Audit report, state of Georgia, Department of Revenue, year ended June 30, 1999

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AUDIT REPORT STATE OF GEORGIA DEPARTMENT OF REVENUE YEAR ENDED JUNE 30,1999

STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

DEPARTMENT OF REVENUE
- TABLE OF CONTENTS -

SECTION I

FINANCIAL

INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION

EXHIBITS

FINANCIAL STATEMENTS

A COMBINED BALANCE SHEET (STATUTORY BASIS)

ALL FUND TYPES AND ACCOUNT GROUPS

2

B COMBINED STATEMENT OF CHANGES IN FUND BALANCES

(STATUTORY BASIS)

GOVERNMENTAL FUND TYPES

4

C STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

BUDGET FUND

5

D STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

9

E STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS

STATE REVENUE COLLECTIONS FUND

10

F NOTES TO THE FINANCIAL STATEMENTS

13

SUPPLEMENTARY INFORMATION

G COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

FIDUCIARY FUND TYPE - AGENCY FUNDS

28

SCHEDULES

1 SCHEDULE OF REQUIRED SUPPLEMENTARY INFORMATION

30

2 SCHEDULE OF APPROVED BUDGET

33

3 CASH AND CASH EQUIVALENTS

34

4 SCHEDULE OF FEDERAL REVENUES

35

5 SCHEDULE OF OTHER OPERATING EXPENSES

37

6 ANALYSIS OF STATE REVENUE COLLECTIONS

38

7 RECONCILIATION OF IRAVEL

48

8 SUMMARY OF SALARIES, IRAVEL, AND PER DIEM AND FEES

49

DEPARTMENT OF REVENUE
- TABLE OF CONTENTS -
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

SECTION I FINANCIAL

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400
January 11, 2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia
and Honorable T. Jerry Jackson, Commissioner Department ofRevenue
INDEPENDENT AUDITOR'S COMBINED REPORT ON FINANCIAL STATEMENTS
AND SUPPLEMENTARY INFORMATION
Ladies and Gentlemen:
We have audited the accompanying financial statements (Exhibits A through F) ofthe Department ofRevenue as of and for the year ended June 30, 1999. These financial statements are the responsibility of the Department's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterial misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
As described in Note 1, these financial statements were prepared on a prescribed basis of accounting that demonstrates compliance with the budgetary statutes and regulations of the State of Georgia, which is a comprehensive basis of accounting other than generally accepted accounting principles.
As more fully discussed in Section III, Current Year Findings and Questioned Costs, material discrepancies were noted in the equipment inventory records of the Department. Equipment inventory comprises the General Fixed Assets Account Group. We were unable to determine the effects these discrepancies may have. on the financial statements.
In our opinion, except for the effects on the financial statements ofthe adjustments to the equipment inventory records that may be necessary as described in the preceding paragraph, the financial statements referred to

99ARL-2

above present fairly, in all material respects, the financial position (statutory basis) of the Department of Revenue as ofJune 30, 1999, and the results ofits operations (statutory basis) for the year then ended, on the basis of accounting described in Note 1.
The year 2000 supplementary infonnation on Schedule "1" is not a required part of the basic financial statements but is supplementary infonnation required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries ofmanagement regarding the methods ofmeasurement and presentation ofthe supplementary infonnation. However we did not audit the infonnation and do not express an opinion on it. In addition, we do not provide assurance that the Department ofRevenue is or will become year 2000 compliant, that the Department's year 2000 remediation efforts will be successful in whole or in part, or that parties with which the Department of Revenue does business are or will become year 2000 compliant.
Our audit was made for the purpose of fonning an opinion on the financial statements taken as a whole. The accompanying supplementary infonnation (Exhibit G and Schedules 2 through 8) is presented for purposes of additional analysis and is not a required part of the financial statements of the Department of Revenue. Such infonnation has been subjected to the auditing procedures applied in the audit ofthe financial statements and, in our opinion, such infonnation is fairly presented in all material respects in relation to the financial statements taken as a whole.
Respectfully submitted,
~u.1lfl t1).~ Russell W. Hinton State Auditor
RWH:jb 99ARL-2

FINANCIAL STATEMENTS - 1-

DEPARTMENT OF REVENUE COMBINED BALANCE SHEET (STATUTORY BASIS)
ALL FUND TYPES AND ACCOUNT GROUPS JUNE 30,1999

ASSETS
cash and cash Equivalents (See Schedule)
Accounts Receivable State Appropriation Federal Other
Prepaid Items
Inventories
Fixed Assets Equipment
Amount to be Provided for Payment of Accrued Compensated Abs~nces Installment Purchase Commitments

GOVERNMENTAL FUND TYPES

STATE

REVENUE

BUDGET

COLLECTIONS

FIDUCIARY FUND TYPE
AGENCY

$ 1,592,652.06 $ 35,213,769.17 $ 28,495,885.01

$ 40,651,007.43
120,095.95 56,041.29

$ 40,827,144.67

$

99,050.50

$

39,553.66

Total Assets

$ 42,558,400.89 $ 35,213.769.17 $ 28,495,885.01

LIABILITIES AND FUND EQUITY
LIabilities Accounts Payable Accrued Payroll Payroll Withholdings Funds Held for Others Compensated Absences Installment Purchases
Total LIabilities
Fund Equity Investment in General Fixed Assets Fund Balances Reserved Inventories Investment for Modemization Year 2000 Projed State Revenue Collections Fund Unreserved Designated Surplus
Total Fund Equity
Total Liabilities and Fund Equity
The notes to the financial statements are an integral part of this statement
-2-

$ 17,220,342.98
154,088.27 3,508.91
$ 17,377,940.16

$ 28,495,885.01 $ 28,495,885.01

$

120,000.00

16,999,901.08

6,706,631.15

$ 35,213,769.17

1.353,928.50
$ 25,180,460.73 $ 35,213.769.17
ViJJyJjI
$ 42,558,400.89 $ 35,213,769.17 $ 28,495,885.01

EXHIBIT "A"

ACCOUNT GROUPS

GENERAL

GENERAL

FIXED

LONG-TERM

ASSETS

DEBT

TOTALS (Memorandum Only) JUNE 30, 1999 JUNE 30, 1998

$ 65,302,306.24 $ 37,208,500.42

$ 40,651,007.43 $ 24,588,240.41

120,095.95

51,314.36

56,041.29

52,n6.15

$ 40,827,144.67 $ 24,692,330.92

$

99,050.50 $

45.00

$

39,553.66 $ 70,008.35

$ 16,892AOO.61

$ 16,892AOO.61 $ 13,224,752.85

$ 5,124,101.42 $ 1,064,764.70
$ 6,188,866.12 $

5,124,101.42 $ 4,733,987.16 1,064,764.70 1,459,897.89
6,188,866.12 $ 6,193,885.05

$ 16,892,400.61 $ 6,188,866.12 $ 129,349,321.80 $ 81,389,522.59

$
$ 5,124,101.42 1,064,764.70

17,220,342.98 $ 9,6n,723.56

154,088.27

0.00

3,508.91

2,290.82

28,495,885.01 25,400,691.09

5,124,101.42 4,733,987.16

1,064,764.70 1A59,897.89

$ 6,188.866.12 $ 52.062,691.29 $ 41,274,590.52

$ 16,892,400.61

$ 16,892,400.61 $ 13,224,752.85

120,000.00 16,999,901.08 6,706,631.15 35,213,769.17

120,000.00 6,343,129.56 7,702,257.15 11,604,658.51

$ 16,892.400.61

1,353,928.50 1,120,134.00 $ n,286,630.51 $ 40,114,932.07

$ 16,892AOO.61 $ 6,188.866.12 $ 129.349,321.80 $ 81.389,522.59

-3-

DEPARTMENT OF REVENUE COMBINED STATEMENT OF CHANGES IN FUND BALANCES (STATUTORY BASIS)
GOVERNMENTAL FUND TYPES YEAR ENDED JUNE 30, 1999

EXHIBIT-B-

The notes to the financial statements are an Integral part of this statement -4-

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1999

EXHIBIT "C"

Total Funds Available
EXPENDITURES PERSONAL SERVICES
Salaries and Wages Employer's Contributions for:
F.I,CA Retirement
The notes to the financial statements are an integral part of this statement -5-

$ 176.934,395,71 $

134;;;;,;,&;,.07..6.,.,,""7.0.2.,34-..

$

48.792.412.73 $

3.204,213.98 6.705,321.08

45.482,209.80
3.009.3n.n 6.206,750.43

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30, 1999

EXHIBITC

EXPENDITURES
PERSONAL SERVICES
Employer's Contributions for: Health Insurance Personal Liability Insurance Unemployment Compensation Insurance Workers' Compensation Insurance Assessments by Merit System Drug Testing

TOTALS

YEAR ENDED

JUNE 30,1999

'JUNE 30,1998

$

5,318,910,03 $

172,874,00

209,286,00

453,586.60

184,149,38

752,50

$

65,041,506,30 $

4,999,332,80 161,977.00 99,360,00 479,826,00 189,460,00 844.00
6"",0"""6=2=9,,,,,,,13;;,;,7,,,,,,8=-0

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30. 1999

EXHIBIT .C"

TOTALS

YEAR ENDED

JUNE 30,1999

JUNE 30,1998

MOTOR VEHICLE TAGS AND DECALS Per Diem, Fees and Contracts Contracts
POSTAGE Other Costs Supplies and Materials
INVESTMENT FOR MODERNIZATION Personal Services Salaries and Wages Employer's Contributions for: F.I.CA Retirement Health Insurance Other Costs Supplies and Materials Repairs and Maintenance Other Operating Expenses (See Schedule) Publications and Printing Equipment Equipment Purchases LeaselPurchase of Equipment Computer Charges Software Computer Billings, DOAS Real Estate Rentals Telecommunications

$

2,404,350.00 $ _ _--=2::c,64=2,:::;85::,::0:::.0::::.,0

$

3,691,745.71 $ _ _--=3~,5~5~0,~39::,::0::.:.7.::.8

$

244,600.14 $

10,266.99 22,528.06 17,611.03

121,919.51 85,115.26
3,390.00 416,304.86

1,033,676.20 101,750.00

263,092.93 888,302.93
0.00 14,117.49

382,477.51
13,274.76 21,915.08 17,515.14
237,988.77 8,418.48
210,365.75 471,980.00
1,953,108.90 3,990.00
416,991.96 1,488,562.19
62,933.34 111,000.00

The notes to the financial statements are an integral part of this statement -7-

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
BUDGET FUND YEAR ENDED JUNE 30,1999

EXHIBIT .C"

$ 176,934,395,71 $

134ii1OO1oi,O_7~6,_70iii:2~.,3.4

The notes to the financial statements are an integral part of this statement -8-

DEPARTMENT OF REVENUE STATEMENT OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
YEAR ENDED JUNE 30.1999

EXHIBIT"D"

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)

$ 129,830,945.00 $ 129,830,945.00 $

212,739.00

212,739.00

46,770,712.00

32,725,325.00

$ 176,814,396.00 $ 162,769,009.00 $

0.00 0.00 -14,045,387.00
-14,045,387.00

0.00

14,165,386.71

14,165,386.71

$ 176,814,396.00 $ 176,934,395.71 $

1_19....:,,9_9_9_.7_1

EXPENDITURES
Personal Services Regular Operating Expenses Travel Motor Vehicle Purchases Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts County Tax Officials/Retirement and FICA Motor Vehicle Tags and Decals Postage Investment for Modernization Year 2000 Project

