Management report, Georgia Student Finance Commission, an organizational unit of the state of Georgia, year ended June 30, 2002 [June 30, 2002]

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GEORGIA STUDENT FINANCE COMMISSION MANAGEMENT REPORT TABLE OF CONTENTS-

LETTER OF TRANSMITTAL

SECTION I

SELECTED FINANCIAL INFORMATION

EXHIBITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGET FUND

1

SCHEDULES OF FUNDS AVAILABLE AND EXPENDITURES

COMPARED TO BUDGET

BUDGET FUND

B

"A" STUDENT FINANCE COMMISSION

2

C

"B" LOTTERY FOR EDUCATION

3

SECTION II 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

DEPARTMENT OF AUDITS AND ACCOUNTS

254 Washington Street, S.W., Suite 214

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

Atlanta, Georgia 30334-8400

October 16, 2002
Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the Georgia Student Finance Commission
and Honorable E. Glenn Newsome, Executive Director
Ladies and Gentlemen:
As part of our audit of the statutory basis financial statements of the State of Georgia presented in the State of Georgia Report of the State Auditor, the basic financial statements of the State of Georgia presented in the State of Georgia 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, 2002, we have performed certain audit procedures at the Georgia Student Finance Commission. Accordingly, the financial statements and compliance activities of the Georgia Student Finance Commission were examined to the extent 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 controls as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of the Georgia Student Finance Comm1ss1on as of and for the year ended June 30, 2002. The particular information provided is enumerated in the Table of Contents.
This report is intended solely for the information and use of management of the State of Georgia and members of the Board and 1s not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,
~~-~
Russell W. Hinton State Auditor

RWH:Jsa

SECTION I SELECTED FINANCIAL INFORMATION

GEORGIA STUDENT FINANCE COMMISSION ANALYSIS OF CHANGES IN FUND BALANCE
BUDGET FUND YEAR ENDED JUNE 30, 2002

EXHIBIT"A"

FUND BALANCES - JULY 1, 2001
Reserved Surplus

"A"
STUDENT FINANCE COMMISSION

"B" LOTTERY
FOR EDUCATION

TOTAL

$ 2,787,912.09 $ 2,787,912.09

$

108,953.39

277,982.56

386,935.95

$

108,953.39 $ 3,065,894.65 $ 3,174,848.04

ADDITIONS
Adjustment to Prior Year's Accounts Payable $ Excess of Funds Available over Expenditures
Exhibit "C"

185.39

$

185.39

$ 6,666,201 81

6,666,201 81

$

DEDUCTIONS

Unreserved Fund Balances (Surplus)

Returned to Office of Treasury and

Fiscal Services

Year Ended June 30, 2001

$

Excess of Expenditures over Funds Available

Exhibit "B"

Reserved Fund Balance Camed Over From

Pnor Year as Funds Available

185 39 $ 6,666,201.81 $ 6,666,387.20

108,953.39 $

277,982.56 $

386,935.95

182 68

182 68

2,787,912.09

2,787,912.09

$

109,136 07 $ 3,065,894 65 $ 3,175,030.72

FUND BALANCES - JUNE 30. 2002

$

2 71 $ 6,666,201.81 $ 6,666,204 52

SUMMARY OF FUND BALANCE
Reserved Lottery for Education
Surplus

$ 3,637,342.00 $ 3,637,342.00

$

2 71

3,028,859 81

3,028,862.52

$ =====2=.7=1 $ 6,666,201.81 $ 6,666,204.52

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i ~ ~ - - - - -------

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"A" STUDENT FINANCE COMMISSION YEAR ENDED JUNE 30, 2002

EXHIBIT"B"

FUNDS AVAIL.ABI.
REVENUES
State Appropnation Federal Revenues Other Revenues Retained

BUOOEr

ACTUAL

VARIANCE FAVORABLE (UNFAVORABLE)

$ 42,382,425.00 $ 42,382,425.00 $

525,883.00

0.00

1,519,545.00 2,045,428.00

0.00 -525,883.00 525,883.00

- - - - - $ 44,427,853.00 $ 44,427,853.00 $

0.00

EXPENDITURES

Personal Services

$ 543,999.00 $ 553,336.64 $

Regular Q:>erating Expenses

21,415.00

21,590.86

Travel

13,000.00

14,735.40

Equipment

12,600.00

11,053.48

Corrputer Olarges

15,433.00

11,403.05

Real Estate Rentals

48,990.00

48,990.00

Telecornrnmications

11,091.00

9,838.92

Per Oem and Fees

10,300.00

8,033.75

Contracts

97,387.00

95,415.58

Guaranteed Educational Loans

3,826,461.00 3,826,461.00

Tuition Equalization Grants

33,449,189.00 33,449,189.00

Law Enforcement Personnel Dependents' Grants

63,854.00

63,854.00

North Georgia College ROTC Grants

442,500.00

442,500.00

North Georgia College Graduates Scholarship

12,599.00

12,599.00

Georgia Military Scholarship Grants

259,783.00

259,783.00

LEAP Program

1,477,023.00 1,477,023.00

Governor's Scholarship Program

4,122,229.00 4,122,229.00

-9,337.64 -175.86
-1,735.40 1,546.52 4,029.95
0.00 1,252.08 2,266.25 1,971.42
0.00 0.00 0.00 0.00 0.00 0.00 000 0.00

