three students who were cited III this finding for noncompliance with the University's published Satisfactory Academic Progress (SAP) policies:

SFA-ROS-21 This student was determined to be ineligible at the end of POE 200102 while seeking the first Masters degree and was required to appeal in order to continue to receive federal aid. The appeal was denied. The Student was required to self-pay for POE 200105 and successfully complete that POE with a minimum three (3) credit hours attempted and a grade of "B" or better. The student met this requirement. Aid was reinstated for POE 200108 on the condition that the student continue to complete every remaining POE meeting the federal completion rate and grade point average requirement for graduate students. Aid was denied for POE 200202. The student has not exceeded 72 attempted credit hours at the graduate level. Accompanying documentation is on file for review. The questioned cost of $6,306.00 should be removed.

SFA-ROS-49 This student was evaluated at the end of POE 200102 seeking a second Masters Degree. For this reason, the student was allowed an additional thirty-six (36) hours to complete the second degree. It was determined that SAP was being met and aid was awarded. Please review the accompanying documentation. This questioned cost of$8,250.00 should be removed.

SFA-ROS-55 This student was evaluated at the end of POE 200102 seeking the first bachelor degree and was determined to be eligible to continue receiving federal aid as SAP requirements were met. This student completed an Appeal at the end of the previous academic year because completion rate requirements were not being met. Aid was awarded for the 2001-2002 academic year. The student withdrew on 2/28/02. The advisor explained at exit counseling there was no additional federal aid eligibility due to total hours attempted. The questioned cost of $4,664.00_should be removed.

New Satisfactory Academic Progress (SAP) procedures require monitoring of those students close to reaching maximum time frame limits. For those students, financial aid awards are made for the eligible POE only. Appeals can be made to the Director of Financial Aid for consideration. Every case is reviewed on its own merit.

We challenge the findings concerning two students that exceeded the aggregate limit in Direct Loans for a dependent undergraduate.

SFA-ROS-30 Due to a PLUS loan denial, this student requested and was awarded additional UNSB funds in the amount of $1,200.00 during the 2000-2001 academic years to attend summer school. When determining remaining eligibility within the Federal Loan Program, students forced to borrow additional Unsubsidized Loan funds resulting from a parent being denied a PLUS loan, should not be penalized. When remaining loan eligibility was determined for the 2001-2002 academic year, the additional unsubsidized loan amount of $1,200.00 was subtracted from the total aggregate amount. This left subsidized eligibility of $4,832.00. This was the total amount awarded for the academic year. The questioned cost of $1,182.00 should be removed.

SFA-ROS-47 During the 1999-2000 this student requested, and was granted, a Dependency Override having met the existing Professional Judgment requirements in place at that time. Unsubsidized aid in the amount of $4,998.00 was awarded that year. Subsequent requests for a Dependency Override were denied because a new Director was hired and new requirements were in place. When reviewing remaining eligibility for this student in the 2001-2002 academic year, the student was not penalized for amounts borrowed in the Unsubsidized loan program due to the previous Dependency Override granted. NSLDS reports the aggregate amount borrowed by the student to be $28,041.00. The questioned cost of $2,291.00 should be removed or reduced to $43.00 which is the actual amount overawarded.
Procedures are in place in the Financial Aid Office to review NSLDS when the aggregate loan limit comment appears in the ISIR record. If the student is not a transfer student, we review the student's award history for denied PLUS loan information or, as in this case, circumstances created as the result of granting a dependency override. Every case is reviewed on its own merit and, as the advocate for students; we work to provide the assistance needed, within guidelines that will not penalize students for decisions made before revised procedures are put in place.

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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
We challenge one finding involving two students that received Direct Subsidized Loans in excess of their financial need.
SFA-ROS-ll The student was overawarded by $120.00 when the Subsidized Stafford loan was certified and disbursed. However, the Governor's Scholarship of $787.00 was awarded to the student on February 12, 2002, which was well after the second disbursement of the loan had been disbursed. For this reason, the questioned cost should be reduced to the actual amount of the overaward.
The discussion on need based and non-need based scholarships as they effect our determining an overaward has been thoroughly reviewed in the Financial Aid Office. It has been determined that while a scholarship can be awarded based on merit and not need, the award must be considered when determining subsidized eligibility. The FAO is developing an Overaward Worksheet as a training tool for Advisors to become more familiar with the change in concept for the scholarships received. This tool will serve to eliminate such overawards.
The report's recommendation to contact the U.S. Department of Education will be done after we receive your final report. We look forward to the results of your review after the challenges to these initial findings are reviewed.
Contact: Russelle Keese, Director of Financial Aid Telephone: (478) 825-6300; Fax: (478) 825-6976; E-mail: keeser@fvsu.edu
Finding Control Number: FA-533-02-02 REPORTING Expenditures in Excess of Authorization Student Financial Aid Cluster Program
The information reflected in BANNER for Financial Aid differs significantly from what is reported in this finding. According to information the Financial Aid Office provided the Auditor on October 16, 2002, the Federal Pell Grant Program Account reflected a Federal authorization of $4,348,180.51 per the Statement of Account Inquiry Form in BANNER (REISSOA). The Aid Year Specific Information Form (RFIBUDG) reflects system awards in the amount of $4,367,884.00. This is a difference of $19,703.49 for that date. Currently, our system reflects the same federal authorization with $4,361,867.00 on RFIBUDG. This is a difference of $13,686.49. We have acknowledged problems with duplicate reporting to Mr. David Bamiki with the U.S. Department of Education for the 2001-2002 award year that will bring $7,112.00 back to the University. The difference of $6,575.00 is reflected in the GAPS Award Balances Report. This finding states problems with the University's Accounting records, and errors in the Ledger have been acknowledged by the Accounting area. Documentation for the above is being sent for your review as it pertains to reconciliation activity in the Financial Aid Office.
Contact: Russelle Keese, Director of Financial Aid Telephone: (478) 825-6300; Fax: (478) 825-6976; E-mail: keeser@fvsu.edu
Finding Control Number: FA-533-02-03 REPORTING Reports Not Reconciled Student Financial Aid Cluster Program
The Financial Aid Office meets weekly with the Accounting area and monthly with Registrar, Information Technology and Admissions. This has helped to resolve several discrepancies and also brings the University into compliance with regulations as they pertain to reconciling monthly.
Contact: Russelle Keese, Director of Financial Aid Telephone: (478) 825-6300; Fax: (478) 825-6976; E-mail: keeser@fvsu.edu
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002

