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

DEPARTMENT OF PUBLIC SAFETY

MANAGEMENT REPORT

- TABLE OF CONTENTS -



Page

LETTER OF TRANSMITTAL

SECTION I

SELECTED FINANCIAL INFORMATION

EXHffiITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGET FUND

1

SCHEDULES OF FUNDS AVAILABLE AND EXPENDTILrnES

COMPARED TO BUDGET

BUDGET FUND

B

"A" DEPARTMENT OFPUBLIC SAFETY

2

C

"B" UNITS ATTACHED FOR ADMINISTRATIVE PURPOSES ONLY 3

SECTION II

AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

S

Y 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) 6562174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-X400
October 23, 2001

Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Board of Public Safety
and Honorable Robert E. Hightower, Commissioner Department of Public Safety
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 ofPublic Safety. Accordingly, the financial statements and compliance activities ofthe Department ofPublic Safety were examined to the extent considered necessary in order to express an opinion as to the fair presentation ofthe 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 Public Safety 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 Public Safety 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:gp


SECTION I SELECTED FINANCIAL INFORMATION


DEPARTMENT OF PUBLIC SAFETY ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND
YEAR ENDED JUNE 30, 2001

EXHIBIT "A"

FUND BALANCE - JULY 1, 2000
Reserved Surplus
ADDITIONS

"A"
DEPARTMENT OF PUBLIC SAFETY

"8"
UNITS ATIACHED FOR ADMINISTRATIVE PURPOSES ONLY

TOTAL

$

6,147,647.93 $

430,674.44

459,227.58 $ 6,606,875.51

165,641.65

596,316.09

$

6,578,322.37 $

624,869.23 $ 7,203,191.60

Adjustments to Prior Year's Contracts and Accounts Payable $
Excess of Funds Available over Expenditures Exhibit "B" Exhibit "C"
Increase in Reserve for Inventories
$
DEDUCTIONS

695,248.13 $ 5,356,137.21
130,119.80 6,181,505.14 $

120,395.19 $ 815,643.32

422,106.26 9,265.67

5,356,137.21 422,106.26 139,385.47

551 ?67.12 $ 6?33,272.26

Unreserved Fund Balance (SurplUS) Returned to Office of Treasury and Fiscal Services
Year Ended June 30, 2000
Reserved Fund Balance Carried Over from Prior Year as Funds Available

$

430,674.44 $

4,354,887.17

$

4,785,561,61 $

165,641.65 $ 596,316.09 142,099.28 4,496,986.45 307,740.93 $ 5,093,302.54

FUND BALANCE - JUNE 30, 2001

$ =_7.:.o,~97~4,265.90 $

868,895.42 $ 8,843,161.32

SUMMARY OF FUND BALANCE
Reserved Inventories Federal Financial Assistance Asset Forfeiture Programs State Funds - State Repository Crash Data
Surplus

$

1,922,880.56 $

287,430.38

4,700,844.62

250,000.00

$

7,161,155.56 $

813,110.34

326,393.97 $ 2,249,274.53

132,603.58

420,033.96

4,700,844.62

250,000.00

458,997.55 $ 7,620,153.11 409,897.87 1,223,008.21

$

7,974,265.90 $

86M95.42 $ 8,843,161.32

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DEPARTMENT OF PUBLIC SAFETY SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"A" DEPARTMENT OF PUBLIC SAFETY YEAR ENDED JUNE 30, 2001

EXH IBIT "B"

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

BUDGET

ACTUAL

VARIANCE FAVORABLE .(UNFAVORABLE)

$ 113,115,775.00 $ 113,115,775.00 $

6,637,224.00

3,806,253.09

2,850,565.00

3,026,697.37

$ 122,603,564.00 $ 119,948,725.46 $

0.00 -2,830,970.91
176,132.37
-2,654,838.54

0.00

4,354,887.17

4,354,887.17

$ 122,603,564.00 $ 124,303,612.63 $ 1,700,048.63

EXPENDITURES
Personal Services Regular Operating Expenses TravElI
,
Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts State Patrol Posts Repairs and Maintenance Conviction Reports Driver License Processing

$ 88,765,983.00 $ 85,342,791.59 $

13,744,175.00

13,992,862.61

400,681.00

405,467.92

5,357,350.00

5,438,666.22

1,998,104.00

1,892,491.32

4,078,664.00

3,821,976.77

113,724.00

114,727.22

3,033,296.00

3,046,059.56

1,716,702.00

1,555,334.83

312,000.00

266,779.10

323,651.00

312,718.61

2,759,234.00

2,757,599.67

3,423,191.41 -248,687.61
-4,786.92 -81,316.22 105,612.68 256,687.23
-1,003.22 -12,763.56 161,367.17 45,220.90 10,932.39
1,634.33

