Management report, Department of Community Affairs, an organizational unit of the state of Georgia, year ended June 30, 2000

DEPARTMENT OF CO

AFFAIRS

MANAGEMENT REPORT

- TABLE OF CONTENTS -

LETTER OF TRANSMITTAL
SECTION I
SELECTED FINANCIAL INFORMATION
EXHffiITS

A ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND
B SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES CONWARED TO BUDGET BUDGET FUND
C RECONCILIATION OF SALARIES

Page
1
2 3

SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS VI M. r Y SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

SECTIONlli 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 30334-8400
February 5,2001

Honorable Roy E. Barnes, Governor

Members of the General Assembly of Georgia

Members of the Board of Community Affairs

and

Honorable Jim Higdon, Commissioner

Department of Community Affairs

..

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 AnnualFinancial Report, and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as ofand for the year ended June 30, 2000, we have performed certain audit procedures at the Department of Community Affairs. Accordingly, the financial statements and compliance activities of the Department of Community Affairs 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 Community Affairs as of and for the year ended June 30, 2000. 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 Community Affairs and members ofthe Board and is not intended to be and should not be used by anyone other than these specified parties.

Respectfully submitted,

~.
Ru ell W. Hinton State Auditor

RWH:jb

SECTION I SELECTED FINANCIAL INFORMATION

DEPARTMENT OF COMMUNITY AFFAIRS ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND
YEAR ENDED JUNE 30, 2000
FUND BALANCE - JULY 1, 1999
Reserved Surplus
ADDITIONS Adjustments to Prior Year's Contracts, Grants and Accounts Payable Excess of Funds Available under Expenditures Exhibit "B"
DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services
Year Ended June 30, 1999
Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCE - JUNE 30, 2000
SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance Surplus

EXHIBIT "A"

$

2,464,802.58

199,578.27

$

2,664,380.85

$

4,059,092.87

-66,250.15

$

3,992,842.72

$

199.578.27

2,464,802.58

$

2,664.380.85

$

3,992,842.72 .

$

3,991,492.02

1.350.70

$

3,992,842.72

-1-

DEPARTMENT OF COMMUNITY AFFAIRS SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30. 2000

EXHIBIT"B"

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

BUDGET

ACTUAL

VARIANCEFAVORABLE JUNFAVORABLE}.

$ 88,028,810.00 $ 88,010,517.00 $

152,863,508.00 136,049,550.54

10,726,146.00

7,271,225.17

$ 251,618,464.00 $ 231,331,292.71 $

-18,293.00 -16,813,957.46
-3,454,920.83
-20,287,171.29

0.00

2,464,802.58

2,464,802.58

$ 251,618,464.00 $ 233,796,095.29 $ -17,822,368.71

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Contracts for Regional Planning and Development Local Assistance Grants Appalachian Regional Commission Assessment HUD - Community Development Block Pass thru Grants Payment to Georgia Environmental Facilities Authority Community Service Grants Home Program ARC - Revolving Loan Fund Local Development Fund Payment to State Housing Trust Fund Payments to Sports Hall of Fame Regional Economic Business Assistance Grants EZlEC Administration Regional Economic Development Grants Contracts for Homeless Assistance HUD Section 8 Rental Assistance Georgia Regional Transportation Authority Year 2000 Upgrade

$ 20,854,033.00 $ 19,807,181.43 $

3,031,417.00

2,485,010.33

706,864.00

608,321.73

289,750.00

277,371.88

378,603.00

287,409.20

842,088.00

569,857.07

1,414,960.00

1,364,245.25

591,630.00

522,733.37

5,878,607.00

4,707,511.92

2,495,948.00

2,495,948.00

45,904,272.00

45,494,977.00

133,355.00

133,355.00

53,929,037.00

40,830,544.62

429,541.00

429,541.00

5,355,083.00

4,480,382.40

25,890,149.00

26,222,208.00

512,473.00

0.00

617,500.00

617,000.00

3,281,250.00

3,281,250.00

1,008,027.00

1,008,027.00

6,847,147.00

6,847,147.00

189,073.00

189,073.00

1,128,125.00

1,128,125.00

3,123,993.00

3,289,693.05

56,805,500.00

56,805,393.19

9,858,139.00

9,858,139.00

121,900.00

121,900.00

1,046,851.57 546,406.67 98,542.27 12,378.12 91,193.80 272,230.93 50,714.75 68,896.63
1,171,095.08 0.00
409,295.00 0.00
13,098,492.38 0.00
874,700.60 -332,059.00 512,473.00
500.00 0.00 0.00 0.00 0.00 0.00
-165,700.05 106.81 0.00 0.00