$ 65,306,193.00 $ 65,041,506.30 $

5,503,735.00

5,449,532.90

1,187,721.00

1,095,494.09

207,300.00

208,839.00

311,242.00

312,688.57

14,274,800.00

14,246,449.21

2,927,364.00

2,895,136.99

2,870,400.00

2,924,120.61

4,167,102.00

3,564,139.11

3,422,795.00

3,422,793.71

2,404,350.00

2,404,350.00

3,646,944.00

3,691,745.71

21,796,961.00

4,797,059.48

48,787,489.00

42,080,858.00

264,686.70 54,202.10 92,226.91 -1,539.00 -1,446.57 28,350.79 32,227.01 -53,720.61
602,962.89 1.29 0.00
-44,801.71 16,999,901.52
6,706,631.00

$ 176,814,396.00 $ 152,134,713.68 $ 24,679,682.32

Excess of Funds Available over Expenditures

$ 24,799,682.03 $

The notes to the financial statements are an integral part of this statement -9-

24,799,682.03

DEPARTMENT OF REVENUE STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
STATE RevENUE COLLECTIONS FUND
YEAR ENDED JUNE 30. 1999

EXHIBIT"E"

STATE REVENUE COLLECTIONS <See Schedule)
Business License Tax Non Business License Tax
Motor Vehicle Registrations - Tags Motor Carrier Registrations - Tags Motor Vehicle Title Registrations
Corporate Net Worth Tax Estate Tax Financial Institutions Business Occupation Tax Income Tax
Corporations Individuals
Property Tax County Tax Digest Accounts Intangible Recording
Public Utilities Property Tax Assessments
Taxes Based on Sales Sales and Use Tax Regular Motor Fuel
Alcoholic Beverages Beer Liquor Wine
Cigars and Cigarettes Motor Fuel
Fines and Forfeitures Peace Officers and Prosecutors Training Fund Unclaimed Property State Children's Trust Fund Eamings - General Govemment
Homestead Option Sales Tax Collection Cost Local Option Sales Tax Collection Cost MARTA Sales Tax Collection Cost Motor Carriers' Fees Real Estate Transfer Tax Collection Cost Sales Tax for Educational Purposes Collection Cost Special Purpose Sales Tax Collection Cost Other Fees
Total Cash Receipts
CASH AND CASH EQUIVALENTS - JULY 1. 1998

CASH RECEIPTS

$

4,140,842.00

$ 140,278,924.82 60,872,872.80 42,335,056.10

243,486,853.72

25,388,603.97 111,192,261.63
12,516,379.59

$ 800,406,824,07 5,700,758,164.76

6,501,164,988.83

$

43,453,325.99

1,161,125.90

44,614,451.89

$

8,307.76

1,137,480.69

1,145,788.45

$ 4,339,548,761.39 139,674,554.97 $ 4,479,223,316.36
$ 79,575,526.28 35,203,777.40 18,124.080.10

$ 12,166,024,866.40

The notes to the financial statements are an integral part of this statement
-10-

DEpARTMENT OF REVENUE STATEMENT OF CASH RECEIPTS AND DISBURSEMENTS
STATE REVENUE COLLECTIONS FUND YEAR ENDED JUNE 30. 1999

EXHIBIT"E"

DISBURSEMENTS

GOVERNMENTAL COST

Fees Retained at Collecting Source Property Tax County Tax Digest Accounts Intangible Recording

$

1,630,822.50

61,847.47 $

1,692,669.97

Taxes Based on Sales Sales and Use Tax Regular Motor Fuel

$ 39,579,094.17 3,674,931.55 $ 43,254,025.72

Cigars and Cigarettes Motor Fuel

2,600,511.94 3,334,675.95

49,189,213.61 $

50,881,883.58

Assessing Property Tax County Tax Digest Accounts

459,876.08

Disbursements of Intemational Registration Plan Collections to Other States

24,645,305.06

Disbursements of Motor Vehicle Registration - Tags Collections to Non-Game Wildlife Conservation and Wildlife Habitat Acquisition Fund Collections to United States Disabled Athletes Fund

$

1,173,522.00

125,525.00

1,299,047.00

Disbursement for Attomey's Fees Federal Employees' Retirement Settlement

4,330,188.14

Disbursement for Income Tax Collection Costs Reimburse Budget Fund

1,962,324.00

Disbursement for Unclaimed Property Expense Reimburse Budget Fund
Total Govemmental Cost

2,363,957.00

s

85,942,580.86

TRANSFERS
To Office of Treasury and Fiscal Services Less: Refunds through Office of Treasury and Fiscal Services

S 13,403,639,641.44
-1 ,358,n1 ,125.07

12,044,868,516.37

Total Disbursements

$ 12,130,811,097.23

CASH AND CASH EQUIVALENTS JUNE 30. 1999

35,213,769.17

$ 12,166,024,866.40

The notes to the financlal statements are an integral part of this statement.
-11 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "F"

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REPORTING ENTITY The Department ofRevenue, an organizational unit ofthe State of Georgia, is part ofthe executive branch ofthe government ofthe State of Georgia. It is the chieftax collection agency for the State of Georgia. The principal taxes collected are those on sales, motor fuel, income, alcoholic beverages, cigars and cigarettes, property, motor vehicle licenses and estates. The executive officer of the Department is the Revenue Commissioner, who is appointed by the Governor with the consent ofthe Senate of the General Assembly ofGeorgia. It is the Revenue Commissioner's duty to administer all Georgia tax laws and he is empowered to make all rules and regulations necessary for the enforcement ofthose laws.
The Department ofRevenue does not have authority to determine the amount of funding it will receive from the State of Georgia for any given fiscal year. Such authority is vested in the General Assembly of Georgia. The Department also does not have authority to retain unexpended State appropriations (surplus) for any given fiscal year. Accordingly, the Department ofRevenue is included within the State of Georgia reporting entity for financial reporting purposes because of the significance of its legal, operational and financial relationships with the State of Georgia. These reporting entity relationships are defined in Section 2100 of the Governmental Accounting Standards Board Codification of Governmental Accounting and Financial R~orting Standards.
FUND ACCOUNTING A fund is an independent fiscal and accounting entity with a self-balancing set of accounts. Fund accounting segregates funds according to their intended purpose ~d is used to aid management in demonstrating compliance with finance-related legal and contractual provisions. The minimum number of funds are maintained consistent with legal and managerial requirements. Account groups are a reporting device used to account for certain assets and liabilities of the governmental funds not recorded directly in those funds. Funds and account groups presented in the accompanying financial statements are as follows:
GOVERNMENTAL FUND TYPES
BUDGET FUND - The fund used to account for activities and functions as set forth in the Amended Appropriations Act of 1998-1999. The Budget Fund is similar in nature to a General Fund as defined in generally accepted accounting principles in that the Blldget Fund is used to account for all activities except those required to be accounted for in some other fund.
STATE REVENUE COLLECTIONS FUND - The fund used to account for the collection of specific revenues ofthe State ofGeorgia as provided by statute or administrative action and the subsequent transfer of such funds to the Office of Treasury and Fiscal Services. This presentation differs from generally accepted accounting principles in that such activity should be included in the General Fund of the governmental organization.

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DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "F"

NOTE 1; SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
FUND ACCOUNTING
FIDUCIARY FUND TYPE
AGENCY FUNDS - The funds used to account for assets held for use by other funds, governments, or individuals.
ACCOUNT GROUPS
GENERAL FIXED ASSETS - The account group used to account for fixed assets used in governmental fund type operations. Fixed assets purchased are recorded at cost or at estimated historical cost if historical cost is not practically determinable. Donated fixe~ assets are recorded at fair market value on the date donated. Disposals are deleted at recorded values. No depreciation has been provided on general fixed assets.
The costs of normal maintenance and repairs that do not add to the value of assets or materially extend assets' lives are not included in the General Fixed Assets Account Group. Material improvements adding to the value or useful life of assets are included in the General Fixed Assets Account Group.
GENERAL LONG-TERM DEBT - The account group used to report the noncurrent portions ofcertain governmental long-term liabilities, such as claims, judgments and compensated absences, which will be paid from future resources.
BASIS OF ACCOUNTING MEASUREMENT FOCUS
The Department ofRevenue uses funds and account groups to report on its financial position and the results ofits operations determined in conformity with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Governmental funds should be accounted for using the flow ofcurrent financial resources measurement focus. With this measurement focus, operating statements present increases and decreases in net current assets and unreserved fund balance is a measure ofavailable spendable resources. In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund remits its unreserved fund balance (surplus) to the Office ofTreasury and Fiscal Services in the subsequent fiscal year.
GOVERNMENTAL FUND TYPES BUDGET FUND
Except as disclosed in the following paragraphs, units of government of the State of Georgia record their Budget Fund revenues and expenditures in accordance with the modified accrual basis ofaccounting. Under the modified accrual basis ofaccounting, revenues are recognized when susceptible to accrual (i.e., when they are "measurable and available"). "Measurable" means the amount ofthe transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the
-14 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
WNE3Q.1999

EXHIBIT "F"

NOTE 1; SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING GOVERNMENTAL FUND TYPES BUDGETFUND
current period. Revenues that are accrued include primarily State appropriations, Federal grants and entitlements, and certain amounts earned under operating agreements with other parties. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, and certain compensated absences, claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources.
Contractual obligations for goods and services which have not been received at the end of the fiscal year are recognized as expenditures and liabilities in the accompanying financial statements. This accounting practice causes expenditure-driven grant revenues to be accrued based, in part, on the unexecuted portion ofcontracts for goods and services. The recognition of encumbrances as expenditures and liabilities is in conformity with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia, but is not consistent with generally accepted accounting principles, which provide for the recording of encumbrances as a reservation of fund balance. Further, revenue recognition for expenditure-driven grants should be based upon expenditures determined in accordance with generally accepted accounting principles.
Prior period adjustments and certain other items are reported as additions to and deductions from fund balances of the Budget Fund in the accompanying financial statements. This presentation is in accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, but differs from generally accepted accounting principles in that immaterial adjustments should be reported as current period revenues and expenditures.
STATE REVENUE COLLECTIONS FUND The State Revenue Collections Fund is maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations of the State of Georgia. This basis of accounting is defined as that method of accounting in which certain revenue and the related assets are recognized when received rather than when earned, and certain expenses are recognized when paid rather than when the obligation is incurred. The State Revenue Collections Fund, which should be included in the General Fund in accordance with generally accepted accounting prin~iples, .should be maintained on the modified accrual basis of accounting.
FIDUCIARY FUND TYPE AGENCY FUNDS
Agency Funds are custodial in nature and do not measure results ofoperations or have a measurement focus. The modified accrual basis ofaccounting is utilized for recognizing assets and liabilities.
BUDGET
Appropriation allotments to the Department of Revenue are on the basis of a budget submitted by the Department and approved by the Legislature and the Governor. The budget is adopted on a basis consistent with accounting practices prescribed or permitted by statutes and regulations ofthe State of Georgia and is
-15 -

DEPARTMENT OF REVENUE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30.1999

EXHIBIT "F"

NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING PQUCIES
BUDGET compiled in the same manner as all State departments. Expenditures are classified by budget unit object classes as provided in Act No. 969 ofGeorgia Laws 1998 (as approved April 20, 1998) and amended by Act No.2 ofGeorgia Laws 1999 (as approved February 4, 1999) and by Act No. 146 of Georgia Laws 1999 (as approved April 12, 1999). This budget is considered to be an appropriated budget and is referred to in these notes as the Amended Appropriations Act of 1998-1999.
Overexpenditure of a budget unit object class, except for the "common object classes", included in the Department's:final amended budget is in violation ofSection 57 ofthe 1998-1999 Amended Appropriations Act. Expenditures ofno more than 102% ofthe stated amount for each common object class are authorized by Section 57. However, the total expenditure for the group ofcommon object classes may not exceed the sum ofthe stated amounts for the separate object classes ofthe group. The common object classes include Personal Services, Regular Operating Expenses, Travel, Motor Vehicle Purchases, Equipment, Computer Charges, Real Estate Rentals, Telecommunications and Postage.
CASH AND CASH EQUIVALENTS Cash and Cash Equivalents include currency on hand, demand deposits with banks and other financial institutions, and the State investment pool that has the general characteristics of demand deposit accounts in that the Department may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty.
The State investment pool (Georgia Fund 1) is an extern3l investment pool that is not registered with the Securities and Exchange Commission (SEC) but does operate in a manner consistent with the SEC's Rule 2a7 of the Investment Company Act of 1940. The State of Georgia's Office of Treasury and Fiscal Services (OTFS) manages Georgia Fund 1 in accordance with policies and procedures established by State law and the State DepositoryBoard, the oversight Board for OTFS. This investment is valued at the pool's share price, $1.00 per share.
The Department does not have any risk exposure related to investments in derivatives or similar investments in Georgia Fund 1 as the investment policy ofOTFS does not provide for investments in derivatives or similar investments through the Georgia Fund 1.
INVENTORIES Inventories ofsupplies are valued at weighted average cost on the Combined Balance Sheet (Statutory Basis) using the first-in/first-out (FIFO) method. The consumption method is used to account for the use of inventories. Under the consumption method, the costs ofinventories are recorded as expenditures when the inventories are consumed rather than when purchased.
RESERVED FUND BALANCE Reserves represent those portions offund equity not appropriable for expenditure or legally segregated for a specific future use. The following is a brief description of the reserves reflected in the accompanying financial statements:
-16 -

DEPARTMENT OF REVENUE NOIES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBII"F"

NOIE 1; SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
RESERVED FUND BALANCE
INVENTORIES Reported inventories, under the consumption method, are offset by a portion of State funds reserved to provide working capital for managing a reasonable level ofinventories.
INVESTMENT FOR MODERNIZATION Represents State appropriations restricted for the modernization of the Department. This amount is restricted for expenditures in the subsequent fiscal year.
YEAR 2000 PROJECT Represents State Appropriations for the Year 2000 Project. This amount is restricted for expenditures in the subsequent fiscal year.
STATE REVENUE COLLECTIONS FUND The balance ofrevenues collected but not transmitted to the Office ofTreasury and Fiscal Services at fiscal year end. These funds are required by the Official Code of Georgia to be transferred to the Office of Treasury and Fiscal Services and are not available for use by the Department.
UNRESERVED FUND BALANCE In accordance with accounting practices prescribed or permitted by statutes and regulations of the State of Georgia, the Budget Fund's unreserved fund balance is remitted to the Office ofTreasury and Fiscal Services in the subsequent fiscal year as SUlplus. This amount ofunexpended general appropriations is designated for reappropriation by the State in subsequent years.
COMPENSATED ABSENCES Compensated absences represent obligations of the Department relating to employee's rights to receive compensation for future absences based upon services already rendered. This obligation relates only to vesting accumulating annual and compensatory leave in which payment is probable and can be reasonably estimated. No liability has been recorded in the individual funds for the current portion ofthis obligation as this amount will not be liquidated with expendable available financial resources. Funds are provided in the appropriation of funds each year to the Department to cover the cost of annual leave paid to terminated employees.
The liability for compensated absences at year end is reported in the General Long-Term Debt Account Group for governmental funds.
MEMORANDUM-ONLY - TOTAL COLUMNS Total columns on the Combined Statements (Statutory Basis) are captioned "Memorandum Only" because they do not represent consolidated financial information and are presented only to facilitate financial analysis. The columns do not present information that reflects financial position, results ofoperations or changes in
-17 -

DEPARIMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "F"

NOTE 1: SUMMARy OF SIGNIFICANT ACCOUNTING POLICIES
MEMORANDUM ONLY - TOTAL COLUMNS financial position in conformity with generally accepted accounting principles. Neither are such data comparable to a consolidation. Interfund eliminations have not been made in the aggregation of this data.
COMPARATIVE DATA Comparative total data for the prior year have been presented in selected sections of the accompanying financial statements in order to provide an understanding ofthe changes in the Department's financial position and operations. Comparative totals have not been included on statements where their inclusion would not provide enhanced understanding of the Department's financial position and operations or would cause the statements to be unduly complex and difficult to understand.
The amounts reflected on the Combined Balance Sheet (Statutory Basis) at June 30, 1999, for the asset caption "Amount to be Provided for Payment ofInstallment Purchase Commitments" and the liability caption '~Installment Purchases" include a correction ofa prior period error (See Note 6). The amounts reflected for the asset and liability captions referred to above at June 30, 1998, have been restated to reflect this correction.
NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS
STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES Funds ofthe State of Georgia cannot be placed in a depository paying interest longer than ten days without the depository providing a surety bond to the State. In lieu of a surety bond, the depository may pledge as
as collateral anyone or more of the following securities enumerated in the Official Code of Georgia
Annotated Section 50-17-59:
(1) Bonds, bills, certificates ofindebtedness, notes, or other direct obligations ofthe United States or of the State of Georgia.
(2) Bonds, bills, certificates of indebtedness, notes, or other obligations of the counties or municipalities ofthe State of Georgia.
(3) Bonds ofany public authority created by the laws ofthe State ofGeorgia, providing that the statute that created the authority authorized the use ofthe bonds for this purpose.
(4) Industrial revenue bonds and bonds ofdevelopment authorities created by the laws ofthe State of Georgia.
(5) Bonds, bills, certificates ofindebtedness, notes, or other obligations ofa subsidiary corporation of the United States government, which are fully guaranteed by the United States government both as to principal and interest, or debt obligations issued by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate Credit Bank, the Central Bank for Cooperatives, the Farm Credit Banks, the Federal Home Loan Mortgage Association, and the Federal National Mortgage Association.
-18 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "F"

NOTE 2: CUSTODIAL CREDIT RISKS OF CASH DEPOSITS AND INVESTMENTS

STATE OF GEORGIA COLLATERALIZATION STATUTES AND POLICIES (6) Guarantee or insurance of accounts provided by the Federal Deposit Insurance Corporation.

As authorized in the Official Code of Georgia Annotated Section 50-17-53, the State Depository Board has adopted policies which allow agencies ofthe State ofGeorgia the option of exempting demand deposits from the collateral requirements.

CATEGORIZATION OF DEPOSITS For purposes of analysis of custodial credit risk, cash deposits consist of all bank balances which include demand deposits and/or interest bearing accounts. The bank balances as of June 30, 1999, are categorized below in order to provide information about the extent to which such deposits are exposed to custodial credit risk.

Category 1 - Amounts covered by depository insurance or collateralized with securities (at market value) held by the Department or by its agent in the Department's name.

Category 2 - Amounts collateralized with securities (at market value) held by the pledging financial institution's trust department or agent in the Department's name.

Category 3 - Amounts collateralized with securities (at market value) held by the pledging financial institution or by its trust department or agent, but not in the Department's name, and amounts uncollateralized.

Cash Deposits

Carrying
Amount

Bank
Balances

Risk Categories

2

3

$49,749,868,34 $ 94,899,433,91 $ 600,000.00 $'========O'0:li::0 $ 94,299,433,91

CATEGORIZATION OF INVESTMENTS The carrying amount of the investment balance as of June 30, 1999, shown below is maintained in an investment pool by the Office ofTreasury and Fiscal Services and is not subject to risk categorization.

tiPe ofInvestment State Investment Pool NOTE 3: OPERATING LEASES

Carrying Amount
$J5.539.537.90

The Department has entered into certain agreements to lease real property and equipment which are classified as operating leases. These leases generally contain provisions that, at the expiration date of the original term ofthe lease, the Department has the option ofrenewing the lease on a year-to-year basis. Future minimum

- 19-

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "F"

.NOTE 3: OPERATING LEASES

commitments for operating leases as ofJune 30, 1999, are listed below. Amounts are included only for multiyear leases and for cancellable leases for which an option to renew for the subsequent fiscal year has been exercised.

Fiscal Year Ending June 30
2000

t 867.405.36

Expenditures for rental of real property and equipment under operating leases for the year ended June 30, 1999, totaled $882,694.50.

NOTE 4: INSTALLMENT PURCHASE COMMITMENTS

The Department of Revenue acquires certain equipment through multi-year installment purchases with varying terms and options. The majority ofthese agreements contain fiscal funding clauses in accordance with O.C.G.A. 50-5-64 which prohibits the creation ofa debt to the State of Georgia for the payment of any sums under such agreements beyond the fiscal year of execution if appropriated funds are not available. If renewal of such agreements is reasonably assured, however, installment purchases requiring appropriation by the General Assembly of Georgia are considered noncancellable for financial reporting purposes.

At June 30, 1999, future minimum commitments under installment purchases for equipment are as follows:

Fiscal Year
Ending June 30
2000 2001
Total Future Minimum Commitments
Less: Amounts Representing Interest
Present Value ofFuture Minimum Commitments
NOTE 5: CHANGES IN GENERAL FIXED ASSETS

$ 584,671.25 584.671.25
$ 1,169,342.50
104.577.80
$.1,064.764.70

In accordance with the statutory definition of moveable personal property as defined in Official Code of Georgia Annotated Section 50-16-161, only those items with an acquisition cost of $1,000.00 or greater are reflected in the General Fixed Assets Account Group.

The following is a summary ofchanges ofequipment in the General Fixed Assets Account Group during the fiscal year:

-20-

PEPARTMENT OF REVENUE
NOTES TO THE FINANCIAL STATEMENTS
JUNE 30, 1999

EXHIBIT "F"

NOIE 5: CHANGES IN GENERAL FIXED ASSETS

Balance July 1, 1998 Additions Deductions Balance June 30, 1999
NOTE 6: GENERAL LONG-TERM DEBT

$13,224,752,85
3,681,861.76 14,214,00
$16,892.400.61

CHANGES IN GENERAL LONG-TERM DEBT A summary of changes in General Long-Tenn Debt for the year ended June 30, 1999, follows:

Balance July 1, 1998 Retroactive Restatement ofPrior
Year Balance

Installment Compensated Purchase
Absences Commitments

Total

$ 4,733,987,16 $ 984,252,71 $ 5,718,239,87

475,645,18

475,645,18

Balance July 1, 1998 - Restated

$ 4,733,987,16 $ 1,459,897.89 $ 6,193,885.05

Additions Annual Leave Earned and Utilized (Net)
Salaries Salary Related Fringe Benefits Current Year Purchases Deductions

362,391.32 27,722,94

215,938.39 611.071.58

362,391.32 27,722,94
215,938,39 611.071.58

Balance June 30, 1999

$ 5.J24JOk,42 $j,064,764.70 $ 6,188,866.12

NOTE 7: RISK MANAGEMENT

Public Entity Risk Pool

The State Personnel Board, Merit System ofPersonnel Administration administered for the State ofGeorgia a program ofhealth benefits during fiscal year 1999 for the employees ofunits ofgovernment ofthe State of Georgia, units ofcounty government and local education agencies located within the State of Georgia, This plan is funded by participants covered in the plan, by employers' contributions paid by the various units of government participating in the plan, and appropriations made by the General Assembly of Georgia. The State Personnel Board, Merit System ofPersonnel Administration contracted with Blue Cross Blue Shield ofGeorgia to process claims in accordance with the State Employees' Health Benefit Plan as established by the State Personnel Board.

