Management report, Department of Administrative Services, an organizational unit of the state of Georgia, year ended June 30, 2001

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DEPARTMENT OF ADMINISTRATIVE SERvICES

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MANAGEMENT REPORT

-TABLEOFCONTENTS-

LETTER OF TRANSMITTAL

SECTION I

SELECTED FINANCIAL INFORMATION

EXHffiITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGET FUND

1

B SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

3

C SCHEDULE OF REVENUES, EXPENDITURES AND

CHANGES IN FUND BALANCES

SELF-INSURANCE TRUST FUNDS

4

D RECONCILIATION OF SALARIES AND TRAVEL

6

SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS ..sUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street. S.w., Suite 214 Atlanta, Georgia 30334-H400
January 25,2002

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia
and Honorable Dana R. Russell, Commissioner Department of Administrative Services
Ladies and Gentlemen:
As part ofour audit ofthe statutory basis financial statements ofthe State ofGeorgia presented in the State ofGeorgia Report ofthe State Auditor, the general purpose financial statements ofthe State of Georgia presented in the State ofGeorgia Comprehensive Annual Financial Report, and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 2001, we have performed certain audit procedures at the Department of Administrative Services. Accordingly, the financial statements and compliance activities of the . Department ofAdministrative Services were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of the Department of Administrative Services as of and for the year ended June 30, 2001. The particular information provided is enumerated in the Table of Contents.
This report is intended solely for the information and use of management of the Department of Administrative Services and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~~ Russell W. Hinton State Auditor
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SECTION I SELECTED FINANCIAL INFORMATION

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DEPARTMENT OF ADMINISTRATIVE SERVICES ANALYSIS OF CHANGES IN:,FUND BALANCE BUDGET FUND YEAR ENDED JUNE 30, 2001

EXHIBIT "An

~ FUND BALANCE -,JUNE 30. 2001
SUMMARY OF FUND BALANCE Reserved Surplus Property Working Capital State Federal Inventories Federal Cost Allocation Overbill State Purchasing Recycle Program Alternative Fuel Program Governor's Mentor Protege Program Allowance for Doubtful Accounts
Surplus
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$ 15,143,516.51
$ 1,993,855.24 446,962.37
2,255,225.09 1,093,937.00
33,440.45 52,000.00 30,000.00 8,492,552.36 $ 14,397,972.51 745,544.00
$ 15,143,516.51

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DEPARTMENT OF ADMINISTRATIVE-SERVICES SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES

EXHIBIT "B"

COMPARED TO BUDGET.

BUDGET FUND

YEAR ENDED JUNE 30, 2001

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Rents and Maintenance Expense , Direct Payments to Georgia Building Authority
for Capital Outlay Direct Payments to Georgia Building Authority
for Operations Telephone Billings Radio Billings Materials for Resale Public Safety Officers Indemnity Fund Health Planning Review Board Operations Payments to Aviation Hall of Fame Payments to Golf Hall of Fame Alternative Fuels Grant Payments to Georgia Technology Authority Payments for Hazardous Materials Removal Distance Learning Grants Year 2000 Project
Excess of Funds Available over Expenditures

$ 301 ,198,596.00 $ 263,641,290.18 $ -37,557,305.82

$ 66,916,618.00 $ 14,931,339.00 613,171.00 902,171.00 4,030,945.00 2,526,010.00 . 4,423,116.00 460,283.00 48,205,668.00 26,637,870.00

62,355,033.40 $ 12,394,708.52
426,213.02 577,856.00 1,257,324.94 876,879.64 4,359,151.76 336,488.66 39,782,853.51 21,085,225.72

650,000.00

650,000.00

598,884.00 89,537,714.00
683,484.00 27,599,840.00
496,375.00 35,000.00 48,500.00 75,000.00
882,900.00 7,783,527.00
100,000.00 79,072.00
2,981,109.00

598,884.00 89,070,151.12
558,681.19 11,960,211.38
496,375.00 20,923.79 48,500.00 75,000.00 76,097.00
7,783,527.00 100,000.00 50,142.28
2,789,969.63

4,561,584.60 2,536,630.48
186,957.98 324,315.00 2,773,620.06 1,649,130.36
63,964.24 123,794.34 8,422,814.49 5,552,644.28
0.00
0.00 467,562.88 124,802.81 15,639,628.62
0.00 14,076.21
0.00 0.00 806,803.00 0.00 0.00 28,929.72 191,139.37

$ 301,198,596.00 $ 257,730,197.56 $ 43,468,398.44

$ 5,911,092.62 $ ===5=,9=11=,0=:;9=2;,;;.6;;.2 -3-

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DEPARTMENT OF ADMINISTRATIVE SERVICES SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
SELF-INSURANCE TRUST FUNDS YEAR ENDED JUNE 30, 2001

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EXHIBit "CO

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WORKERS' COMPENSATION
FUND

STATE

INDEMNIFICATION

.