SAVANNAH STATE UNIVERSITY
Finding Control Number: FS-548-02-01 CASH AND CASH EQUIVALENTS REVENUES/RECElVABLES/RECEIPTS EXPENSES/LIABILITIESIDISBURSEMENTS GENERAL LEDGER CAPITAL ASSETS Inadequate Separation of Duties
1) Cash receipting functions were not separated from cash disbursement and general ledger functions.
We do not concur with this finding. According to the auditors this finding specifically relates to the current Bursar. During the audit period the current Bursar served in the following capacities with the outlined responsibilities:
Controller July 2001 - October 2001 The Controller's responsibilities included the design and implementation of financial systems and management reports, preparation of financial reports, and supervision of various areas of accounting.
Special Projects Coordinator October 2001 - June 2002 The Special Projects Coordinator responsibilities included reconciling Banner-clearing accounts, reconciling/auditing travel and advances, and preparing various journal entries as directed. In late 2002 the supervision of the Student Accounts unit was added to the responsibilities of this position.
Based on the above outlined duties Gob descriptions are on file), it is the University's position that there is no inadequate separation of duties involving Janice Allen, which relates to the cash receipting, cash disbursement, and general ledger functions.
Additionally, it appears that the back-up documentation for this finding was based on information obtained from a cashier. The University believes that this information should have been verified by the Point of Contact, observation, and/or job descriptions.
2) Cash collection functions and maintenance of detail accounts receivable records were not separated from general ledger functions.
We do not concur with this finding. During the registration period, which could run for 3 to 5 days, various staff members from various departments are assigned as temporary cashiers. The University has the following procedure in place to ensure the safeguarding of assets.
Procedure: Individuals serving as supervisors during registration verify the temporary cashiers' presence, all totals (cash, checks, money orders, and credit cards) and signs off on the Daily Cash Receipts Form. For future reference the temporary cashier will retain a copy of this form.
3) Deposit preparation functions were not separated from cash receipts functions.
We concur with this finding. As a part of the end of day balancing procedure cashiers prepared deposit slips. This was done due to limited resources; however the following procedure is in place to ensure the safeguarding of assets.
Procedure: Cashiers verify each others Daily Cash Receipts Form, Bank Deposit Slip, and closes out each other's cashiering session. Under no circumstances will a cashier close out his/her own session. The closed session number is written on the top of the Daily Cash Receipts Form. The completed deposits are placed into the bank deposit bag. The bank deposit bag is picked up and delivered to the bank by security.
4) Banner receivable and accounts receivable functions were not separated from the check disbursement functions.