- 21-

DEPARTMENT OF REVENUE
NOTES TO THE FINANCIAL STATEMENTS
ruNE 3Q. 1999

EXHIBIT "F"

NOTE 7: RISK MANAGEMENT
Other Risk Management
The Department ofAdministrative Services (DOAS) has the responsibility for the State ofGeorgia ofmaking and carrying out decisions that will minimize the adverse effects of accidental losses that involve State government assets. The State believes it is more economical to manage its risks internally and set aside assets for claim settlement. Accordingly, DOAS processes claims for risk of loss to which theState is exposed, including general liability, property and casualty, workers' compensation, unemployment compensation, and law enforcement officers' indemnification. Limited amounts of commercial insurance are purchased applicable to property, employee and automobile liability, fidelity and certain other risks. The Department is part of the State of Georgia reporting entity, and as such, is covered by the State of Georgia risk management program administered by DOAS. Premiums for the risk management program are charged to the various state organizations by DOAS to provide claims servicing and claims payment.
NOTE 8: RETIREMENT PLANS
EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Plan Description The Department ofRevenue participates in the Employees' Retirement System ofGeorgia ("ERS"), a singleemployer, defined benefit plan established by the General Assembly ofGeorgia for the purpose of providing retirement allowances for employees of the State of Georgia.
The benefit structure ofERS is defined by State statute and wassignificantly modified on July 1, 1982. Unless elected otherwise, an employee who currently maintains membership with ERS based upon State employment that started prior to July 1, 1982, is an "old plan" member subject to the plan provisions in effect prior to July 1, 1982. All other members are "new plan" members subject to the modified plan provisions.
Under both the old plan and new plan, members become vested after 10 years of creditable service. A member may retire and receive normal retirement benefits after completion of 10 years of creditable service and attainment ofage 65. If 10 years ofservice is completed and age 60 is reached, the member may retire with a reduced benefit. Additionally, there are certain provisions allowing for retirement after 25 years of service regardless of age.
Retirement benefits paid to members are based upon a formula which considers the monthly average of the member's highest twenty-four consecutive calendar months of salary, the number of years of creditable service, and the member's age at retirement. Postretirement cost-of-living adjustments are also made to member's benefits. The normal retirement pension is payable monthly for life; however, options are available for distribution ofihe member's monthly pension at reduced rates to a designated beneficiary upon the member's death. Death and disability benefits are also available through ERS.
The ERS issues a financial report each fiscal year which may be obtained through ERS.
-22 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT"F"

NOTE 8: RETIREMENT PLANS
. EMPLOYEES' RETIREMENT SYSTEM OF GEORGIA
Funding Policy As established by State statute, all full-time employees ofthe State of Georgia and its political subdivisions, who are not members of other state retirement systems, are eligible to participate in the ERS. Both employer and employee contributions are established by State statute. The Department's payroll for the year ended June 30, 1999, for employees covered by ERS was $41,571,923.66. The Department's total payroll for all employees was $49,762,384.08.
Under the old plan, member contributions consist of4% of annual compensation up to $4,200.00 and 6% of annual compensation in excess of $4,200.00. Of these member contributions, the employee pays the first 1.25% and the employer pays the remainder on behalf of the employee. Under the new plan, member contributions consist solely of 1.25% of annual compensation paid by employee. The Department also is required to contribute at a specified percentage of active member payroll determined annually by actuarial valuation. For the year ended June 30, 1999, the ERS employer contribution rate for the Department amounted to 15.75% of covered payroll and included the amounts contributed on behalf of the employee under the old plan referred to above. Employer contributions are also made on amounts paid for accumulated leave to retiring employees.

Total contributions to ,the plan made during fiscal year 1999 amounted to $7,066,198.68, of which $6,546,544.87 was made by the Department and $519,653.81 was made by employees. These contributions met the requirements ofthe plan. There is no net pension obligation for the plan. Employer contributions (annual pension cost) for the current fiscal year and the preceding two fiscal years are as follows:

Fiscal Year

Annual Pension Cost

Percentage Contributed

Net Pension Obligation

1999 1998 1997

$ 6,546,544.87

100%

N/A

$6,130,126.02

100%

N/A

$ 6,000,615.22

100%

N/A

Actuarial and Trend Information Actuarial and historical trend information is presented in the ERS June 30, 1999, financial report which may
be obtained through ERS.

GEORGIA DEFINED CONTRIBUTION PLAN

Plan Description The Department of Revenue participates in the Georgia Defined Contribution Plan ("GDCP") which is a single-employer defined contribution plan established by the Georgia General Assembly for the purpose of providing retirement coverage for State employees who are temporary, seasonal, and part-time and are not members of a public retirement or pension system. GDCP is administered by the Employees' Retirement System Board ofTrustees.

-23 -

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
JUNE 30. 1999

EXHIBIT "F"

NOTE 8: RETIREMENT PLANS
GEORGIA DEFINED CONTRIBUTION PLAN
Benefits A member may retire and elect to receive periodic payments after attainment of age 65. The payment will be based upon mortality tables and interest assumptions to be adopted by the Board. Ifa member has less than $ 3,500 credit to hislher account, theBoard has the option ofrequiring a lump sum distribution to the member in lieu of making periodic payments. Upon the death of a member, a lump sum distribution equaling the .amount credited to his/her account will be paid to the member's designated beneficiary. Benefit provisions are established by State statute.
The Employees' Retirement System of Georgia (ERS) issues a financial report each fiscal year which may be obtained through ERS.
Contributions and Vesting Member contributions are seven and one-half percent (7.5%) of gross salary. There are no employer contributions. Contribution rates are established by State statute. Earnings are credited to each member's account in a manner established by the Board. Upon temrination ofemployment, the amount ofthe member's account is refundable upon request by the member. The Department's payroll for the year ended June 30, 1999, for employees covered by GDCP was $6,857,020.10. The Department's total payroll for all employees was $49,762,384.08.
Total contributions made by employees during fiscal year 1999 amounted to $514,282.92 which represents 7.50% ofcovered payroll. These contributions met the requirements ofthe plan.
.NOTE 9: LEAVE POLICIES
Employees earn ten hours ofsick leave each month with a maximum accumulation ofninety dayS. Unused accumulated sick leave does not vest with the employee and is forfeited upon retirement or termination of employment.
Employees earn annual leave ranging from ten to fourteen hours each month depending upon the employees' length ofcontinuous State service with a maximum accumulation offorty five dayS. Employees are paid for unused accumulated annual leave upon retirement or temrination ofemployment. See Note 1 - Compensated Absences.
Certain employees who retire with one hundred and twenty dayS or more of forfeited annual and sick leave are entitled to additional service credit in the Employees' Retirement SyStem of Georgia.

-24-

DEPARTMENT OF REVENUE NOTES TO THE FINANCIAL STATEMENTS
WNE30.1999

EXHIBIT "F"

NOTE 10: OTHER FINANCIAL NOTE
PAYMENTS MADE ON BEHALF OF LOCAL GOVERNMENTS Certain employees ofthe offices ofthe tax commissioners, tax collectors and tax receivers of the counties of the State of Georgia have been declared by State law to be adjuncts of the Department of Revenue. As a result, the Department has been directed by statute to pay the employer's portion of State retirement and Federal social security benefits for employees of these offices from funds appropriated by the General Assembly. During the year ended June 30, 1999, the Department paid $2,690,394.00 to the Employees' Retirement System of Georgia for retirement benefits and paid $732,399.71 to the local governments for social security benefits for these offices.
NOTE 11: CONTINGENCIES
Amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies. This could result in refunds to the grantor agency for any expenditures which are disallowed under grant terms. The amount ofexpenditures which may be disallowed by the grantor cannot be determined at this time although the Department expects such amounts, if any, to be immaterial to its overall financial position.
Litigation, claims and assessments filed against the Department ofRevenue, if any, are generally considered to be actions against the State ofGeorgia. Accordingly, significant litigation, claims and assessments pending against the State of Georgia are disclosed in the State of Georgia Comprehensive Annual Financial Report for the fiscal year ended June 30,1999.

-25 -

SUPPLEMENTARY INFORMATION -27 -

PEPARTMENT OF REVENUE COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENcy FUNDS YEAR ENDEp JUNE 30. 1999

EXHIBIT"G"

(3) MARTA SALES TAX DISBURSEMENTS To Office of Treasury and Fiscal Services For Distribution to MARTA To State Revenue Collections Fund
see notes to the financial statements.

-28-

$ 274,585,390.59 2.686,729.71
$ 2n272,120.30

DEPARTMENT OF REVENUE COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
FIDUCIARY FUND TYPE - AGENCY FUNDS YEAR ENDED JUNE 30. 1999

EXHIBIT"G"

See notes to the financial statements.

-29-

DEPARTMENT OF REVENUE

SCHEDULE "1"

SCHEDULE OF REQUIRED SupPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

YEAR ENDED .rrJNE 30. 1999

The Department of Revenue (DOR) has identified numerous computer systems and other electronic equipment (Systems) that are critical to operations which are affected by the year 2000 issue. The year 2000 issue is the result of shortcomings in many electronic data processing systems and other equipment that make operations beyond 1999 troublesome. These Systems include both "outsourced" Systems where the State of Georgia through the Department of Administrative Services (DOAS) is responsible for remediation efforts and "in-house" Systems where DOR is responsible for remediation efforts. The following stages have been identified as necessary to implement a year 2000 compliant system.

:'-wareness Stage - Encompasses establishing a budget and project plan for dealing with the year 2000 Issue.
Assessment Stage - The actual process ofidentifying all systems and individual components ofsystems to check for compliance.
Remediation Stage - The time when changes are made to systems and equipment.
Validationtresting Stage - The process of ensuring that the changes made to systems and equipment will produce a year 2000 compliant system.

It will be necessary for the DOR to progress through all four of these stages for each computer and/or electronic system, not already year 2000 compliant, in order to assure that these systems will not be adversely affected. The following is a list of the Systems, their primary function, and the year 2000 compliance stage the Systems are in as defined by Governmental Accounting Standards Board Technical Bulletin No. 98-1, as amended by Technical Bulletin No. 99-1.

Systems

Primary Function

Compliance Stage at June 30. 1999

Compliance Stage Necessary for Completion

1) Corporate Income Tax Remediation
2) Corporate Income Tax Rewrite - Phase I
3) Individual Income Tax Remediation
4) Individual Income Tax Rewrite - Phase I
5) Sales Tax Remediation

Processes tax returns, payments, and refunds for businesses.
Processes tax returns, payments, and refunds for businesses.
Processes tax returns, payments, and refunds for individual taxpayers.
Processes tax returns, payments and refunds for individual taxpayers.
Collects, calculates, tracks, and distributes local taxes to Georgia counties on a monthly basis.

