Management report, Department of Agriculture, an organizational unit of the state of Georgia, year ended June 30, 2004

STATE OF GEORGIA
DEPARTMENT OF AUDITS AND ACCOUNTS
Russell W. Hinton State Auditor
MANAGEMENT REPORT DEPARTMENT OF AGRICULTURE AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 2004

DEPARTMENT OF AGRICULTURE MANAGEMENT REPORT -TABLE OF CONTENTS-

LETTER OF TRANSMITTAL

SECTION I

SELECTED FINANCIAL INFORMATION

EXHIBITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGET FUND

1

B SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

2

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF AUDITS AND ACCOUNTS

254 Washington Street, S.W., Suite 214

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

Atlanta, Georgia 30334-8400

September 16, 2005
Honorable Sonny Perdue, Governor Members of the General Assembly of Georgia
and Honorable Thomas T Irvin, Commissioner Department of Agriculture
Ladies and Gentlemen:
As part of our audit of the statutory basis financial statements of the State of Georgia presented in the State of Georgia Report of the State Auditor, the basic financial statements of the State of Georgia presented in the State of Georgia 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, 2004, we have performed certain audit procedures at the Department of Agriculture. Accordingly, the financial statements and compliance activities of the Department of Agriculture were examined to the extent 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 controls 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 Agriculture as of and for the year ended June 30, 2004. 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 State of Georgia and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:mmr

SECTION I SELECTED FINANCIAL INFORMATION

DEPARTMENT OF AGRICULTURE ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND YEAR ENDED JUNE 30. 2004

EXHIBIT "A"

FUND BALANCE - JULY 1, 2003 Reserved Surplus
ADDITIONS Excess of Funds Available over Expenditures Exhibit "B" Prior Year's Checks Voided
DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 2003 Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCE - JUNE 30, 2004
SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance Dog and Cat Sterilization Fund Royalties and License Fees Vidalia Onions
Surplus

$

1,320,607.89

275,147.16

$

1,595,755.05

$

1,724,602.55

3,496.05

$

1,728,098.60

$

275,147.16

1,320,607.89

$

1,595,755.05

$ =======1,=72=8==,0=9=8.=6=0

$

826,431.74

296,821.64

540,258.39

$

1,663,511.77

64,586.83

$

1,728,098.60

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DEPARTMENT OF AGRICULTURE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30. 2004

EXHIBIT uB"

FUNDS AVAILABLE REVENUES
State Appropriation Federal Revenues Other Revenues Retained
CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 41,230,794.00 $ 41,230,794.00 $

7,768,798.00

7,619,382.86

4,569,930.00

5,078,304.53

$ 53,569,522.00 $ 53,928,481.39 $

0.00 -149,415.14 508,374.53
358,959.39

0.00

1,320,607.89

1,320,607.89

$ 53,569,522.00 $ 55,249,089.28 $ _ _--.:.1,_67_9...:...,5_6_7._28_

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem and Fees Contracts Market Bulletin Postage Payments to Athens and Tifton Veterinary Laboratories Poultry Veterinary Diagnostic Laboratories in Canton,
Dalton, Douglas, Oakwood, Statesboro, Carroll, Macon, Mitchell, and Monroe Veterinary Fees Indemnities Advertising Contract Renovation, Construction, Repairs and Maintenance Projects at Major and Minor Markets Contract-Federation of Southern Cooperatives

$ 32,639,946.00 $ 4,348,043.00 1,131,669.00 443,419.00 493,204.00 752,727.00 1,198,343.00 454,769.00 299,016.00 1,922,219.00 566,619.00 3,357,556.00
3,042,091.00 144,312.00 10,000.00 425,000.00
2,301,589.00 39,000.00

32,691,048.71 $ 4,276,509.06 1,150,246.32 442,630.46 493,713.82 758,355.65 1,162,127.89 459,909.96 293,914.87 1,919,536.01 566,619.00 3,357,556.00
3,042,091.00 142,239.50 2,400.00 424,999.96
2,301 ,588.52 39,000.00

-51,102.71 71,533.94 -18,577.32
788.54 -509.82 -5,628.65 36,215.11 -5,140.96 5,101.13 2,682.99
0.00 0.00
0.00 2,072.50 7,600.00
0.04
0.48 0.00