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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
We do not concur with this finding. Banner receivable and accounts receivable functions were handled by student accounts. The check disbursement function was handled by accounting.
5) Supervisory access level to the various functions within the accounts payable, accounts receivable, human resources, capital assets and general ledger modules of Georgia First System were not separated.
We concur with this finding. This was the result of implementing PeopleSoft in May of 2002. The Implementation Committee, with the assistance of Empower Solutions (consultants), decided on the users' security levels. It was understood that due to limited manpower to thoroughly separate functions, staff would have to do two or three functions, thereby crossing over security levels. The Committee's decisions at that time started out minimally based its understanding of each user's function. As expected, business operations slowed down due to the unfamiliarity of the software but the very minimal security levels exacerbated the situation. Access to certain information and functions to proceed with the job was severely hampered; users' access levels were then expanded. In fact, even the Board recommended turning off certain restrictions; one of which was budget control, just to get through the daily business functions and attend to year-end closing and new-year opening.
The access levels for certain users who were the lead trainers and "experimenters" for the various modules and reports was a necessity designed to facilitate operations, not to circumvent internal controls.
Currently, the University feels there is sufficient understanding and knowledge of the software to be able to reclassify security levels to meet internal control standards. As of March 2003 Business and Finance was reorganized under functional lines and concomitantly, the security levels have been revised, a copy of which is attached. The University reserves the right to further revise security levels when deemed necessary for a smooth operation.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
Finding Control Number: FS-548-02-08 CAPITAL ASSETS Inadequate Capital Assets Records
1) Did not reconcile by asset category the ending book balances at June 30, 2001 to the adjusted beginning balance as of July 1, 2001.
We concur with this finding. The University experienced problems with the Asset Management module; the auditor's year-end figures will be used as a beginning point for our reconciliation for this current fiscal year.
2) The University did not reconcile the property records to the capitals ledger.
We concur with this finding. The University experienced problems with the Asset Management module; the auditor's year-end figures will be used as a beginning point for our reconciliation for this current fiscal year.
3) The University was unable to provide a listing of equipment which included ....
We partially concur with this finding. The University was able to provide a listing for all the attributes except the funding source used to purchase federal items. This attribute will be included in the Asset Management module for the current fiscal year.
To improve the overall management of the University's property, the office of Central Receiving and Records management is in the process of revising the University's procedure for property management. The process will be completed by May 31,2003.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
Finding Control Number: FA-548-02-01 ACTIVITIES ALLOWED OR UNALLOWED Improper Activity Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $7,185.07
We do not concur with this finding. Working papers confirmed that by way of telephone conversation with the Program Officer for the U.S. Department of Education, on 2/26/03, that the amounts encumbered in FY 200 1 for the University's Image Building Activity were allowable. The total expenditure for Image Building Activities was $53,335.93, of which $46,170.86 was considered a finding in FY 2001. These expenditures and encumbrances including the $7,165.07 that is now considered to be a finding were commitments made by the University on or before June 27, 2001, as evidenced by requisitions prepared on or before that date. No additional commitments for services were made after 6/27/01.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
Finding Control Number: FA-548-02-02 ALLOWABLE COSTS/COST PRINCIPLES Deficiencies in Internal Controls Higher Education - Institutional Aid (CFDA 84.031)
1) We do not concur with this finding. The payments for meals for the two workshops were reasonable and in compliance with OMB Circular A-21 Section c (3).
Title III funded activity and sub~activity directors, Program Coordination staff, university administrators and selected staff from Business and Finance was invited to the FY 2002 Title III orientation workshop. The meal was prepared based on the total number of employees expected to attend the orientation.
A similar situation arose in the Professional Development activity. It is standard operating procedure of the SSU Training Academy, a Title III funded program, to poll staff to obtain an estimated number of participants for upcoming workshops. Information obtained addresses the following issues:
a) The estimated number of participants to ensure that the University does not exceed the agreed upon maximum with the trainer.
b) The estimated room size necessary to conduct the training session.
The workshop in question was held for all employees of Plant Operations. The anticipated attendance of 60 represented the total number of employees in Plant Operations. (The documents submitted earlier with regards to the attendance roster referenced another workshop held during that week. We have the listing of participants on file for the November 15,2001 Plant Operations workshop).
In the future, the University will refine its methods to more precisely forecast attendance at Title III sponsored events.
2) We concur with this finding. The University will ensure that adequate documentation is provided for all expenditures by re-engineering the Voucher Auditing position. (The job description is on file.)
3) We concur with this finding. The employee has refunded the University and an adjustment has been made to correct the error. The reengineered Voucher Auditing position will review vouchers to identify errors in processing before checks are signed and released.
4) We do not concur with this finding. The University's Accounts Payable procedure required that Vendors send invoices in duplicate (original and one copy) to the Controller's office. If invoices are mailed to other offices on campus, departments are required to forward the documents to the Controller's office immediately. However, in
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Georgia
Auditee's Corrective Action PLans For the Fiscal Year Ended June 30, 2002
situations where original invoices cannot be located, copies of invoices may be used to effect payment. Such payments will only be made after Accounts Payable personnel verify that they are not duplicate payment.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
Finding Control Number: FA-548-02-03 ALLOWABLE COSTS/COST PRINCIPLES Improper Expenditures Higher Education - Institutional Aid (CFDA 84.031) Questioned Cost: $1,112.00
We do not concur with this finding. In the University's opinion these are allowable expenditures as per 34 CFR 608.4 (a), and (b). Tide III funds were not used to supplement expenditures for activities that are related to carrying out an approved program.
Savannah State University, at the directive of the University System of Georgia, implemented PeopleSoft HRMS and most recently, People Soft Financials. The result was extensive training for this new software. As part of the training, it was necessary to re-evaluate current operating procedures, skill sets and forms utilized. As a result of feedback from all employees involved in the training, members of the HR Department and Payroll collectively developed forms that were formatted to coincide with skills acquired in training. Thus for documents modified as a result of the training, the cost associated was viewed as training related expenses.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
Finding Control Number: FA-548-02-04 ELIGIBILITY SPECIAL TESTS AND PROVISIONS Deficiencies in Student Financial Aid Refund Process Student Financial Aid Cluster Program Questioned Cost: $3,990.81
1) Unearned Title IV funds were not applied to the appropriate student financial aid program for one student, resulting in questioned cost of$234.82.
We do not concur with this finding.
Cited Student The University was responsible for returning $337.82. An unsubsidized loan in the amount of $234.00 was returned on June 5, 2001 and $103.00 was returned on February 21, 2002. All funds were returned on the school's behalf.
Nine students were disbursed Title IV funds greater than the amounts earned resulting in additional questioned cost of $3,755.99.
All of the students identified in the sample fell in the Fall 2000 and Spring 2001 timeframe. These students were reviewed and audited by the U. S. Department of Education. Savannah State University has satisfied any liability within the subsequent year.
According to the Federal Blue Book (34 CFR 668.164), if a student is to return loan funds, he or she repays the amount according to the terms of the promissory note he or she signed. The school is not obligated to return these funds on the student's behalf.
The auditor identified ten students totaling the questioned costs of$3,755.99.
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
1) We do not concur with this finding.
First Cited Student (Fall 2000) The University initially used the incorrect rate to determine the withdrawal percentage. As a result, we returned $1,559.01 to Stafford Loans. Upon reviewing the calculation at the request of the Department of Education during their review, it was noted that the University should have only retuned $718.88. Since the school returned excess funds in the amount of$840.13, this will reduce the student's return portion by this amount. As cited above, the University is not obligated to return loan funds on behalf of the student. Savannah State University has no further financial obligation on this account. We could not determine how the auditor arrived at the return amount of$I,460.55.
2) We do not concur with this finding.
