Management report, Secretary of State, an organizational unit of the state of Georgia, year ended June 30, 1999

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

SECRETARY OF STATE MANAGEMENT REPORT - TABLE OF CONTENTS -

LEITER OF TRANSMITIAL

SECTION!

SELECTED FINANCIAL INFORMATION

EXHIBITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGETFUND

1

SCHEDULES OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGETFUND

B

"A" SECRETARY OF STATE

2

C

"B" REAL ESTATE COMMISSION

3

D RECONCILIATION OF SALARIES

4

SECTION IT
CURRENT YEAR FINDINGS AND QUESTIONED COSTS
SCHEDULE OF FINDINGS AND QUESTIONED COSTS

RussELL W. H1NTON
STATE AUDITOR
(404) 656-2174

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
January 10, 2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia
and Honorable Cathy Cox Secretary of State

Ladies and Gentlemen:

As part ofour audit of the statutory basis financial statements of the State of Georgia presented in the State of Georgia Report ofthe State Auditor, the general purpose financial statements of the State of Georgia presented in the State ofGeorgia Comprehensive Annual Financial Report, and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as of and for the year ended June 30, 1999, we have performed certain audit procedures at the Secretary of State. Accordingly, the financial statements and compliance activities of the Secretary of State were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.

This Management Report contains information pertinent to the financial and compliance activities of the Secretary of State as of and for the year ended June 30, 1999. The particular information provided is enumerated in the Table of Contents.

This report is intended solely for the information and use ofmanagement ofthe Secretary of State and is not ~tended to be and should not be used by anyone other than these specified parties.

. w.~:::is ---..~ .ectfully submitted,

R sell W. Hinton



State Auditor

RWH:gp

SECTION! SELECTED FINANCIAL INFORMATION

SECRETARY OF STATE ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND YEAR ENDED JUNE 30, 1999

EXHIBIT"A"

FUND BALANCE - JULY 1, 1998
Reserved Surplus
ADDITIONS
Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures
Exhibit "B" Exhibit "C" Reimbursement of Prior Year's Expenditures
DEDUCTIONS
Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1998
Adjustment to Prior Year's Accounts Receivable Reserved Fund Balance Carried Over from
Prior Year as Funds Available

"A" SECRETARY
OF STATE

"B"
REAL ESTATE COMMISSION

TOTAL

$ 194,435.46 1,229,111.85 $
$ 1,423,547.31 $

$ 194,435.46 99,932.92 1,329,044.77
99,932.92 $ 1,523,480.23

$ 47,214.54
1,588,820.51 $
902.16
$ 1,636,937.21 $

$ 47,214.54

127,663.83 505.00

1,588,820.51 127,663.83 1,407.16

128,168.83 $ 1,765,106.04

$ 1,229,111.85 $ 15,766.93
194.435.46
$ 1,439,314.24 $

99,932.92 $ 1,329,044.77 15,766.93
194,435.46
99,932.92 $ 1,539,247.16

FUND BALANCE - JUNE 30. 1999

$ 1,621,170.28 $ 128,168.83 $ 1,749,339.11

SUMMARY OF FUND BALANCE
Reserved State Funds Federal Financial Assistance Other Funds
Surplus

$ 807,761.98 30,883.18 80,475.27
$ 919,120.43 702,049.85 $

$ 807,761.98 30,883.18 80,475.27

$ 919,120.43

128,168.83

830,218.68

$ 1,621,170.28 $ 128,168.83 $ 1,749,339.11 -1 -

SECRETARY OF STATE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"A" SECRETARY OF STATE YEAR ENDED JUNE 30, 1999

EXHIBIT"B"

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

BUDGET

ACTUAL

VARIANCEFAVORABLE {UNFAVORABLE)

$ 30,175,496.00 $
0.00 2,655,594.00

30,175,496.00 $
114,459.73 2,685,793.09

$ 32,831,090.00 $ 32,975,748.82 $

0.00 114,459.73
30,199.09
144,658.82

0.00

194,435.46

194,435.46

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

- - - - - ' - - - $ 32,831,090.00 $ 33,170,184.28 $

339,094.28

$ 18,411,311.00 $
3,546,478.00 250,464.00 171,490.00 269,520.00
3,496,336.00 2,474,252.00
933,400.00 2,114,814.00
597,500.00 565,525.00

17,891,158.73 $
3,448,054.66 232,518.32 171,489.64 269,520.18
3,523,777.46 2,443,230.65
931,008.68 2,041,015.20
553,987.16 75,603.09