$ 53,569,522.00 $ 53,524,486.73 $

4_5..:....,0_3_5._27_

Excess of Funds Available over Expenditures

$

1,724,602.55 $ ==1=,7=2==.4=,6::::::02:=.:.==55==

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

DEPARTMENT OF AGRICULTURE AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2004

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-402-03-01

Partially Resolved

The finding has been partially resolved. With the cooperation of the State Properties Commission, the Department has contracted with an MAl Certified Appraiser in order to ascertain historical cost of land and buildings. To date, metro Atlanta appraisals which represent approximately 550/0 of the total have been completed. We expect to have data on the remaining 25 counties completed prior to June 30, 2005.

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SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF AGRICULTURE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2004

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EMPLOYEE COMPENSATION Extraordinary Achievement Incentive Awards Finding Control Number: FS-402-04-01

Condition: Criteria:
Information:

On June 15, 2004, the Department of Agriculture provided incentive payments to 174 of its 711 employees. Our examination of these payments revealed that documentation in support of the majority of the payments was inadequate to adequately ascertain compliance with State statutes and policies of the Georgia Merit System and the Department of Agriculture.
The Official Code of Georgia Annotated (OCGA) Title 45, Chapter 21 provides statutory authority for implementation of employee incentive award and compensation programs subject to review by the State Personnel Board. OCGA Section 45-21-2(b) states, in part, as follows:
"The board may establish incentive award programs for agencies for:
(1) Employees who perform a special, extraordinary service, act, or achievement in the pUblic interest, beyond the ordinary demands of duty, and in connection with or related to state government or its instrumentalities."...
Implementing regulations adopted by the State Personnel Board are codified at Section 17.1000, Incentive Compensation and Awards Programs, Rules of the State Personnel Board.
Section 17.1000 of the Rules of the State Personnel Board provides minimum guidelines and procedures for the development and administration of an Extraordinary Achievement Incentive Awards program. Paragraph 17.1004.6 states:
"The Extraordinary Achievement Incentive Award shall be used to recognize an individual state employee or a team of state employees that goes beyond the normal demands of the job by: (06-26-03/08-19-03) a. Finding a new way of working that improves departmental performance,
but does not result in identifiable monetary savings; b. Performing service or an act or an achievement which particularly
enhances public perception for state government; c. Performing acts of heroism that are above and beyond the call of duty;
or, d. Performing special extraordinary acts or service in the public interest that
go beyond the employee's assigned responsibilities."
Our review of the 174 incentive payments to employees indicated that the Extraordinary Achievement Incentive Awards program, as implemented by the Department of Agriculture, did not require nor maintain documentation sufficient to support conclusions reached on specific employees in relation to the foregoing criteria.

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DEPARTMENT OF AGRICULTURE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 2004

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

Finding Control Number: FS-402-04-01 continued

Further, Paragraph 17.1004.6 states:

"Upon payment of an Extraordinary Achievement Award, the Agency shall notify the Commissioner in writing of the name and employee I.D. number of the recipient as well as the amount of the award and the reason for making the award."

Initial inquiries concerning these incentive payments found that the Department of Agriculture failed to notify the Commissioner of the Georgia Merit System as required. Subsequent to inquires concerning the incentive payments, the Department of Agriculture made the required notification on November 22,2004.

Cause:

Deficiencies noted with regard to extraordinary achievement payments occurred because the Department of Agriculture failed to adequately follow applicable policies and procedures. The Department of Agriculture also failed to require or maintain proper documentation for the questioned incentive payments as is required of all expenditures.

Effect:

The inability to adequately document and support the decisions made with regard to specific employees awarded incentive payments prohibits the Department of Agriculture from demonstrating its compliance with the spirit and intent of the Extraordinary Achievement Awards program set forth in OCGA Title 45, Chapter 21.

Recommendation:

The Department of Agriculture should review its implementation of the Extraordinary Achievement Awards program for inconsistencies with OCGA Title 45, Chapter 21 and Section 1700.1000 of the Rules of the State Personnel Board. Inconsistencies in policy and application should be resolved with the Georgia Merit System. Incentive payments for extraordinary achievement should only be made in accordance with the revised policies and OCGA Title 45, Chapter 21. Further, decisions made with regard to specific employees and the award of incentive payments should be fully documented.

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