Second Cited Student (Fall 2000) The University's responsibility was to return $1,165.23 back to the Department of Education. The School returned this amount. The amount of $336.39 identified by the auditor was the student's portion and should be paid back according to the terms of the loan agreement by the student. The school has no further financial obligation on this account.
3) We do not concur with this finding.
Third Cited Student (Spring 2001) The University's responsibility was to return $1,112.85 back to the Department of Education. The School returned this amount. The amount of $21. 58 identified by the auditor was the student's portion to return.
4) We do not concur with this finding.
Fourth Cited Student (Spring 2001) The University's responsibility was to return $868.71 back to the Department of Education. The University returned $1,156.40 instead. The amount of$35.32 identified by the auditor was the student's portion.
5) We do not concur with this finding.
Fifth Cited Student (Spring 2001) The University's responsibility was to return $1,024.72 to the Department of Education. The School returned this amount. The amount of$283.04 identified by the auditor was the student's portion.
6) We do not concur with this finding.
Sixth Cited Student (Spring 2001) The University's responsibility was to return $337.82. The Institution returned these funds. The amount of $409.09 identified by the auditor was the student's portion and should be repaid according to the terms of the promissory note.
7) We do not concur with this finding.
Seventh Cited Student (Spring 2001) The University's responsibility was to return $971.04. The Institution returned these funds. The amount of $112.98 identified by the auditor was the student's portion.
8) We do not concur with this fmding.
Eighth Cited Student (Spring 2001)
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
The University's responsibility was to return $678.37. The Institution returned these funds. The amounts of $170.63 and $58.03 identified by the auditor were the student's portion.
9) We do not concur with this finding.
Ninth Cited Student (Spring 2001) The University's responsibility was to return $717.25. The Institution returned these funds. The amount of $96.78 identified by the auditor was the student's portion.
10) We do not concur with this finding.
Tenth Cited Student (Spring 2001) The University's responsibility was to return $1,040.50. The Institution returned these funds. The amount of $771.60 identified by the auditor was the student's portion.
2) Unearned Title IV funds were not applied to the appropriate student financial aid programs within 30 days as required.
We concur with this finding. During the year under review, the University implemented a policy for withdrawals to address the return of funds in a timelier manner. The policy is on file. According to a representative from the Department of Education, the 30-day time limit does not apply to unclaimed return checks.
3) Refund checks were cancelled and reissued after 60 or more days.
According to the Federal Blue Book (Reference 34 CFR 668.165) a school must pay a credit balance directly to a student with fourteen (14) days. We are in compliance with this regulation since the checks have been cut and made available for the student. The University contacted a representative from the Department of Education to verify if a time limit existed to return funds to the Department for outstanding checks. We were informed that the school should continue to try to reach the student on outstanding checks. The funds do not have to be returned until after the term has expired. The funds belong to the student and we should make every effort to deliver them to the student.
I) We concur with finding.
First Noted Student At the time the refund check was cut, the student was due the credit balance on the account. Check date was 8/25/01. Housing and meal charges were posted on 9/11/01. However, the check was not voided until 12/05/01.
2) We do not concur with this finding.
Second Noted Student This refund check cut in the amount of $3,483.74 was issued on 1/15/02 and voided on 1/17/02. However, it was reissued on 1/18/02 and voided again on 1/22/02. A replacement check was cut on 1/22/02 and issued to the student. We would not determine why the auditor stated the check was cut for the wrong amount. All entries appear to be correct and timely.
3) We do not concur with this finding.
Third Noted Student A refund check in the amount of$1,196.12 was cut on 1/15/2002 and voided on 1/18/02. A second refund check was cut on 1/18/02 in the amount of$3,396.12 and voided on 1/22/02. A replacement check was cut on 1/22/02 in the amount of $3,396.12. The check was voided and replaced in a timely manner.
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30,2002
4) We do not concur with this finding.
Fourth Noted Student According to our records, the school was notified that the student withdrew on 2/14/02. This was after the refund check was cut on 1/18/02. The check was never issued to the student and was subsequently voided on 2/6/02. All transactions appear to be timely since they all fell within the same term.
5) We do not concur with this finding.
Fifth Noted Student A refund check in the amount of $1,398.51 was cut on 1/18/02 and voided on 1/28/02. A replacement check was cut on 2/14/02 in the amount of $750.51. This amount reflects an adjustment made to the student's account to reduce his loan disbursement. All transactions were done in a timely manner.
6) We do not concur with this finding.
Sixth Noted Student A refund check in the amount of $1,672.02 was cut on 1/18/02 and cancelled on 1/22/02. A replacement check was cut on 1/22/02. All transactions were done in a timely manner.
7) We concur with this finding.
Seventh Noted Student Original check was cut on 8/25/02 but voided on 2/20/02. A replacement check was cut on 2/28/02. The University has implemented a procedure to handle this situation.
8) We concur with this finding.
Eighth Noted Student Original check was cut on 8/25/01 but voided on 1/9/02. Replacement checks were issued on 1/18/02 and 1/22/02. The University has implemented a procedure to handle this situation.
9) We concur with this finding.
Ninth Noted Student Original check was cut on 1/18/01 and voided on 6/8/01. A replacement check was cut on 8/25/01. The University has implemented a procedure to handle this situation.
10) We concur with this finding.
Tenth Noted Student Checks were not voided and replaced in a timely manner. The University has implemented a procedure to handle this situation.
11) We concur with this finding.
Eleventh Noted Student Checks were not voided and replaced in a timely manner. The University has implemented a procedure to handle this situation.
Procedure: The Cashier makes a list of all checks that have not been picked up after the disbursement date. This list is given to Student Accounts to determine what action should be taken. Information is forwarded to the Cashier to either inform the student that the check is available or to void the check. If the
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Auditee's Corrective Action PLans For the fiscaL Year Ended June 30, 2002
student does not retrieve the check in a timely manner (as stated in the letter or verbal correspondence), the check is voided.
Student Accounts is responsible for voiding the check in Banner and the Cashier is responsible for forwarding the checks to Accounting for further action. An adjustment sheet is prepared by Student Accounts to inform Financial Aid of the appropriate adjustment to be made to the student's account to return the funds.
4) Three refund checks were reissued before the first refund check was cancelled.
We do not concur with this finding. Under the CUFA Accounting System, checks were backdated for end of the month during the monthly closing period. In reference to the three checks cited by the auditor, these checks were voided in September, 2001 and reissued in that same month. However, the check disbursements made through CUFA reflected the month end date of 8/31/02. On the student's account, the checks were not reissued before the original checks were cancelled.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
Finding Control Number: FA-548-02-05 EQUIPMENT AND REAL PROPERTY MANAGEMENT Failure to Maintain a Property Management System Higher Education - Institutional Aid (CFDA 84.031)
We concur with this finding. The University is in the process of updating equipment records to ensure compliance as stated in OMB Circular A-II0 Subpart C 34. The University will follow property management standards as required in Subpart C 34 (t).
The office of Central Receiving and Records management is in the process of revising the University's Procedure for property management. The process will be completed by May 31, 2003.
Contact Person: Elaine Campbell, Controller Telephone: (912) 303-1776; Fax: (912) 353-3188; E-mail: campbele@savstate.edu
STATE UNIVERSITY OF WEST GEORGIA
Finding Control Number: FS-554-02-04 CAPITAL ASSETS Inadequacies in Capital Asset System
The University's assets were converted as a result of the GASB requirements implemented in 2002. It was necessary for the University to do an asset inventory, which was accomplished under a University System contract, by American Appraisal Associates (AAA). We received the asset detail from AAA in August of2002, too late for reconciliation on June 30th . In addition, the University of West Georgia found significant errors in the asset inventory when the detail was supplied to us, and in fact, since the final release of the report we have been working back through their detail and our records to identify variances and correct information. The reconciliation will take time to resolve.
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GEorgia.
Auditee's Corrective Action PLans For the fiscaL Year Ended June 3D, 2002
EAST GEORGIA COLLEGE
Finding Control Number: FS-572-02-02 CAPITAL ASSETS Inadequate Capital Assets Records
We concur with this finding. Capital Assets have been reconciled and errors in capitalization thresholds that were included in the conversion data from American Appraisals Associates have been corrected. Assets that were included in error or not included in the data from the independent appraisal report have been corrected and added or deleted as necessary. The College's Asset Management module now agrees with the Capital Ledger.
FLOYD COLLEGE
Finding Control Number: FS-573-02-04 CAPITAL ASSETS Inadequate Controls Over Capital Assets
We concur with this finding. Reports supporting the requested information have been identified and key personnel have become more familiar with the Asset Management module. Reconciliation of the inventory will be conducted annually.
Contact Person: Wayne Jones, Comptroller Telephone: (706) 295-6344; Fax: (706) 295-6610; E-mail: wjones@f1oyd.edu
