Management report, Department of Defense, an organizational unit of the state of Georgia, year ended June 30, 1999

MANAGEMENT REPORT DEPARTMENT OF DEFENSE AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 1999
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

DEPARTMENT OF DEFENSE 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 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
September 27, 1999

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia
and Honorable David B. Poythress, Adjutant General Department of Defense
Ladies and Gentlemen:
As part ofour audit of the statutory basis financial statements ofthe State of Georgia presented in the State of Georgia Report of the State Auditor, the general purpose financial statements of the 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, 1999, we have performed certain audit procedures at the Department of Defense. Accordingly, the financial statements and compliance activities of the Department ofDefense 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 Defense as of and for the year ended June 30, 1999. 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 Defense and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp

State Auditor

SECTION I SELECTED FINANCIAL INFORMATION

DEPARTMENT OF DEFENSE ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND YEAR ENDED JUNE 30, 1999
FUND BALANCE - JULY 1, 1998 Reserved Surplus
ADDITIONS Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures Exhibit "B" Reimbursement of Prior Year's Expenditures
DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1998 Adjustments to Prior Year's Accounts Receivable Refund of Unexpended Funds to Granter Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCE - JUNE 30, 1999
SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance Armory Funds Billeting Funds Youth Challenge Program Donations Elberton Training Center
Surplus
- 1-

EXHIBIT "A"

$ 1,761,810.13
50,364.62
$ 1,812,174.75

$

75,030.60

1,240,516.75 1,011.70

$ 1,316,559.05

$ 50,364.62
15,929.05 91,568.19 1,761,810.13
$ 1,919,671.99
$ 1,209,061.81

$ 668,181.48 204,670.28 150,360.31 645.00 125,000.00
$ 1,148,857.07 60,204.74
$ 1,209,061.81

DEPARTMENT OF DEFENSE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30, 1999

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 (UNFAVORABLE)

$ 5,591,747.00 $ 5,591,747.00 $

20,322, 190.00 17,418,438.60

1,594,496.00

1,135,672.31

$ 27,508,433.00 $ 24,145,857.91 $

0.00 -2,903,751.40
-458,823.69
-3,362,575.09

0.00

1,761,810.13

1,761,810.13

$ 27,508,433.00 $ 25,907,668.04 $

-1,600,764.96

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Year 2000 Project
Excess of Funds Available over Expenditures

$ 11,925,684.00 $ 11,091,494.36 $

10,784,228.00

9,381,354.59

85,960.00

74,131.76

2,518.00

2,518.00

16,764.00

16,124.79

265,569.00

265,691.41

74,743.00

53,945.01

2,473,685.00

1,952,910.27

1,804,812.00

1,763,746.98

74,470.00

65,234.12

834,189.64 1,402,873.41
11,828.24 0.00
639.21 -122.41 20,797.99 520,774.73 41,065.02 9,235.88

$ 27,508,433.00 $ 24,667,151.29 $

2,841,281.71

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

$ 1,240,516.75 $ ====1::1::,2=4:::!0'=51=6=7.=5

-2-

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF DEFENSE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS fuadequacies in Bank Reconciliation Procedures
Finding Control Number: FS-411-99-01
The Department ofDefense's accounting procedures were not sufficient to provide for adequate control over the bank reconciliation process. Engagement procedures and interviews with personnel of the Department revealed that a bank reconciliation of the Payroll Account was not performed for the month ofJune, 1999, and that bank reconciliations for the General Operating Account were not performed for the months of April, May and June, 1999. As a result, as of June 30, 1999, our examination ofthe Payroll and General Operating Accounts identified unreconciled differences of$130,693.55 and $1,466.92, respectively, between the amount recorded on the general ledger and the bank statements.
The Department should establish the necessary procedures to ensure that bank reconciliations for the Payroll and General Operating Accounts are reconciled on a monthly basis. The Department should take action to identify the unreconciled differences and make adjustments to the accounting records where appropriate.