- - - - - $ 44,427,853.00 $ 44,428,035.68 $

-182.68

Excess of Expenditures over Funds Available
-2 -

$

-182.68 $= = =-= 182= .68

:

I

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 2002

EXHIBIT"C"

FUN03 AVPJLABLE REVEN.JES
State AR:rorJriation Oher ReYer1ues Retained
CARRY-0/ER FR0\1 PRlffi YEAR Transfer fran Reserved Fund Bal~

VARIAf\CE FAvmABLE
(UNFAVORABLE)

$ 361,403,930.00 $ 361,403,930.00 $

570,000.00

93,080.72

$ 361,973,930.00 $ 361,497,010.72 $

0.00 -476,919.28
-476,919.28

0.00 2,787,912.09

2,787,912.09

$ 361,973,930.00 $ 364,284,922.81 $ 2,310,992.81

EXPEN!llURES
I-OPE Financial ,Ajd - Tuition I-OPE Financial ,Ajd - Books I-OPE Financial ,Ajd - Fees 1-bpe Scholarships - Private Colleges Georgia Mlitary College Scholarship LEPO Scholarship Teadler Scholarships Prorrise Scholarships Prorrise 11 Scholarships Ergineer Scholarships

$ 212,069,353.00 $ 210,020,844.25 $

45,586,466.00 45,586,466.00

52,759,417.00 51,564,196.27

40,482,442.00 39,866,709.00

663,960.00

595,221.29

238,008.00

187,188.36

4,004,658.00 3,861,678.25

4,291,000.00 4,265,201.67

1,117,666.00 1,115,955.34

760,000.00

555,259.77

2,048,508.75 0.00
1,195,220.73 615,732.20 68,738.71 51,779.64 142,979.75 25,798.33 1,710.66 204,740.23

$ 361,973,930.00 $ 357,618,721.00 $ 4,355,209.00

Exress of Funds Available r:Ner Bcpenditures

$ 6,666,201.81 $ 6,666,201.81

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

GEORGIA STUDENT FINANCE COMMISSION AUDITEE'S RESPONSE
SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2002

PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FS-476-01-01 FS-476-01-02 FS-476-01-03 FS-476-01-04 FS-476-01-05 FS-476-01-06 FS-476-01-07 FS-476-01-08 FS-476-01-09 FS-476-01-10 FS-476-01-11

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

CORRECTIVE ACTION/RESPONSES
GENERAL LEDGER Failure to Reconcile General Ledger to Grant and Scholarships Subsystems Finding Control Number: FS-476-01-07
The Georgia Student Finance Commission investigated all variances identified in the fiscal year 2001 audit report and made corrections as appropriate by June 30, 2002. In addition, the Scholarships and Grants Division and the Accounting Services Division will place into operations a procedure to ensure that the amounts awarded to students by the institutions and the amounts recorded in the "disbursements by institution" subsystem reconcile to the amounts recorded on the general ledger at the end of the award year. This procedure will be in place and operating as of June 30, 2003.
GENERAL LEDGER-AGENCY FUNDS Inadequate Documentation - Surety Bond Nonpublic Postsecondary Education Commission Finding Control Number: FS-476-01-11
The Georgia Student Finance Commission has segregated the Surety Bond funds and will make appropriate transfer of funds into a separate fund source earmarked for the Tuition Guaranty Trust Fund. Based on an opinion received from the Attorney General, the bond in question will be transferred to the Georgia Department of Revenue as unclaimed property in the fiscal year ended June 30, 2003.

SECTION Ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS

GEORGIA STUDENT FINANCE COMMISSION SCHEDULE OF FINDINGS AND QUESTIONED COSTS
YEAR ENDED JUNE 30, 2002
FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS BUDGET PREPARATION/EXECUTION Overexpenditure of Budget Unit Object Classes Finding Control Number: FS-476-02-01 The total approved budget for Budget Unit "A" of the Georgia Student Finance Commission provided for expenditures totaling $44,427,853.00. A comparison of anticipated funds available and budgeted expenditures to actual funds available and expenditures by object class indicates that the common object class Travel exceeded the authorized expenditure level of 102% of the budgeted amount by $1,475.40. In addition, total expenditures for all common object classes exceeded the sum of the budgeted amounts for all common object classes in the amount of $4,420.35. The overexpenditures identified above are in violation of Section 58 of the Amended Appropriations Act of 2001-2002. These overexpenditures were caused by the Commission's failure to monitor the expenditure of funds against budgeted expenditures by object class. Management's failure to observe state budgetary law can result in direct material effects on the financial statements. The Commission should review its internal control procedures over budget operations, de~ign procedures that would prohibit the expenditure of funds in excess of budget approval, and implement those procedures to strengthen the internal controls over the budget function.
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