ATLANTA TECHNICAL COLLEGE
Finding Control Number: FS-823-02-01 CASH AND CASH EQUIVALENTS REVENUES/RECEIVABLESIRECEIPTS EXPENDITURES/LIABILITIESIDISBURSEMENTS INVENTORIES CAPITAL ASSETS Inadequate Accounting Procedures
We concur with this finding. 1) Cash and Cash Equivalents a) Monthly preparation of bank reconciliation ensures reconciling items are being cleared in a timely manner for all accounts.
b) We have changed our banking procedures to ensure timely notification.
c) Procedure has been implemented to limit control over access to the activation key as well as the signature plate.
2) Revenue/Receivables/Receipts a) Procedures are now in place to ensure we have adequate documentation of all receivables and that write offs are explained.
b) The processes used in the Financial Aid Office has been changed to facilitate the reconciliation process. A quarterly reconciliation procedure has been implemented for BannerJPeopleSoft. Daily receipts from the Banner system can be verified as entered on the daily PeopleSoft Accounting Entry Information Report and the Cash Receipts Journal Report.
c) As noted in 2b above, daily revenue is recorded in Banner and posted in PeopleSoft. Daily receipts are recorded by date and entered in the appropriate accounting period.
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
d) Procedures used for handling mail have been expanded to incorporate a detail log of checks received.
3) Expenditures/Liabilities/Disbursements Procedures are in place to verify the three-way match (purchase order, invoice, receiving report) prior to issuance of all checks.
4) Inventories A quarterly inventory reconciliation for resale items has been implemented. A budget line item has been incorporated to record the cost of sales.
5) Capital Assets Effective procedures are in place for ensuring new equipment items are tagged and recorded appropriately on inventory. An annual physical inventory system has been implemented and progress is being made toward improving the accuracy of equipment inventory.
Contact Person: Marion Davis-Barnett, Vice President of Administrative Services Telephone: (404) 756-3711; Fax: (404) 756-0932; E-mail: mbarnett@admin1.atlanta.tec.ga.us
DEKALB TECHNICAL COLLEGE
Finding Control Number: FS-830-02-01 CASH AND CASH EQUIVALENTS INVENTORIES GENERAL LEDGER CAPITAL ASSETS Deficiencies in Accounting Procedures
We concur with this finding.
Cash and Cash Equivalents a) The monthly bank accounts for Fy'02 have now been reconciled. The Comptroller has divided the responsibilities for each bank account and reconciliation; and has taken steps to assure that all bank accounts are reconciled in a timely manner,
b) Procedures have been put into place by the Comptroller to assure that adequate controls and procedures related to Bookstore buy-back cash (referred to here as petty cash) are followed.
Inventories Procedures are now in place to take a Bookstore inventory on a quarterly basis; along with more timely entry into the PeopleSoft General Ledger system.
General Ledger The Comptroller has reaffirmed procedures to ensure that posting errors to the local service account do not take place.
Capital Assets The local inventory is being reconciled with the PeopleSoft Asset management inventory. An audit by an outside company will be performed this year and any resultant adjustments made to ensure that the local inventory is reconciled to the PeopleSoft Asset Management inventory.
Contact Person: John Buell, Comptroller Telephone: (404) 297-9522, ext. 2123; Fax: (404) 298-3614; E-mail: buellj@dekalbtech.org
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Auditee's Corrective Action PLans For the fiscaL Year Ended June 30, 2002
GEORGIA HIGHER EDUCATION ASSISTANCE CORPORATION
Finding Control Number: FS-918-02-01 GENERAL LEDGER Inadequate Accounting Procedures
The instances noted occurred in fiscal 2001 and were corrected in fiscal 2002. Procedures are currently in place to prevent issues like these from reoccurring.
Contact Person: Herman Cox, Assistant Director of Accounting Services Telephone: (770) 724-9108; Fax: (770) 724-9101; E-mail: hermanc@mail.gsfc.state.us
Finding Control Number: FA-918-02-02 REPORTING Inaccurate Data Submitted to ED
The instances noted occurred in fiscal 2001 and were corrected in fiscal 2002. Procedures are currently in place to prevent issues like these from reoccurring.
Contact Person: Herman Cox, Assistant Director of Accounting Services Telephone: (770) 724-9108; Fax: (770) 724-9101; E-mail: hermanc@mail.gsfc.state.us
STATE ROAD AND TOLLWAY AUTHORITY
Finding Control Number: FS-927-02-01 ACCOUNTING CONTROLS Inadequate Controls Over Cruise Card Information
We concur with this finding. We have implemented new procedures to assure the cruise card patrons' confidential information is restricted to those designated individuals who have a need to process the changes of the credit card information to patrons' accounts. The fax machine is monitored during the day by the supervisor of that department. At the close of business, the machine is turned off to prevent the receipt of cruise card patron confidential information while a supervisor is not present.
To assure the cruise card patrons' applications are secured and only accessible by designated employees, the applications are entered into the system once they have been received, then stored in a locked file cabinet which is only accessible by a supervisor or a manager.
Contact Person: Terry Rogers, Tollway Administrator Telephone: (404) 760-5892; Fax: (404) 266-3045; E-mail: trogers@georgiatolls.com
Finding Control Number: FS-927-02-02 REVE}..'UES/RECEIVABLES/RECEIPTS Deficiencies in the Collection and Recording of Cash Tolls (F.J. Torras Causeway)
We concur with this finding. The State Road and Tollway Authority (the "Authority") expects the results ofa study of the F.J. Torras Causeway to be delivered in the latter part of May, 2003. This study evaluates a number of alternatives including the installation of collection systems similar to those at the GA 400 Extension or the removal of the toll altogether. The Authority is also evaluating the impacts of HB 503 which issues a decal for passage over the Causeway issued with the license tag decal to residents of Glynn County.
Contact Person: John Leonard, Interim Executive Director Telephone: (404) 463-8770; Fax: (404) 463-8769; E-mail: jleonard@georgiatolls.com
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Auditee's Corrective Action PLans For the fiscaL Year Ended June 30,2002
Finding Control Number: FS-927-02-03 REVENUESiRECEIVABLES/RECEIPTS Inadequate Accounting Procedures
We concur with this finding. To assure the credit card processing function is safeguarded, several procedures were implemented. At present, the Authority stopped all refunds made to credit cards. Refund checks are issued when the patron's credit card has expired or changed. This will preempt any refunds to credit cards which are not on the system as the patron's credit card of record. The computerized system is being enhanced to limit a credit card refund to a patron's credit account of record. The system enhancements should be in place by September 2003.
Contact Person: Guy Johnson, Accounting Director Telephone: (404) 760-5887; Fax: (404) 266-3045; E-mail: gjohnson@georgiatolls.com
Finding Control Number: FS-927-02-04 EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequate Accounting Procedures
We concur with this finding. The State Road and Tollway Authority proposes an independent review of the processes of the Georgia Department of Transportation to document their project invoicing procedures. The results of this review will allow the Authority to establish written policies and procedures to ensure payments are made for approved transportation projects.
Contact Person: Dan Guimond, Treasurer Telephone: (404) 463-8765; Fax: (404) 463-8769; E-mail: dguimond@georgiatolls.com
GEORGIA TECHNOLOGY AUTHORITY
Finding Control Number: FS-980-02-01 EXPENSES/LIABILITIES/DISBURSEMENTS Inadequate Accounting Procedures
GTA concurs with the finding with a few clarifications.
Item #1 - The Authority has implemented procedures so that documentation for any vendor invoice is maintained and reviewed by both the Telecommunications and Financial divisions in a consistent manner. Examples of supporting documentation reviewed and kept may include vendor timesheets, vendor quotes, vendor scope of work descriptions and vendor invoices as well as GTA originated requests for work, approvals to proceed, change order documentation, completion acceptance and customer billing.
GTA has corrected the weakness of allowing the vendor to bill block hours. Block time is no longer allowed to be ordered or billed under the current contract. All service requests are for defined projects with clear, concise statements of work to be performed for specific customers.
Item #2 - GTA has implemented multiple signature requirements across the Telecommunications and Financial divisions that will insure that the processes are consistently followed for customer orders, internal and external cost proposals, application of administrative overhead and assessment of service order fees to insure that only authorized work is performed appropriately by vendors and accurately invoiced to the state. The level of detail provided in customer proposals is normally done at a summary level. However, if the customer requests additional detail it is provided. This detail may include specific materials and their quantities, labor hours specified by skill level and administrative overhead costs.
The process begins with a written request for work submitted by a customer agency. The request must be reviewed and countersigned by managers in two sections indicating acknowledgement of a formal request. This counter signature requirement follows each documentation stage of the project. For example, countersignatures are required for:
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
Site visit requests Validation of vendor quote and scope of work Memorandums to proceed Project completion and acceptance of work performed Invoice validation and approval for payment Internal review of proj ect file for closure
Prior to payment of the vendor invoice in Accounts Payable, the GTA Billing Office reviews certain project documentation before submitting its release of payment approval. No invoices are paid until these steps have been acknowledged in writing.
Bulk materials do not exist as a valid line item in the contract and are not allowed to be ordered or invoiced as such. All material components used must be individually listed and costed on the vendor invoice. Only two situations exist where the vendor will provide materials under the existing contract.