Validationtresting Stage - None Completed

Remediation Stage

VaHda1ion!I'esting Stage

Validationtresting Stage - None Completed

Remediation Stage

ValidationfI'esting Stage

Validationtresting Stage - None Completed

See notes to the financial statements.

-30-

DEPARTMENT OF REVENUE

SCHEDULE "1"

SCHEDULE OF REQUIRED SlWPLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

. YEAR ENDED JUNE 30. 1999

Systems 6) Withholding Rewrite -
Phase I 7) Withholding Rewrite -
Phasell 8) Field Service Applications
9) Infrastructure
10) GRITS Security
11) Central Taxpayer Accounting (CTA)
12) Central Taxpayer Registration (CTR)
13) Mail/Cash
14) NC Registration and Title System
15) MY Registration and Cash Mgmt Remediation
16) Miscellaneous
17) Correspondence

Primaty Function

Compliance Stage at June 30.1999

Compliance Stage Necessary for Completion

Processes returns and employee tax Validation/Testing Stage- None payments withheld by employers. Completed

Processes returns and employee tax Remediation Stage payments withheld by employers.

Validation'Testing Stage

Processes data at the regional field Validation/Testing Stage- None offices to audit and collect taxes. Completed

Replaces or remediates personal and network computers, desktop software, and network devices.

Validation/Testing Stage- None Completed

Secures the systems used to capture and maintain taxpayer information.

Validation/Testing Stage- None Completed

Integrated accounting system that post tax payments, liabilities, assessments, and refunds.

Validation/Testing Stage- None Completed

Central repository oftaxpayer information on individuals and businesses.

Validation/Testing Stage- None Completed

Performs initial data capture oftax documents, process payments, and produce bank deposit reports.

Validation/Testing StageCompleted

None

Integrated, on-line system for processing motor vehicle tags and titles.

Validation/Testing StageCompleted

None

Processes motor vehicle tags and Validation/Testing Stage- None the accounting for such payments. Completed

Systems supporting various tax operations, such as motor fuel, and alcohol and tobacco.

Validation/Testing Stage Completed

None

Tracks, manages, and retrieves correspondence with taxpayers.

Assessment Stage

Remediation and Validatim'festingStages

See notes to the financial statements.

- 31 -

PEPARIMENT OF REVENUE

SCHEDULE "1"

SCHEDULE OF REQUIRED SuppLEMENTARY INFORMATION

YEAR 2000 DISCLOSURES

.YEAR ENDED JUNE 30. 1999

Systems 18) Central Audit
Applications 19) Property Tax
Applications 20) Imaging
21) Remittance Processing
22) CAMS Replacement 23) Y2K Compliance Test
24) Phoenix Project (peopleSoft)
25) Agency Project Management

Primaxy Function

Compliance Stage at June 30, 1999

Compliance Stage Necessary for Completion

Perform audit operations using internal programs written in FilePro.

Validation!resting Stage- None Completed

Administer property tax operations using internal programs written in FilePro.

Validation!resting Stage- None Completed

Reduces dependency on the retention of hard copy documents, and streamlines data entry and document retrieval.

Assessment Stage

Remediation and Validation'I'estingS1ages

Processes and deposits payments received by the Department of Revenue.

Validation!resting Stage- None Completed

Information and tracking system for Assessment Stage inventory and motor vehicles.

Remediation and Va1ida1ion'festingS1ages

The final quality control step to minimize Y2K disruptions in operations.

Validation!resting Stage ~ None Completed

Implementation ofthe state's new human resource management, payroll, and financial business systems.

Validation!resting Stage- None Completed

Staffand other resources providing centralized focus for the Y2K effort, ensuring work is completed on time and within budget

Validation!resting StageCompleted

None

Expenditures by DOAS for the Phoenix Project cover the State ofGeorgia as a whole and are not detailed by individual agency. The DOR had commitments totaling $55,349,612.00 for the year 2000 issue at June 30, 1999.

See notes to the financial statements.

- 32-

DEPARTMENT OF REVENUE SCHEDULE OF APPROVED BUDGET
YEAR ENDED JUNE 30,1999

SCHEDULE "2"

FUNDS AVAILABLE
REVENUES
State Appropriation Federal Revenues Other Revenues Retained

ORIGINAL

AMENDED

BUDGET

APPROPRIATION APPROPRIATION ADJUSTMENTS

TOTAL

$ 96,148,513.00 $ 17,149,051.00 $ 16,533,381.00 $ 129,830,945.00

212,739.00

212,739.00

5.378,455.00

41.392,257.00

46.770,712.00

$ 101.526.968.00 $ 17,149.051.00 $ 58,138.377.00 $ 176.814,396.00

EXPENDITURES

Personal Services

$

Regular Operating Expenses

Travel

Motor Vehicle Purchases

Equipment

Computer Charges

Real Estate Rentals

Telecommunications

Per Diem, Fees and Contracts

County Tax Officials/Retirement and FICA

Motor Vehicle Tags and Decals

Postage

Inv~stment for Modernization

Year 2000 Project

63,734,438.00 $
5,268,072.00 1.162,429.00
207,300.00 311,242.00 9,726,030.00 2,927,364.00 2,708,870,00 1,244,600.00 3,422,795.00 2,404,350,00 3,506,810,00 4,902,668.00

1,214,224.00 $
19,992.00
1,105,570.00 3,349,438.00
252,061.00 -90,531.00 677,000.00
70,134.00 10,551,163.00

357,531.00 $
215,671.00 25,292.00
-1,105,570.00 1,199,332.00 -252,061.00
252,061.00 2,245,502.00
70,000.00 6,343,130.00 48,787,489.00

65,306,193.00 5,503,735.00 1,187,721.00 207,300.00 311,242.00
14,274,800.00 2,927,364.00 2,870,400.00 4,167,102.00 3,422,795.00 2,404,350.00 3,646,944.00 21,796,961.00 48,787,489.00

$ 101.526,968.00 $ 17,149,051.00 $ 58,138,377.00 $ 176,814,396.00

See notes to the financial statements.

- 33-

DEPARTMENT OF REVENUE CASH AND CASH EQUIVALENTS
JUNE 30,1999

SCHEDULE "3"

NONINTEREST BEARING ACCOUNTS
South Trust Bank of Georgia, NA, Atlanta, Georgia
SunTrust Bank, Atlanta, Georgia
Wachovia Bank of Georgia, NA, Atlanta, Georgia
INTEREST BEARING ACCOUNTS
Bank of America, Atlanta, Georgia
SunTrust Bank, Atlanta, Georgia
Funds on Deposit with Office of Treasury and Fiscal Services State Investment Pool
OTHER
Cash on Hand

$ 1,671,229,20 684,117,33
9,705,244.69 $ 12,060,591,22
$ 35,063,051,51
2,626,225,61 15,539,537,90 53,228,815,02
12,900,00
$ 65,302,306.24

See notes to the financial statements,

- 34-

DEPARTMENT OF REVENUE SCHEDULE OF FEDERAL REVENUES
YEAR ENDED JUNE 30, 1999

PROGRAM
Transportation, U. S. Department of Highway Planning and Construction Direct Motor Carrier Safety Assistance Program Direct State On-Line Enforcement Network Through International Fuel Tax Association, Incorporated

CFDA NUMBER
20,205 20,218
OFA

SCHEDULE "4"
AMOUNT
$ 165,484.00
43,295.00 3,960.00
$ 212,739.00

See notes to the financial statements,

- 35-

DEPARTMENT OF REVENUE SCHEDULE OF OTHER OPERATING EXPENSES
YEAR ENDED JUNE 30,1999
REGULAR OPERATING EXPENSES
Bank Service Charges Clipping Service Computer Billings, Department of Labor Court Costs Evidence Purchase FIFA's Freight, Express and Storage Levies Other Security System Subscriptions and Dues Training Films and Tapes Uniforms
OTHER
INVESTMENT FOR MODERNIZATION Training
YEAR 2000 PROJECT
Training

SCHEDULE "5"

$

430,10

7,639,84

3,233,62

48,549,64

12,704.70

229,822,50

114,046,28

2.278,24

11,151.83

8.382.50

213,078,69

3.908.24

9.513,03

$ 664,739.21

$ 3,390.00 $ 542,858.45

See notes to the financial statements.

-37 -

DEPARTMENT OF REVENUE
ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE -6-

BUSINESS LICENSE TAX
Beer Dealers Wholesalers' Licenses Retailers' Licenses Special Permits License and Brand Registration License Penalties
Liquor Dealers Wholesalers' Licenses Retailers' Licenses License and Brand Registration License Penalties
Wine Dealers Wholesalers' Licenses Retailers' Licenses License and Brand Registration License Penalties
Cigar and Cigarette Dealers Wholesalers' Licenses Manufacturers' Representative License
Coin Operated Amusement Machines Licenses and Permits Less: Refunds Through Office of Treasury and Fiscal Services

$

33,880.00

809,149,48

21,800.00

9,363.50

23,306.25 $

897,499.23

$

27,120.00

479,309.02

24,135.34

14,487.50

545,051.86

$

21,965.00

649,664.50

11,230.16

18,406.25

701,265.91

$

13,300,00

3,050.00

16,350.00

$

1,989,860.00

9,185.00

1,980,675.00

$

4,140,842.00

Netto State Beer Dealers Liquor Dealers
Wine Dealers Cigar and Cigarette Dealers Coin Operated Amusement Machines

$

897,499.23

545,051.86

701,265.91

16,350.00

1,980,675.00

$

4,140,842.00

see notes to the financial statements.

-38-

DEPARTMENT OF REVENUE ANALVSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULEWf:{'

NON-BUSINESS LICENSE TAX

Motor Vehicle Registrations - Tags

AUanta Office Sales

Decalsrrags

$

Miscellaneous Sales

County Office Sales Gross Collections

Undistributed Collections - Other

Less: Refunds Through Office of Treasury and Fiscal Services

Motor carrier Registrations - Tags

Intemational Registration Plan

Collections from Georgia Motor carriers

For Georgia

$

For Other States

Collections from Other States

Miscellaneous Collections

Less: Refunds Through Office of Treasury and Fiscal Services

Motor Vehicle TiUe Registrations

AUanta Office

$

County Offices

TiUe Penalties Georgia Bureau of Investigation Inspection Fees Special Handling Fees

175,375,25 601,496.16 $

776,871,41

146,504,309.64

-1,636,445.39

$

145,644,735.66

5,365,810,84 $

140,278,924.82

10,857,205.37 24,645,305,06 $
$
12,769,300.60 26,213,077.50 $

35,502,510.43 24,709,403.63
775,408.55 60,987,322,61
114,449.81
38,982,378,10 907,650.00 697,824.00
1,747,204.00

60,872,872.80 42,335,056.10

$

243,486,853.72

Disbursement of Intemational Registration Plan

Collections to Other States

Disbursements of Motor Vehicle Registration - Tags

Collections to Non-Game Wildlife Conservation and Wildlife

Habitat Acquisition Fund

$

Collections to United Slates Disabled Athletes Fund

Netto State

cash Balance

July 1,1998

$

June 30,1999

$

24,645,305.06

1,173,522.00 125,525.00
91,899,75 -156,944,26

1,299,047.00 217,607,546,17
-65,044.51

$

243,486,853.72

See notes to the financial statements.