FUND

UNEMPLOYMENT COMPENSATION
FUND

TOTAL

$ 78,786,431.50 $ $ 78,786,431.50 $
9,499,574.67 $ 88,286,006.17 $

5,496,375.00 $ 5,496,375.00 $
76,396.96 5,572,771.96 $

$ 3,004,233.00

1,647,379.00 6,025,154.00
838,193.64 758,442.00 3,863,253.00
-269.00 87,287,039.50

3,004,233.00 $ 100,419,192.14

378,366.89

375.25 29,307,353.95

3,382,599.89 $ 129,726,921.34

$

4,339,569.13

3,594,556.73

$ _---.:.7.L;:,9;=.34..:.J.,.:.,:12::=5.:.::.8=6

$ 10,930,254.47
3,594,556.73 4,538,490.50
$ 19,063,301.70

$

$

741,793.43

21,895,760.33

9,547,729.15

13,161.66

4,928,105.75

1,486,941.76

7,218,067.18

943,467.42

$ 46,775,026.68 $

$ 54,709,152.54 $

$ 33,576,853.63 $

129,193,073.96

$ 1,037,877.96
1,037,877.96 $ 1,037,877.96 $ 4,534,894.00 $
840,422.01

3,417,884.93 $

31,051,100.75 1,037,877.96 741,793.43
21,895,760.33 9,547,729.15 13,161.66 4,928,105.75 1,486,941.76 7,218,067.18 943,467.42

3,417,884.93 $ 78,864,005.39

3,417,884.93 $ 97,927,307.09

-35,285.04 $ 31,799,614.25

5,029,108.10 411,166,094.98

$ 162,769,927.59 $

5,375,316.01 $

4,993,823.06 $ 442,965,709.23 - 5-

DEPARTMENT OF ADMINISTRATIVE SERVicES RECONCILIATION OF SALARIES AND TRAVEL
YEAR ENDED JUNE30, 200,1

EXHIBIT"D"

Totals per Annual Supplement

Accruals June 30, 2001

Adjustments Barber, Cain, Cloud, Davis, Harrison, Hazelton, Henderson, Johnson, Keller, Redus,

Byron James Joanne Janese Gregory Martha Elizabeth Denise Erica Brenda

SALARIES

TRAVEL

$ 45,637,976.94 $ 425,928.67

70,687.10

5.50 8.00 6.25 10.00 79.50 102.60 12.00 11.50 14.00 35.00

$ 45,708,664.04 $ 426,213.02

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SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF ADMINISTRATIVE SERVICES AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-401-99-01 FS-401-00-01

Further Action Not Warranted Unresolved - See Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-401-00-01

The following measures have been initiated:

(1) Property coordinators have been identified and trained within each entity/location.

(2) Full physical inventory was taken in the first quarter ofFY 2000.

(3) The monthly reconciliations of the Asset Management System are prepared monthly.

(4) Additions and deletions to inventory have been made based on physical count.

(5) Procurement identifies capital assets at the initiation ofthe procurement process.

(6) Updated department policies and procedures draft was issued in FY 2001.

(7) Updated information into the new Asset Management System for GTTS, Property and Radio Inventories. Currently updating the MIS inventory system to the new Asset Management System with a pr~jected completion date of FY 2002.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF ADMINISTRATNE SERVICES SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-401-01-01
Our examination included a review ofthe internal accounting controls utilized by the Department of Administrative Services in maintaining their State Property System and also included testing the system for compliance with State laws and regulations.
Qne-thousand-six-hundred-seventy-one (1,671) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of $1 0,784,227.13 out of a population of $79,199,673.80 and were selected for the purpose oflocating the equipment as recorded in the inventory records. The following deficiencies were noted:
(1) Four-hundred-sixty (460) items totaling $1,359,710.59 could not be located.
(2) Seventeen (17) items totaling $240,095.91 were surplused, but were not removed from the equipment inventory records.
Also, during the physical inspection testing, seventeen (17) items ofequipment were located which were not included in the equipment inventory records.
The Department is required to maintain equipment inventories in accordance with provisions ofState 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.