Repair - Cable plant repair is typically outside aerial or underground facilities or riser transport between floors. Breeches of these facilities usually cause widespread outages that must be addressed on an emergency basis. They can involve backhoes, expensive splice closures and conduit repair. These are not services that are in the best interest ofthe state to provide in-house.
Specific large projects with well-defined and documented scope to include a timeline and logistics that preclude a separate materials provisioning approach due to a significant increased risk to the project. Use of this "turnkey" provision must be approved by the CNO or her Executive Analyst.
Item # 3 - Procedures have been implemented to cross reference vendor invoices to projects in the billing system so that this information can be compared. A request has been submitted to the Financial System Services group to add functionality to the PRISM billing system to add query capability on the GTA job #. The profitability of any particular project is maintained on a project-by-project basis within the Telecommunications Division. All direct costs are accumulated on each and every project and passed to customer agencies with specific product and service detail, cost and appropriate mark up. This includes direct labor for technicians and materials. Materials may be purchased specifically for a project or pulled from shelf stock. In either case, an itemized materials list is kept in the project file. All other overhead is captured in the administrative fee for each project.
GTA's formal naming convention has been in place since the inception of the state providing cabling services in the 90s, but was not followed in the time period audited by certain individuals in the Atlanta Region. The multiple signature process across divisions that has been implemented will not allow for the naming convention to be distorted. GTA's Accounts Payable has implemented the use of the GTA Project Job number by entering it in Phoenix as a cross reference to the project in GTA's billing system.
Procedures for cable and/or wiring projects were documented on March 4, 1999 and since that time, additional flowcharting of these procedures has taken place. Most recently this process was re-examined for accuracy and to require additional validation points in January, 2003. Training was provided for all affected GTA staff in February, 2003. The most current changes to this procedure have been fully flow-charted and are currently in use in both the Telecommunications and Financial Divisions ofGTA.
Contact Person: Sherrie Southern, Director of Financial Systems Telephone: (404) 463-2344; Fax: (404) 463-5089; E-mail: ssouthem@gta.ga.gov
Finding Control Number: FS-980-02-02 CAPITAL ASSETS Inadequacies in Operation of Asset Management Module
We concur with this finding. However, there are issues with the responsibility of the corrective actions. Financial Systems concur with the system related errors and is responsible for providing the Asset Management Module for use by 70+ state
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Auditee's Corrective Action Plans For the Fiscal Year Ended June 30, 2002
entItles. It is not the responsibility of Financial Systems to control either how an entity uses the system or if the entity completes the reconciliation process. Financial Systems provides assistance and recommendations for the reconciliation process only. The response to this finding describes several events put in place for Financial Systems in supporting the Asset Management Module and several events in process.
Notified Department of Audits in August 2002 to make them aware of issues identified and to request assistance.
Financial Systems task force established to address issues. Task force included hiring of a consultant with expertise in AM reconciliation and the PeopleSoft AM module. Also included Department of Audits.
Panel changes implemented in AM module to stop erroneous entries by users.
AM reconciliation procedures analyzed, modified and provided to users.
Procedures for running scripts by Financial Systems staff implemented with proper approval and testing required prior to running.
Mass change process stopped until detailed analysis is completed.
Journal lines deleted erroneously reinstated as part of data clean up.
Over $300 million in out of balance conditions corrected in data clean up process to date.
Transfers created out of balance condition due to one-line entries. Data clean up related to transfers completed. System corrected to eliminate one-line entries on transfers of assets.
Department of Audits query joined two tables to verify ledger data. However, the two tables were not correctly joined resulting in erroneous query results. Documentation provided to Department of Audits identifying acrual remaining out of balance amounts of$282,588.68.
$282,588.68 out of balance conditions remaining. Data clean up in process. Contact Person: Sherrie Southern, Director of Financial Systems Telephone: (404) 463-2344; Fax: (404) 463-5089; E-mail: ssouthern@gta.ga.gov
METROPOLITAN REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8564-02-01 CAPITAL ASSETS Failure to Maintain Capital Assets We concur with this finding. All assets and inventories are maintained in the appropriate software provided by the DOE designed for iliat purpose. Appropriate controls are in effect to maintain all assets and inventories. At the end of the FY03 fiscal year, the capital assets will be maintained within the formal accounting records in compliance with accounting principles. Contact Person: Charlene Williams, Accounting Manager Telephone: (404) 352-2697; E-mail: charlene@mresa.org
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Auditee's Corrective Action PLans For the Fiscal Year Ended June 3D, 2002
WEST GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8604-02-01 CAPITAL ASSETS Failure to Maintain Capital Assets
West Georgia RESA concurs with this finding as stated in the FY02 Audit report. Weare in the process of implementing Capital Assets/Property Management into the accounting records. We should have this fully implemented with the FY2003 Financial Report.
Contact Person: Larry Davis, Executive Director Telephone: (770) 583-2528; Fax: (770) 583-3223
OCONEE REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8664-02-01 CAPITAL ASSETS Failure to Maintain Capital Assets
We concur with this finding. The following information shows our corrective action plan for all audit findings and improper or questioned costs:
The management of capital assets is presently being put into place at Oconee RESA. With access to software provided by GDOE, Oconee RESA will have the proper accounting function that will bring our accounting procedures into conformity with Generally Accepted Accounting Principles. Oconee RESA has always maintained an inventory database to record capital assets owned by Oconee RESA with date acquired, acquisition cost, estimated replacement cost, location and description.
Date ofImplementation: Presently preparing installation of FASGov software and input of information to be complete by June 30, 2003.
Contact Person: Frieda Brinson, Business Manager Telephone: (478) 552-5178; ext 227; Fax: (478) 552-0446; E-mail: fbrinson@doe.k12.ga.us
CHATTAHOOCHEE-FLINT REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8724-02-01 CAPITAL ASSETS Failure to Maintain Records for Capital Assets
We concur with this finding. We have contracted with the Valuation Advisory Group, Inc. to handle our Fixed Assets Account. This group is scheduled to be in our office the week of May 12 - 16 to work on this. We have an inventory of equipment by individual office prepared for him. We will determine at this time whether to go with a $1000 or $5000 Inventory Threshold.
The above mentioned actions should eliminate this finding in the FY03 Audit and future audits.
Contact Person: Meredith Walker, Executive Director Telephone: (229) 937-5341; Fax: (229) 937-5754
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Auditee's Corrective Action PLans For the Fiscal Year Ended June 30, 2002
HEART OF GEORGIA REGIONAL EDUCATIONAL SERVICE AGENCY
Finding Control Number: FS-8764-02-01 CAPnAL ASSETS Failure to Maintain Records for Capital Assets Due to current staffing limitations and budgetary considerations prohibiting the hiring of additional administrative staff, the Board has been unable to pursue the recording of capital assets on the financial statements. We have contacted the Glick Consulting Group and were told that at this point the Heart of Georgia RESA is not required to maintain these records. As funding becomes available, the Heart of Georgia RESA will attempt to maintain the capital assets inventory within the accounting records. Contact Person: June D. Bradfield, Eds.S., Executive Director Telephone: (478) 374-2240; Fax: (478) 374-2240
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Listing of OrganizationaL Units Comprising the State of Georgia Reporting Entity For the Fiscal Year Ended June 30, 2002
ORGANIZATIONAL UNIT
Administrative Services, Department of Agricultural Exposition Authority, Georgia Agriculture, Department of Agrirama Development Authority, Georgia Audits and Accounts, Department of (*) Aviation Hall of Fame, Georgia Banking and Finance, Department of Building Authority, Georgia
Regular (*) Hospital (*) Markets (*) Penal (*) Community Affairs, Department of Community Health, Department of (*) Correctional Industries Administration, Georgia Corrections, Department of Defense, Department of Development Authority, Georgia (*) Education, Department of Education Authority, Georgia Schools (*) University (*) Environmental Facilities Authority, Georgia (*) Financing and Investment Commission, Georgia State (*) Forestry Commission, State Games Commission, Georgia State General Assembly, Georgia (*) Golf Hall of Fame Authority, Georgia Golf Hall of Fame, Georgia Governor, Office of the Higher Education Assistance Corporation, Georgia (*) Higher Education Savings Plan, Georgia (*) Highway Authority, Georgia Housing and Finance Authority, Georgia (*) Human Resources, Department of Industry, Trade and Tourism, Department of Insurance, Department of International and Maritime Trade Center Authority (*) Investigation, Georgia Bureau of Jekyll Island State Park Authority Judicial Branch Juvenile Justice, Department of Labor, Department of Lake Lanier Islands Development Authority Law, Department of Lottery Corporation, Georgia (*) Motor Vehicle Safety, Department of Music Hall of Fame Authority, Georgia Natural Resources, Department of North Georgia Mountains Authority