520,152.27 98,423.34 17,945.68 0.36 -0.18 -27,441.46 31,021.35 2,391.32 73,798.80 43,512.84
489,921.91

---------- $ 32,831,090.00 $ 31,581,363.77 $

1,249,726.23

$ 1,588,820.51 $ =====1=,5=88='=82=0=.5=1

-2-

SECRETARY OF STATE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"B" REAL ESTATE COMMISSION YEAR ENDED JUNE 30, 1999

EXHIBIT"C

FUNDS AVAILABLE
REVENUES
State Appropriation Other Revenues Retained

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

$ 2,352,080.00 $ 2,352,080.00 $

29,489.00

29,838.66

0.00 349.66

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

- - - - - - $ 2,381,569.00 $ 2,381,918.66 $

349.66

$ 1,383,094.00 $ 176,623.00 15,000.00 29,000.00 7,639.00
. 181,400.00 170,085.00 187,000.00 133,000.00 98?28.00

1,354,400.75 $ 138,474.59 13,231.37 27,390.86 2,717.04 170,809.83 170,085.00 153,451.83 124,965.94 98?27.62

28,693.25 38,148.41
1,768.63 1,609.14 4,921.96 10,590.17
0.00 33,548.17
8,034.06 0.38

$ 2,381,569.00 $

__ 2,254,254.83 $

127,314.17 _.;.;;;;.;..:.;...;..;..;__

Excess of Funds Available over Expenditures

$ 127,663.83 $ ===1=2:::::::!7,=66=3=.8=3

-3-

SECRETARY OF STATE RECONCILIATION OF SALARIES
YEAR ENDED JUNE 30, 1999

Totals per Annual Supplement

Adjustments Anderson, Ashe, Black, Bolton, Camp, Carr, Chambers, Crawford, Dowell, Durham, Elijay, Fox, Gonzalez, Harris, Hartwell-Lee, Hicks, Hodges, Hudgins, Jackson, Jarrell, Jones, Kiaukaras, Mack, McGruder, Nowicki, Perez, Piccinini, Salvadore, Smelund, Talley-McRae, Thompson, Turner, Turpin, Tyner, Underwood, Walker, Williams, Wingate, Yankey,

Vaughn I. RobertL. Alice A. Frazier L. Ryan D. KipleyD. Virginia L. Judith R. Peggy$. Delano Nancy I. Elizabeth R. Leah M. Susan Karen Y. Catherine N. Angela L. KimberlyJ. MiyaM. Gregory K. Tonia R. Sheri L. Cheryl J. Taffie N. Eugene F. Kimberly K. Gabriele L. Clydie M. William S. Helen L. Cynthia L. Rosemary Jennifer L. Marvin JeanW. Marye. Patrice Meredith Joan C.

-4-

EXHIBIT"D
SALARIES
$ 14,084,439.83
340.00 120.75 372.96 374.50 432.00 128.00 480.00 644.00 445.92 280.00 990.00 560.00 150.00 136.50 576.00 420.00 476.00 213.50 450.64 620.00 67.50 682.00 960.50 532.00 392.00 220.00 380.00 608.00 60.00 315.00 456.00 616.00 192.50 416.25 304.00 350.63 488.75 352.00 518.00
$ 14,100,561.73

SECTION II CURRENT YEAR FINDINGS AND QUESTIONED COSTS

SECRETARY OF STATE SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 1999
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS
CASH AND CASH EQUIVALENTS Inadequacies in Bank Reconciliation Procedures Finding Control Number: FS-478-99-01
The Secretary of State's accounting .procedures were not sufficient to provide for adequate controls over the bank reconciliation process. Engagement procedures and interviews with personnel revealed that bank reconciliations were not performed in a timely manner for the Operating, Payroll, and the Revenue Collections accounts. The June 1999 bank statements for the three accounts identified were not reconciled until December 1999.
While management of the Secretary of State has asserted that financial records are complete and accurate, failure to reconcile bank statements in a timely manner could result in errors in financial reporting or fraud occurring with regard to cash that would go undetected until this reconciliation process was completed.
During fiscal year 1999, the Secretary of State's office experienced high turnover in the accounting department, resulting in a shifting and reprioritizing of duties, and as a consequence, bank statements were not reconciled in a timely manner.
Management of the Secretary ofState's office should establish the necessary procedures to ensure that bank reconciliations are reconciled on a monthly basis to ensure timely detection of errors and/or fraud, thus assuring the accuracy and completeness oftheir financial records.