$ 122,603,564.00 $ 118,947,475.42 $ 3,656,088.58

Excess of Funds Available over Expenditures

$ 5,356,137.21 $ 5,356,137.21

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DEPARTMENT OF PUBLIC SAFETY

SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET



BUDGET FUND

"B" UNITS ATTACHED FOR ADMINISTRATIVE PURPOSES ONLY

YEAR ENDED JUNE 30, 2001

EXHIBIT "C"

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

BUDGET

ACTUAL

VARIANCE FAVORABLE .<UNFAVORABLEl

$ 16,326,962.00 $ 16,326,962.00 $

12,790,914.00 10,373,895.96

3,417,010.00

3,228,316.09

0.00 -2,417,018.04
-188,693.91

$ 32,534,886.00 $ 29,929,174.05 $ -2,605,711.95

0.00

142,099.28

142,099.28

$ 32,534,886.00 $ 30,071,273.33 $ -2,463,612.67

EXPENDITURES
Personal Services Regular Operating Expenses Trave,l Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts Capital Outlay Highway Safety Grants Peace Officers Training Grants
Excess of Funds Available over Expenditures

$ 11,889,508.00 $ 11,571,473.15 $

5,799,989.00 4,938,353.80

357,053.00

177,169.27

377,159.00

112,979.92

451,994.00

404,401.77

392,605.00

333,227.02

349,802.00

305,075.98

331,810.00

278,916.32

3,086,475.00

2,516,228.05

870,000.00

869,867.45

4,975,200.00

4,503,129.54

3,653,291.00

3,638,344.80

318,034.85 861,635.20 179,883.73 264,179.08
47,592.23 59,377.98 44,726.02 52,893.68 570,246.95
132.55 472,070.46
14,946.20

$ 32,534,886.00 $ 29,649,167.07 $ 2,885,718.93

$ ==...;;42.2.,106.26 $ _...,;;4~2:o.!2,~10~6~.2~6

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SECTIONll AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF PUBLIC SAFETY 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-466-00-01

Previously Reported Corrective Action Implemented

SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS


DEPARTMENT OF PUBLIC SAFETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUEIRECEIVABLESIRECEIPTS Failure to Remit State Revenue Collections in a Timely Manner Finding Control Number: FS-466-0l-0l
Our examination revealed that the accounting procedures ofthe Department of Public Safety were not sufficient to provide for adequate controls over the remittance of State Revenue Collections funds to the Office of Treasury and Fiscal Services (OTFS) as required by the Official Code of Georgia Annotated, Section 45-12-92 that states, in part, as'follows:
"All departments, agencies, and budget units charged with the duty ofcollecting taxes, fees, assessments, or other moneys, the collection of which is imposed by law, shall pay all revenues collected by them into the state treasury on a monthly basis on or before the fifteenth day of each month for the immediately preceding month's co11ectlOns ..."
The Department failed to make timely remittances to OTFS for nine months during the period under review. Management of the Department ofPublic Safety should establish procedures necessary to ensure that all funds collected are remitted in a timely manner.
EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequacies in Reporting of Travel Finding Control Number: FS-466-0l-02
Our examination included a review of the accounting procedures utilized by the Department of Public Safety in reporting travel expenses to the Department ofAudits and Accounts (DOAA). This examination revealed the following:
(I) Payments to third parties were included in the travel amounts reported to DOAA without being edited or corrected to reflect the employee for whom the payment was made.
(2) Travel expenses reported to DOAA did not agree with the Department's general ledger. This problem occurred as a result of manual journal entries posted to the general ledger module without ensuring appropriate adjusting entries were recorded in the accounts payable module.
The Department ofPublic Safety is required to submit travel to DOAA in accordance with a format prescribed by the State Auditor as provided by in Official Code of Georgia Annotated (OCGA) Section 50-6-27. In conjunction with this requirement, the Department ofAdministrative Services (DOAS) provided guidance for state agencies utilizing the statewide Phoenix accounting systems to link employees to third party payments in order for these state agencies to report third party travel payments in the format prescribed by DOAA. This guidance is located in "Phoenix Business Process
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DEPARTMENT OF PUBLIC SAFETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
EXPENDITURES/LIABILITIESIDISBURSEMENTS Inadequacies in Reporting of Travel Finding Control Number: FS-466-01-02
Number AP-067". In addition, DOAA publishes the Accounting Procedures Manualfor the State of Georgia, which requires agencies to balance subsidiary accounting records to the general ledger.
The inadequacies in reporting travel as required were caused by the Department's failure to follow DOAS third party payment guidance and failure to ensure that the accounts payable module is balanced with the general ledger module. Upon request by DOAA auditors, the Department furnished manual adjustments to correct these conditions for travel reporting purposes.
Management's failure to submit travel in a format prescribed by DOAA and to ensure that subsidiary accounting records balance to the general ledger can result in errors being compiled and reported in the Report of the State Auditor - Personal Services, Travel Expense and Reimbursed Expenses Compilation. This report is a matter ofpublic record and is furnished to each member ofthe General Assembly in accordance with OCGA Section 50-6-27.
To ensure accurate and timely reporting oftravel expense in the compilation report referred to above, the Department of Public Safety should follow the guidance provided by DOAA and DOAS. In addition, the Department should develop procedures to ensure that appropriate adjusting entries are recorded in all affected modules.
EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequacies in Reporting of Per Diem and Fees Finding Control Number: FS-466-01-03
Our examination included a review of the accounting procedures utilized by the Department of Public Safety in reporting per diem and fees expenses to the Department of Audits and Accounts (DOAA). This examination revealed that per diem and fees expenses reported to DOAA did not agree with the Department's general ledger. This problem occurred as a result of manual journal entries posted to the general ledger module without ensuring appropriate adjusting entries were recorded in the accounts payable module.
The Department of Public Safety is required to submit per diem and fees to DOAA in accordance with a format prescribed by the State Auditor as provided by in Official Code ofGeorgia Annotated (OCGA) Section 45-7-74.
This inadequacy in reporting per diem and fees as required was caused by the Department's failure to ensure that the accounts payable module is balanced with the general ledger module. Upon request by DOAA auditors, the Department furnished manual adjustments to correct these conditions for per diem reporting purposes.
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DEPARTMENT OF PUBLIC SAFETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001

FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

EXPENDITURESILIABILITIESIDISBURSEMENTS Inadequacies in Reporting of Per Diem and Fees Finding Control Number: FS-466-01-03

Management's failure to ensure that subsidiary accounting records balance to the general ledger can result in errors being compiled and reported in the Report ofthe State Auditor - Per diem and Fees Compilation. This report is a matter ofpublic record and is furnished to each member ofthe General Assembly in accordance with OCGA Section 45-7-74.

To ensure accurate and timely reporting of per diem and fees expense in the compilation report referred to above, the Department ofPublic Safety should follow the guidance provided by DOAA. In addition, the Department should develop procedures to ensure that manual journal entries are recorded in all affected modules.

GENERAL LEDGER

.

Ending Balances in Balance Sheet Clearing Accounts

Finding Control Number: FS-466-01-04

Our examination included a review ofthe internal accounting controls and procedures utilized by the Department ofPublic Safety in recording adjustments to various modules comprising the statewide Phoenix accounting system. Our testing revealed that, at June 30, 2001, the Department's general ledger module 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 June 30, no balances should remain in the clearing accounts.

Management's failure to ensure that these accounts do not have balances at the end of the year can materially misstate the financial statements ofthe Department and can lead to erroneous decisions by the Department's management as well as by the State of Georgia's executive decision makers.

The Department should ensure that clearing account balances have been distributed to appropriate accounts at the end ofeach accounting period and that no balances remain in the clearing accounts at fiscal year end.

GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-466-01-05

Our examination included a review ofthe internal accounting controls utilized by the Department of Public Safety in maintaining their State Property system and also included testing the system for compliance with State laws and regulations. The following condition relating to inappropriate accounting practices was found to exist:

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DEPARTMENT OF PUBLIC SAFETY SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2001
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS GENERAL FIXED ASSETSfPROPERTY MANAGEMENT Inadequacies in Operation of Property Management System Finding Control Number: FS-466-01-05
Equipment inventory records for additions were updated incorrectly. Testing of current year additions revealed two additions that had been updated incorrectly onto the equipment inventory records by the amount of$81,200.75 (net). In addition, three-hundred-twenty-seven (327) equipment items were selected to test the accuracy of the Department's property management records. These items contained a value of$2,129,848.98 out of a population of $45,526,101.96 and were selected for the purpose of locating the equipment as recorded in the inventory records. The following deficiency was noted: Fifty-six (56) items totaling $124,790.82 could not be located. Also, during the physical inspection testing, twenty-nine (29) 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 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 State laws and regulations.

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