-39-

DEPARTMENT OF REVENUE ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE -6-

CORPORATE NET WORTH TAX Domestic and Foreign Corporations Current, Delinquent and Penalties
Netto State
ESTATE TAX Original Returns and Additions Less: Refunds Through Office of Treasury and Fiscal Services
Netto State
FINANCIAL INSTITUTIONS BUSINESS OCCUPATION TAX Original Returns and Additions
Netto State

$ ==2=50,3;;;;;8~8,:=;60;;;;;3o;;;,9=7 $ ====2=50,3;;;;;88~,6:=;0;;;;;3.,97=
$ 114,667,531,64 3,475,270,01 $ =====1=11=,1=92=,2;;;6..1.=,6;0,,3
$ =====1==11~,1=92:=;,2=60.;,1,.63;;"
$ ====1=2=,50.;,16:=;,3.7.9..,=59= $ _ _1.:.:;2i!Oi!5_16~!3=7==9.=59;;"

See notes to the financial statements.

-40-

DEPARTMENT OF REVENUE ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE -6-

INCOME TAX Corporations Original Returns, Additional Tax, Interest and Penalties Estimate of Taxes
Less: Refunds Through Office of Treasury and Fiscal Services Individuals
Original Returns, Additional Tax, Interest and Penalties Estimate of Taxes Fiduciary Withholdings
Less: Refunds Through Office of Treasury and Fiscal Services

$

127,292,355.02

858,856,139.90

$

986,148,494.92

185,741,670.85 $

800,406,824.07

$ 553,911,602,90 949,314,280.31 14,933,434.47
5,245,875,868.38
$ 6,764,035,186.06
1,063,277,021.30

5,700,758,164.76

$ 6,501,164,988,83

Disbursement for Attorney's Fees Federal Employees' Retirement Setuement
Disbursement for Collection Costs Reimburse Budget Fund
Netto State Cash Balance
July 1,1998 June 30, 1999

$

4,330,188.14

1,962,324.00 6,474,062,883.49

$

-9,774,553.48

30,584,146.68

20,809,593.20

$ 6.501,164,988.83

See notes to the financial statements.

-41-

DEPARTMENT OF REVENUE ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE -6"

PROPERTY TAX

County Tax Digest Accounts

Vehicle

$

Property

Mobile Home

Timber

Intangible

Not on Digest

Interest

Penalties

Miscellaneous Undesignated General Collections

Less: Refunds Through Office of Treasury and Fiscal Services Intangible Recording Gross Collections

4,505,967,87 37,708,959.00
249,432,12 156,545,17
170,36 338,275.83 190,181,26 445,130,90 $
$

43,594,662,51 128,643.33
43,723,305,84 269,979,85 $

43,453,325.99 1,161,125.90

$ ==44===:,6..1.=4,=45;,,;1=.8-.9

Commissions Paid on Above County Digest Accounts Receiver Collector
Intangible Recording
Netto State County Tax Digest Accounts Intangible Recording
Cash Balance July 1, 1998

$

459,876,08

1,630j822.50 $

2,090,698.58

61,847.47

$

2,152,546,05

$

41,343,792,05

1,097,288,72

42,441,080.n

20,825.07

$

44,614,451,89

See notes to 1he financial statements.

-42-

DEPARTMENT OF REVENUE
ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30,1999

SCHEDULE "S"

PUBLIC UTILITIES
Property Tax AI:J Valorem Tax Railroad Companies
Assessments 1999 Collections

$

8,307.76

1,137,480.69

Netto State
TAXES BASED ON SALES
Sales and Use Tax Monthly Collections by General Accounting Office Regular Motor Fuel
Less: Refunds Through Office of Treasury and Fiscal Services Regular Motor Fuel

$ ===1=,1,;,,;4.=5,=78;;;;8=.4==5 $ ===1=,1=4=5,=.:78=8=.:,4=5

$ 4,377,752,129.92 140,224,593.57 $ 4,517,976,723.49

$

38,203,368.53

550.038.60

38,753,407.13

$ 4.479,223,316.36

Commissions Paid on Above Regular Motor Fuel
Netto State Regular Motor Fuel
cash Balance July 1,1998 June 30,1999

$

39,579,094.17

3.674,931.55 $

43,254,025.72

$ 4,297,050,926.82 135,999,623.42

4,433,050;550.24

$

-1,342,230.03

4,260,970.43

2,918,740.40

$ 4.479,223,316.36

See notes to the financial statements.

-43-

See notes to the financial statements.

-44-

DEPARTMENT OF REVENUE ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE "6"

TAXES BASED ON SALES

Motor Fuel Collections Aviation Dealers Gasoline Dealers Diesel Operators Bonded L. P, Gas Operators - Bonded Undistributed by Fuel Type Penalties and Interest Compressed Natural Gas

$

65,525.43

343,190,367.15

110,216,894,32

364,955.74

611,496,40

1,395,968,88

256.428.42 $ 456,101,636.34

Commissions Allowed

3,334,675.95 $ 459,436,312.29

Motor Carrier Mileage Tax Collections Penalties and Interest

$

9,205,169.90

181,113,51

9,386,283.41

$ 468,822,595;70

Less: Total Returned Checks Through Motor

Fuel Revolving Accounts

Refunds Through Office of Treasury and Fiscal Services

Agriculture

$

International Fuel Tax Agreement

. Motor Carrier

Retail Dealers

$
1,576,875,93 33,489,642.79
149,856.04 487.227,84

57,014.25 35,703.602.60

35,760,616,85

$ 433,061,978,85

Commissions Paid on Above (Retained at Collecting Source)

Netto State

Cash Balance

July 1,1998

$

June 30,1999

$
-401,827.59 396.681.71

3,334,675,95 429,732,448.78
-5,145.88

$ 433,061,978.85

See notes to the financial statements.

-45-

DEPARTMENT OF REVENUE
ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE -6-

FINES AND FORFEITURES Beer - Malt Beverage Uquor Wine Cigars and Cigarettes

BOND FORFEITURES

$

$

59,250.29

PENALTIES 53,784.63 $ 31,231.93 60,880.39
4,689,769.56

TOTAL 53,784.63 90,482.22 60,880.39
4,689,769,56

$

59,250.29 $

4,835,666.51 $

4,894,916,80

Netto State

$

4,894,916,80

PEACE OFFICERS AND PROSECUTORS TRAINING FUND
Fees from Court Fines and Bond Forfeitures Less: RefundS Through Office of Treasury and Fiscal Services

$

19,373,457.48

1,387.68 $

19,372,069.80

Netto State

$

19,372,069.80

UNCLAIMED PROPERTY Proceeds from Sale of Abandoned Property

$

28,384,356,36

Disbursement for Undaimed Property Expense Reimburse Budget Fund
Netto State

$

2,363,957.00

26,020,399.36

$

28,384,356.36

STATE CHILDREN'S TRUST FUND
Fees from Marriage Ucenses and Divorce cases Less: Refunds Through Office of Treasury and Fiscal Services

$

1,202,595.00

1,067.00 $

1,201 ,528.00

Netto State

$

1,201,528.00

see notes to the finandal statemenls.

-46-

DEPARTMENT OF REVENUE ANALYSIS OF STATE REVENUE COLLECTIONS
YEAR ENDED JUNE 30, 1999

SCHEDULE -6-

EARNINGS - GENERAL GOVERNMENT
Homestead Option Sales Tax Collection Cost
Local Option Sales Tax Collection Cost
MARTA Sales Tax Collection Cost
Motor Carriers' Fees Motor Fuel Truck Registration Temporary Permits
Penalties for Non-Registration
Real Estate Transfer Tax Collection Cost
Sales Tax for Educational Purposes Collection Cost
Special Purpose Sales Tax Collection Cost
Other Fees Fees on Contracts International Fuel Trade Agreement Registration Liquor Investigation Fees Miscellaneous Collections Motor Fuel Dealers' Registration Fees Unallocated Collections - Motor Fuel Unallocated Collections - Alcohol and Tobacco

$

803,895.88

8,365,5n.48

2,686,729.71

$

114,080.00

65,370.10

$

4,100.00

170,619.00

83,900.00

-7,403,132.40

1,380.00

-380,607.08

251,877.09

179,450.10 262,018.36 9,033,368.82 7,713,084.89
-7,271,863.39

$

21,772,261.85

Netto State cash Balance
July1,1998 June 30, 1999

$

21,750,704.38

$

-116,496.04

138,053.51

21,557.47

$

21,n2,261.85

see notes to the financial statements.

-47-

Totals per Annual Supplement

Accruals June 30, 1998 June 30,1999

Adjustments Reese, Rich,

Robert G. Dennis C.

DEPARTMENT OF REVENUE RECONCILIATION OF TRAVEL
YEAR ENDED JUNE 30. 1999

SCHEDULE -.,..
$ 1,104,893.85 -1,251.88 2,287.16 1,053.38 198.50
$ 1,107,181.01

See notes to the financial statements.

-48-

DEPARTMENT OF REVENUE . SUMMARY OF SALARIES, TRAVEL. AND PER DIEM AND FEES
YEAR ENDED JUNE 30,1999

SCHEDULE "8"

Regular Computer Charges Investment for Modernization Year 2000 Project

SALARIES

TRAVEL

$ 48,792,412,73 $ 1,095,494,09 $

244,600,14 725,371,21

11,686.92

PER DIEM AND FEES
1,408,173.39 27,332.25
188,795.83 330,000.00

$ 49,762,384.08 $ 1,107,181.01 $ =~1&,9=54::i::!:,3=0=1=.4=7

See notes to the financial statements.

-49 -

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

DEPARTMENT OF REVENUE
AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QlJESTIQNED COSTS YEAR ENDED JUNE 30. 1999

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-474-97-01 FS-474-97-02 FS-474-97-03 FS-474-97-05 FS-474-98-01 FS-474-98-02 FS-474-98-03 FS-474-98-04 FS-474-98-05

Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Further Action Not Warranted Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented Umesolved - See, Corrective Action/Responses

CORRECTIVE ACTIONIRESPONSES

CASH AND CASH EQUNALENTS Inadequate Accounting Procedures Finding Control Number: FS-474-98-01

Prior Year Management Response

We concur with this finding. The Department has hired an accounts payable supervisor who is responsible for monitoring the reconciliation ofbank accounts. The accounts payable supervisor will be used to better separate employees' duties in the performance ofmaintaining and reconciling bank accounts. The Accounting Director is taking steps to assure the bank accounts are maintained and reconciled on a timely basis. The following is a list of planned and completed corrective actions for the five (5) deficiencies cited in this finding. They are numbered according to the deficiency to which they apply.

I. Bank reconciliation duties are being reviewed and reassigned to provide for adequate separation of duties.

2. The General Funds Transfer Account is being reconciled to the General Ledger monthly.

3. The bank reconciliations are being monitored monthly to determine their status. All accounts will be current prior to the end ofthe fiscal year.

4. We are working with the banks to identify and correct reconciling items.

5. The majority of outstanding checks are attributed to large volume account which are full reconciliation accounts maintained by the banks. We have met with the banks and have instructed them to void, on a monthly basis, any checks over 180 days old.