CONTROL NUMBERS
403 926 402 940 404 483 406
900 903 904 905 428 419 921 467 411 914 414
906 907 928 409 420 496 445 975 958 422 918 986 924 923
427
429 408 974 471 910 430 461 440 913 442 973 475 929 462 912

(*) Audits of these organizational units performed in whole or in part by other auditors.
AP - 3

Listing of Organizational Units Comprising the State of Georgia Reporting Entity For the Fiscal Year Ended June 30,2002
ORGANIZATIONAL UNIT
OneGeorgia Authority Pardons and Paroles, State Board of Pension Funds
Class Nine Fire Department Pension Fund, Georgia Employees' Retirement System of Georgia (*)
Regular Defined Contribution Plan, Georgia District Attorneys Retirement Fund of Georgia Judicial Retirement System, Georgia Legislative Retirement System, Georgia Public School Employees Retirement System State Employees' Assurance Department Superior Court Judges Retirement Fund of Georgia Firefighters' Pension Fund, Georgia Judges of the Probate Courts Retirement Fund of Georgia Peace Officers' Annuity and Benefit Fund Sheriffs' Retirement Fund of Georgia Superior Court Clerks' Retirement Fund of Georgia (*) Teachers Retirement System of Georgia (*) Personnel Board, State - Merit System of Personnel Administration Ports Authority, Georgia (*) Public Safety, Department of Public Service Commission Public Telecommunications Commission, Georgia Rail Passenger Authority, Georgia Regents of the University System of Georgia, Board of Colleges and Universities Research Universities
Georgia Institute of Technology (*) Georgia State University Medical College of Georgia University of Georgia (*) Regional Universities Georgia Southern University Valdosta State University State Universities Albany State University Armstrong Atlantic State University Augusta State University Clayton College and State University Columbus State University Fort Valley State University Georgia College and State University Georgia Southwestern State University Kennesaw State University North Georgia College and State University Savannah State University Southern Polytechnic State University State University of West Georgia