$ 251,618,464.00 $ 233,862,345.44 $ 17,756,118.56

Excess of Funds Available over Expenditures -2-

$

-6..6.,25o.15 $

-.;;:;6~6,=25~0~.1~5

DEPARTMENT OF COMMUNITY AFFAIRS RECONCILIATION OF SALARIES YEAR ENDED JUNE 30, 2000

Total per Annual Supplement

Adjustments

Shared Services on Jointly Staffed Personnel

Georgia Sports Hall of Fame Authority

Aderhold,

Charles A.

Barden,

Clyde L.

Bennett,

Beverly P.

Burns,

Robert D.

Coleman,

Karen

Daniel,

Tamia L.

Decell,

Jacquelyn S.

Farrow,

Queen S.

Grable,

Jamaal

Justan,

Jana I.

Knierim,

M. Alice

Price,

Sherry C.

Robison,

Alan D.

Shuford,

Donna W.

Simmons,

Charles A.

Smith,

Johnny C.

Solomon,

Annie Pearl

Spence,

Byron T.

Tate,

Elizabeth

Tompkins,

Willarene

Walton,

Michael K.

Weaver,

James A.

EXHIBIT "C"
$ 15,097,955.58
-30,777.00 -14,519.25
-2,484.42 -35,689.50 -18,720.71
-6,942.00 -43,890.00 -10,771.36
-2,821.01 -30,777.00 -61,563.00 -21,669.00 -46,225.50 -12,126.75 -15,478.78 -12,091.71 -40,090.25 -24,480.13
-2,164.50 -1,598.64
-689.13 -3,280.50
$ 14,659,105.44

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

DEPARTMENT OF CO

Y AFFAIRS

AUDITEE'S RESPONSE

SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS

YEAR ENDED JUNE 30, 2000

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-428-99-01 FS-428-99-02

Further Action Not Warranted Partially Resolved - See Corrective action/Responses

CORRECTIVE ACTIONIRESPONSES

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in the Operation of Property Management System Finding Control Number: FS-428-99-02

In prior years, the Department has never received a finding in this area because of its strong internal controls. This finding is due to the conversion to the PeopleSoft system. All efforts were made to bring the Department's inventory current in the PeopleSoft system. Surplus items were still not deleted as of June 30, 2000. They will be deleted from the PeopleSoft system by January 31,2001.

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF CO

AFFAIRS

SCHEDULE OF FINDINGS AND QUESTIONED COSTS

YEAR ENDED JUNE 30, 2000

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

BUDGET PREPARATIONIEXECUTION Overexpenditure of Budget Unit Object Classes Finding Control Number: FS-428-00-01

The total approved budget for the Department of Community Affairs provided for expenditures totaling $251,618,464.00. A comparison ofanticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicated that the following object classes were overspent by the amount identified below:

Home Program Contracts for Homeless Assistance

$ 332,059.00 $ 165,700.05

The overexpenditures identified above are in violation ofSection 58 ofthe Amended Appropriations Act of 1999-2000. These overexpenditures were caused by the Department's failure to monitor the expenditure of funds against the budgeted expenditures by object class.

The Department of Community Affairs should review its internal control procedures over budget operations, design procedures which would prohibit the expenditure of funds in excess of budget approval, and implement those procedures to strengthen the internal controls over the budget function.

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in the Operation of Property Management System Finding Control Number: FS-428-00-02

Our examination included a review ofthe internal accounting controls utilized by the Department of Community Affairs in maintaining their property management system. The following conditions relating to inappropriate accounting practices were found to exist:

1. Equipment purchases totaling $310,583.03 for Fiscal Year 2000 were not added to the equipment inventory records in accordance with State property management policies.

2. In addition to the amounts reported in the prior year management report (Finding Control Number FS-428-99-02), equipment purchases totaling $746,760.68 for Fiscal Year 1999 were not added to the equipment inventory records in accordance with State property management policies.

The Department should establish the necessary internal controls to ensure that equipment inventories are maintained in accordance with State property management policies.