-I -

DEPARTMENT OF REVENUE
AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-474-98-01
Current Year Management Response
The recommended corrective actions have been implemented.
REVENUE/RECEIVABLES/RECEIPTS GENERAL LEDGER Deficiencies in the State Revenue Collectio!1s Fund (Overall) Finding Control Number: FS-474-98-02
Prior Year Management Response
We agree with this finding. Corrective actions for each of the deficiencies of the finding are discussed as follows:
In response to deficiencies 1,2 and 5, a comprehensive study of the Central Accounting Unit has been completed by an outside accounting firm concerning the implementation of a dual-entry accounting system. We are actively working towards the implementation ofPeopleSoft to replace our current system. We plan to implement the new system during the fiscal year 2000.
In response to deficiency 3, procedures to notify all responsible Division personnel of known adjustments, in a timely manner, have been put in place. Rejected electronic funds transfers are posted within two days ofnotification by the bank as returned items on the CTA system. NSF and returned checks are similarly posted to the CTA system. Once posted notices are sent to the taxpayer and the original check returned to CTA.
In response to deficiency 4, the Department has established a Loose Check Section to track and process any check that is not attached to the applicable document. .Any checks that cannot be identified will be placed in a "suspense account" and deposited by Central Accounting. The section will also maintain a copy of the checks and track their final disposition. In addition, the Internal Administration Division will set up procedures whereby documents with checks that prematurely leave the processing flow will be logged and the log will be monitored. Finally, the entire process will be reviewed periodically by our Internal Audit/Operations Analysis Unit.
-2-

DEPARIMENT OF REVENUE
AUDITEE'SRESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
REVENUE/RECENABLES/RECEIPTS GENERAL LEDGER Deficiencies in the State Revenue Collections Fund (Overall) Finding Control Number: FS-474-98-02
Prior Year Management Response
In response to deficiency 6, the Department ofRevenue recognizes and agrees that proper cut-offs may not be strictly followed in every instance; however, more research is needed in the area to adopt a feasible and agreeable resolution to the problem.
Current Year Management Response
Deficiencies 1, 2, 5 and 6 are still being addressed as we are implementing PeopleSoft to accommodate the dual-entry accounting system.
Deficiencies 3 and 4 have been corrected as stated previously.
REVENUE/RECENABLES/RECEIPTS GENERAL LEDGER Deficiencies in the. Income Tax Division Subsidiary Records Finding Control Number: FS-474-98-03
Prior Year Management Response
In response to audit finding FS-474-98-03, the Income Tax Division acknowledges the issues presented in the report. The Income Tax Division is working toward the resolution of these audit issues in the rewrites ofthe withholding and individual systems.
Corrective actions for each ofthe three deficiencies ofthe finding are discussed as follows:
1. The second phase of the withholding processing system is designed with the functionality to interact with the planned rewrite of the individual processing system. The documented employer withholding tax will be systematically compared to the amounts claimed by taxpayers on the individual returns to assist with compliance issues.
-3-

DEPARTMENT OF REVENUE
AUDIIEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
REVENUE/RECEIVABLES/RECEIPTS GENERAL LEDGER Deficiencies in the Income Tax Division Subsidiary Records Finding Control Number: FS-474-98-03
Prior Year Management Response
The design of the new individual income tax system is currently being developed. The new individual income tax system will include a program to compare the federal income tax master file tape to the Georgia returns file, to reconcile the federal adjusted income claimed on the Georgia return to the federal return.
2. In the redesign of the withholding and individual systems, there will be adequate system
controls to track adjustments to ensure that all are processed in a timely manner. The systems will be designed to produce automated aging reports for regular management review to assure that adjustments are made timely.
3. Implementation ofPhase I ofthe withholding system relieved the Department from maintaining a hand-prepared log book. Printouts ofthe batch listings from the system are now maintained in lieu of the log. Phase II will provide an adequate system of accounting controls to utilize automated procedures to ensure that all batches are processed by the system prior to purging.
Current Year Management Response September. 1999
In response to audit finding FS-474-98-03, the Income Tax Division acknowledges the issues presented in the report. The Income Tax Division is working toward the resolution ofthese audit issues in the rewrites ofthe withholding and individual systems.
Corrective actions for each ofthe three defiCiencies ofthe finding are discussed as follows:
1. The comparison of withholding information between the new withholding and individual system is targeted for the second phase ofeach system. The withholding system is in the initial stages ofthe second phase. Implementation ofthe new individual system is scheduled for midNovember, 1999. Preliminary studies are presently being conducted in anticipation of the second phase ofthe individual system.
In the interim, a study is being implemented to determine the feasibility of a pilot project using a small segment of the W2 information filed for 1998 and compared to associated individual returns.
-4-

DEPARTMENT OF REVENUE
AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDEn JUNE 30.1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QIJESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
REVENUE/RECENABLES/RECEIPTS GENERAL LEDGER Deficiencies in the Income Tax Division Subsidiary Records Finding Control Number: FS-474-98-03
Current Year Management Response September. 1999
2. In the second phases of the redesign of the withholding and individual systems, there will be adequate system controls to track adjustments to ensure that all are processed in a timely manner. The systems will be designed to produce automated aging reports for regular management review to assure that adjustments are made timely.
3. The purge process is scheduled for the second phase of the new withholding system. When completed, the purge process for the new system will include edits that will not allow a batch not processed to be purged. Prior to the purge process, a report will be generated for all batches not processed.
Currently a report for all batches not processed in the withholding system is requested on a monthly basis. Further automated accounting controls will be implemented in the second phase of the withholding system with a request that this report be systematically generated on a monthly basis, rather than being generated on demand. In the interim, written office procedures have been implemented to assure that this report is requested on the predetermined time schedule to assure all batches are processed in a timely manner.
EXPENDITURESILIABILITIESIDISBURSEMENTS GENERAL LEDGER Deficiencies in the Sales Tax Division Subsidiary Records Finding Control Number: FS-474-98-04
Prior Year Management Response
We concur with this finding. The Division has initiated a program to formally document specific policies and procedures including descriptions of key Division responsibilities, policies and functions. As ofJanuary, 1999, the Division has completed training and procedure manuals for two (2) of the three (3) major operating sections (Data Entry and Data Balance) and is finalizing manuals for its Error Resolution section. This documentation should be complete by July, 1999.
-5-

DEPARTMENT OF REVENUE AlIDIIEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE .ACTIONIRESPONSES
EXPENDITURESILIABILITIESIDISBURSEMENTS GENERAL LEDGER Deficiencies in the Sales Tax Division Subsidiary Records Finding Control Number: FS-474-98-04
Current Year Management Response
We have completed our Policy and Procedures Manual for all processing areas (Data Entry, Data Balance and Error Resolution).
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Finding Control Number: FS-474-98-05
Prior Year Management Response
1. The Procurement Office has recently hired a Property and Supply Supervisor to take control of all property listed on the Property Management System. This individual is responsible for ensuring that Divisional property is decaled and entered into the Property Management System in a timely manner. Currently, all property over thirty (30) days old is entered and decaled. It is anticipated that future purchases ofequipment will be decaled and entered within thirty (30) days. The Procurement and Services Officer, Senior will review monthly reconciliation reports to ensure all equipment that is paid by Central Accounting has been entered into the Property Management System.
2. The Procurement Office makes every effort to ensure that the year end property reports covering additions and deletions ofproperty are balanced. The Procurement Office personnel believe that the unidentified variance of $34,560.81 is a timing issue and is not a true out of balance condition. Ifdata is entered on these reports after the report is ordered, then this would cause the reports to be out ofbalance.
3. Documentation covering additions and deletions of equipment on the Property Management System is maintained by the Procurement Office. Documentation for one (1) item referenced by the audit report is in the property file. Documentation for the second item cannot be located. Every effort will be made to ensure that documentation for all transactions is properly filed.
-6-

DEPARIMENT OF REVENUE AUDITEE'S RESPONSE
SUMMARy SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30. 1999
PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CORRECTIVE ACTIONIRESPONSES
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Finding Control Number: FS-474-98-05
Prior Year Management Response
The Procurement Office has implemented controls to ensure equipment inventory records are monitored and accurately maintained. Meetings have been held with Property Coordinators, Supervisors and Directors to resolve pending inventory issues and reinforce established internal procedures.
Current Year Management Response
Corrective action 1, 2 and 3 have been accomplished, also additional steps in asset management to further ensure assets are accounted for.
1. Upon approval ofpurchase order, notification is sent to buyers requesting verification ofreceipt of fixed asset. Ensuring that property entered on the Asset Management System in a timely manner is always the objective of Asset Management.
a. Property reconciliation procedure is followed as stated in property reconciliation manual.
b. Monthly focus is given to amountpaid for equipment received as shown in the accounting system and amounts added to the Asset Management System.
2. Property information reports are matched with accounting system reports of same accounting periods.
a. Analyzes report to identify items added to one system, but not added to another.
3. Daily Transaction files are maintained and checked for errors.
a. When deletion of equipment is done a record ofthe transaction is placed in the deletion file.
b. \Vhen equipment is added to Asset Management System a record ofthe transaction is placed in the addition file.
-7-