CONTROL NUMBERS
981 465
983
416 N/A 946 N/A N/A 468 N/A 945 950 949 947 951 948 482 460 916 466 470 977 960
472
503 509 512 518
539 551
521 524 527 528 530 533 536 542 543 545 548 550 554

(*) Audits of these organizational units performed in whole or in part by other auditors. AP-4

Listing of OrganizationaL Units Comprising the State of Georgia Reporting Entity For the Fiscal Year Ended June 30, 2002
ORGANIZATIONAL UNIT
Colleges and Universities (continued) Associate Degree Colleges Abraham Baldwin Agricultural College Atlanta Metropolitan College Bainbridge College Coastal Georgia Community College Dalton State College Darton College East Georgia College Floyd College Gainesville College Georgia Perimeter College Gordon College Macon State College Middle Georgia College South Georgia College Waycross College Other Georgia Military College Skidaway Institute of Oceanography
Regional Educational Service Agencies Central Savannah River Area Regional Educational Service Agency Chattahoochee-Flint Regional Educational Service Agency Coastal Plains Regional Educational Service Agency First District Regional Educational Service Agency Griffm 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
Regional Transportation Authority, Georgia Removal of Hazardous Materials, Agency for Revenue, Department of Road and Tollway Authority, State Sapelo Island Heritage Authority School Readiness, Office of Secretary of State Seed Development Commission, Georgia Soil and Water Conservation Commission, State Southwest Georgia Railroad Excursion Authority Sports Hall of Fame Authority, Georgia Stone Mountain Memorial Association (*) Student Finance Authority, Georgia (*)

CONTROL NUIVlBERS
557 561 562 563 569 570 572 573 575 571 576 581 584 587 589
968 593
8684 8724 8864 8804 8624 8764 8564 8644 8524 8584 8504 8664 8884 8544 8844 8604 976 497 474 927 942 469 478 919 480 984 944 911
917

(*) Audits of these organizational units performed in whole or in part by other auditors.
AP-5

Listing of Organizational Units Comprising the State of Georgia Reporting Entity For the Fiscal Year Ended June 30,2002
ORGANIZATIONAL UNIT
Student Finance Commission, Georgia Subsequent Injury Trust Fund Superior Court Clerks' Cooperative Authority, Georgia (*) Technical and Adult Education, Department of
State Technical Colleges Albany Technical College Altamaha Technical College Appalachian Technical College Athens Technical College Atlanta Technical College Augusta Technical College Central Georgia Technical College Chattahoochee Technical College Columbus Technical College Coosa Valley Technical College DeKalb Technical College East Central Technical College Flint River Technical College Georgia Aviation Technical College Griffin Technical College Heart of Georgia Technical College Lanier Technical College Middle Georgia Technical College Moultrie Technical College North Georgia Technical College North Metro Technical College Northwestern Technical College Ogeechee Technical College Okefenokee Technical College Sandersville Technical College Savannah Technical College South Georgia Technical College Southeastern Technical College Southwest Georgia Technical College Swainsboro Technical College Valdosta Technical College West Central Technical College West Georgia Technical College
Technology Authority, Georgia Tobacco Community Development Board, Georgia Transportation, Department of Treasury and Fiscal Services, Office of Veterans Service, Department of Workers' Compensation, State Board of World Congress Center Authority, Geo. L. Smith II, Georgia

CONTROL NUMBERS
476 489 955 415
820 821 840 822 823 824 835
827
828 829 830 825 847 816 831 833 834 836 837 838 839 849 844 818 817 841 842 843 846 845 848 826 819 980 978 484 486 488 490 922

(*) Audits of these organizational units performed in whole or in part by other auditors. AP-6