SECTION ill CURRENT YEAR FlNDINGS AND QUESTIONED COSTS

DEPARTMENT OF REVENUE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-474-99-01
Our examination included a review ofthe internal accounting controls and accounting procedures utilized by the Department of Revenue (Department) to provide for adequate internal control over assets of the Department. The following deficiencies and inappropriate accounting practices were found to exist:
1) The Department did not provide for adequate separation of employee duties in the performance of maintaining and reconciling six (6) bank accounts.
2) The General Fund Transfer Account was not reconciled to the appropriate accounts on an ongoing basis. Accounting errors, incorrect postings and bank statement cut-off dates not consistent with general ledger cut-offdates contributed to the discrepancies.
3) Bank reconciliations for twelve (12) ofthirty-nine (39) bank accounts were not formally approved during the test months ofFebruary and June 1999.
4) The June 30, 1999, bank reconciliations were not prepared timely for the following four (4) bank accounts: Nations Bank - Payroll Account, Sun Trust - Revenue Collections Account, Nations Bank - International Registration Plan Account .and Nations Bank - General Operating Account. In addition, a review ofsubsequent period bank reconciliations indicated that as ofDecember 30, 1999, no reconciliations had been prepared for six (6) accounts. Another seven (7) accounts had not been reconciled in a timely manner during the subsequent period.
5) Reconciling items identified during the bank reconciliation process were not corrected in a timely manner. A review ofthe bank reconciliations indicates that there were $3,352,220.13 in reconciling items dating from October 1995 that were not corrected as ofJune 30, 1999. In addition, reconciling items were inadequately documented and/or identified on seven (7) bank reconciliations.
6) At June 30, 1999, outstanding checks on v~ous bank accounts totaling $5,973,120.19 remained outstanding in excess of six (6) months.
7) The balance per books for the Federal Retirees H. B. 90 account at June 30, 1999, was $1,442,075.42 and the balance per books for the Corporate Refunds account at June 30, 1999, was $29,596,942.64. The book balance for these two accounts includes many stale-dated checks which were written off during the year under review. The appropriate disposition ofthese funds has not been determined.
These deficiencies were a result of the Department's failure to adequately manage cash assets of the Department.
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DEPARIMENT OF REVENUE SCHEDULE OF FlNDINGS AND QlJESTIONEP COSTS
YEAR ENDED JUNE 3D. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUNALENTS Inadequate Accounting Procedures Finding Control Number: FS-474-99-01
The Department should establish internal controls to ensure that employees'duties are adequately segregated and monthly bank statements are reconciled with the accounting records on a timely basis. The Department should also establish procedures to identify and appropriately account for outstanding and/or stale-dated checks. In addition, the Department should examine the necessity ofeach bank account in an effort to reduce the number ofbank accounts.
REVENUES/RECENABLES/RECEIPTS GENERAL LEDGER Deficiencies in the State Revenue Collections Fund (Overall) Finding Control Number: FS-474-99-02
Our examination included a review ofthe internal accounting controls and accounting procedures utilized by the Department of Revenue (Department) in maintaining their State Revenue Collections Fund. This examination included procedures to provide reasonable assurance that revenue collections received by the Department through either the Mail Cash System (manual deposits by the Department) or the Electronic Funds Transfer Maintenance Unit (electronic fund transfers from taxpayers) were adequately accounted for by the Department's general ledger system maintained by the Central Accounting Unit' and were properly recorded in the subsidiary ledgers .and associated records maintained by the Divisions and individual tax units. Our procedures also included a reconciliation ofthe revenue collections received and subsequently transferred by the Department to the Office of Treasury and Fiscal Services (OIES), which acts as the State treasury. The following deficiencies and inappropriate practices were found to exist:
1) The general ledger system consists of the "Revenue Ledger" and the "Refund Ledger." These ledgers do not provide for dual-entry accounting for the purpose of recognizing receipts and disbursements. Dual-entry bookkeeping is the cornerstone of any accounting system and provides a mechanism to ensure the proper balancing of a general ledger accounting system. Failure to provide for dual-entry accounting inhibits the, Department from producing a ''balanced'' general ledger for audit.
The general ledger system should be redesigned to provide dual-entry accounting for the purpose of recognizing receipts and disbursements.
2) The general ledger system did not include separate accounts to identify each type ofrevenue reported to and recorded by OIES; nor did the system contain unique identifying numbers (transmittal numbers/deposit numbers) for all revenue amounts recorded within the general ledger. These deficiencies result in extensive time and effort being required to reconcile' the financial activity between the Department and OIES.
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DEPARIMENI OF RE\TENUE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Deficiencies in the State Revenue Collections Fund (Overall) Finding Control Number: FS-474-99-02
The general ledger system should be updated to contain the transmittal number and deposit number for each receipt transmitted to and refund requisitioned from OTES. In addition, the chart of accounts should be expanded to contain a separate account for each revenue type reported by OTES.
3) The Central Accounting Unit does not have adequate procedures in place to ensure that necessary corrections to the general ledger resulting from electronic fund transfers, NSF checks, stale-dated checks and returned refund checks are reported in a timely manner to the Divisions and individual tax units. The failure to fully communicate known adjustments in a timely manner to responsible persons within the Department can result in inaccurate financial records and possible financial loss to the State.
The Central Accounting Unit should develop and implement procedures to ensure that all adjustments are communicated to the Divisions and individual tax units responsible for maintaining applicable subsidiary ledgers and associated records.
4) The Department has not established an internal control system whereby the subsidiary ledgers and associated records properly "roll-up" into the general ledger. As a result, the general ledger system and the subsidiary ledger system operate independently of each other and are not reconciled periodically. In addition, there are no consistent cut-offdates established between the two sets of records. A well designed accounting system provides for general ledger control over subsidiary ledgers and records and provides for a linkage between the general and subsidiary records. The lack ofcontrols, which ensure a prompt reconciliation ofthe general ledger and subsidiary records, has resulted in the Department's accounting records in the Divisions and individual tax units being inconsistent, and in certain instances unreconcilable with the general ledger.
The Department should establish policies and procedures that will establish managerial control for the Central Accounting Unit over the subsidiary ledgers and associated records through use of an integrated general and subsidiary ledgers system. In addition, consistent cut-off dates should be established between the two systems and all subsidiary ledgers and associated.records should be reconciled to the general ledger on a monthly basis.
5) The Department has not established an internal control system that requires cash receipts and disbursements to be posted to the "Revenue Ledger" and the "Refund Ledger" in the accounting period in which they occur, allowing discretionary shifting of cash receipts and disbursements between accounting periods. This "shifting of funds" is inconsistent with the Cash Receipts and Disbursements basis of accounting and compounds the problems associated with reconciling the general ledger system and the subsidiary ledgers and associated records maintained by the Divisions.
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DEPARIMENT OF REVENUE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECENABLES/RECEIPTS GENERAL LEDGER Deficiencies in the State Revenue Collections Fund (Overall) Finding Control Number: FS-474-99-02
State Revenue Collections Funds are maintained on the Cash Receipts and Disbursements basis of accounting as prescribed or permitted by statutes and regulations of the State of Georgia. The Department should develop and implement procedures to ensure that cash receipts and disbursements are recorded in the "Revenue Ledger" and the "Refunds Ledger" at the time of occurrence, as required by the Cash Receipts and Disbursements basis of accounting. In addition, the Department should develop and implement procedures to ensure that posting dates in the "Revenue Ledger" and the "Refund Ledger" are consistent with the posting dates in the subsidiary ledgers and associated records.
The deficiencies noted above are a result ofthe Department's failure to provide for a comprehensive, modem accounting system coupled with strong, clear lines of authority and intemal controls. The Department should carefully evaluate each ofthese deficiencies and take appropriate action to resolve these matters.
REVENUES/RECENABLES/RECEIPTS GENERAL LEDGER Deficiencies in the Income Tax Division Subsidiary Records Finding Control Number: FS-474-99-03
Our examination included a review ofthe intemal accounting controls and accounting procedures utilized by the Income Tax Division (Division) ofthe Department ofRevenue (Department) for maintaining subsidiary ledgers and associated records. This review revealed the following deficiencies in the maintenance of subsidiary records by the Division as follows:
1) The Division does not adequately track data received from both companies and individuals concerning taxpayer wages, income tax withholdings or estimated payments ofGeorgia income tax. Onlylimited work in regard to individual confirmation ofForm W-2 information is performed by the Department.
As a result ofthis deficiency, the Division cannot ensure, in all cases, that the withholding amount claimed by the taxpayer on the annual tax return is accurate or that known taxable income is reported as income. This condition resulted due to the Department's failure to design and implement needed procedures, programs or systems.
The Department should design and implement a system that will provide for the- systematic reconciliation ofincome and withholding data received from employers and individuals with Form W-2 and other documents filed with year-end individual tax returns.
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DEPARTMENT OF REVENUE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30.1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
REVENUES/RECEIVABLES/RECEIPTS GENERAL LEDGER Deficiencies in the Income Tax Division Subsidiary Records Finding Control Number: FS-474-99-03
2) Tax examiners of the Individual Income Tax Unit and Withholding Unit of the Division are
responsible for amending tax returns when errors and processing problems are identified as returns
are being processed by the Division. Amendment of the returns involves the tax examiner
submitting adjustments for such items as taxes due and assessment or abatement of interest and
penalty amounts. The Division does not have the necessary systematic controls in place to ensure that all adjustments are processed in a timely manner.
I
The failure to process adjustments in a timely manner could lead to inaccurate financial records. The lack of timely processing is the result ofthe Department not having automated system controls to age the amended returns in process.
The Department should implement enhancements to the computer system to produce an automated aging report of all returns and provide for regular management review ofthe report to assure that adjustments are made timely.
EXPENDIIURESILIABILITIESIDISBURSEMENTS Deficiencies in the Disbursement ofRailroad Car Equipment Tax Finding Control Number: FS-474-99-04
Our examination included a review ofthe internal accounting controls and accounting procedures utilized by the Property Tax Division, Public Utility Section (Division) ofthe Department ofRevenue (Department) for maintaining subsidiary ledgers and associated railroad car equipment tax records. This review revealed that railroad car equipment tax was not being remitted to local governments on a timely basis. The total amount ofundistributed railroad car equipment tax for calendar year 1996 was $3,591,053.98, for calendar year 1997 was $3,929,086.93 and for calendar year 1998 was $4,662,662.79.
Official Code of Georgia Annotated Section 48-5-519 states that "the commissioner shall remit the taxes collected at least once each year".
This deficiency was a result ofthe Department's failure to update the software program utilized to make the railroad car equipment tax distributions.
Subsequent to fiscal year end, the Division distributedthe calendar years 1996 and 1997 collections on October 5, 1999, and the calendar year 1998 collections on January 14, 2000. The Division should ensure subsequent distributions ofrailroad car equipment tax are made on a timely basis in accordance with OCGA Section 48-5-519.
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DEPARTMENT OF REVENUE
SCHEDULE OF FINDINGS AND QlJESIIONEP COSTS YEAR ENDED JUNE 30. 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETSIPROPERIY MANAGEMENT Inadequacies in Operation ofProperty Management System Finding Control Number: FS-474-99-05
For the year under review, Our examination included a review of the internal accounting controls utilized by the Department ofRevenue (Department) in maintaining their State Property System and also included testing the system for compliance with State laws and regulations. The following conditions relating to inappropriate accounting practices were found to exist:
1) Equipment purchases totaling $3,117,235.93 were not promptly added to the property inventory system and were not included in the property inventory records at June 30, 1999. Many of these purchases were in excess of six months old.
2) The Procurement and Services Division does not ensure that the prior year ending inventory balance plus the year end report reflecting additions, changes and deletions, also known as the Transaction History File Report, (pROP 8113) reconciles with the Agency Inventory Report (pROP 8034). At fiscal year end, an unreconcilable variance of$I,114,207.53 existed between the prior year ending inventory balance, the Transaction History File Report and the Agency Inventory Report.
3) Forty-one (41) additions to the property inventory records were selected to test the validity of all additions made to the property inventory records. These additions totaled $2,266,229.00 out of a population of$3,977,015.75. Two (2) equipment items totaling $21,305.00 could not be located.
4) A review ofadditions to the Transaction History File disclosed an overstatement of $1,402,802.00. Sixteen (16) items were posted at the total invoice cost rather than a per unit cost. In addition, two (2) inventory additions were actually 200 computers valued at $938.00 per unit. The property inventory changes report reflected corrections to some of these posting errors; as a result, an unresolved variance of$191,930.00 existed.
5) Three (3) items totaling $14,214.00 were listed onthe deletions report in error.
In addition, fifty-eight (58) equipment items were selected to test the accuracy ofthe Department's property management records. These items contained a value of$I,233,280.00 out ofa population of$16,892,400.61 and were selected for the purpose oflocating the equipment as recorded in the inventory records. Twentythree (23) items totaling $55,784.53 could not be located.
The Department is required to maintain equipment inventories in accordance with provisions of the ~ PrCWerty Manaiement System Manual as published by the Department of Administrative Services. The discrepancies identified above were caused by the Department's failure to follow guidelines for maintaining equipment inventories.
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DEPARIMENT OF REVENUE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED ruNE 30. 1999 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
GENERAL FIXED ASSETSIPROPERTY MANAGEMENT Inadequacies in Operation ofProperty Management System Finding Control Number: FS-474-99-05 As a result of the discrepancies. identified above, we were unable to determine the validity of the total equipment inventory valuation contained in the inventory records, which comprises the General Fixed Assets Account Group. The Department should establish the necessary internal controls and implement procedures to ensure the equipment inventory records are maintained in accordance with the State Property Management System Manual.
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