Management report, Department of Technical and Adult Education, Administrative Central Office, (Oversight Unit), year ended June 30, 1999

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MANAGEMENT REPORT DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT) AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA
YEAR ENDED JUNE 30, 1999
STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS
254 WASHINGTON STREET
ATLANTA, GEORGIA 30334-8400

DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT JJNID
MANAGEMENT REPORT -TABLE OF CONfENTS -

LETTER OF TRANSMITTAL

SECTION!

SELECTED FINANCIAL INFORMATION

EXHIBITS

A ANALYSIS OF CHANGES IN FUND BALANCE

BUDGETFUND

1

SCHEDULES OF FUNDS AVAILABLE AND EXPENDTI1JRES

COMPARED TO BUDGET

BUDGETFUND

B

"A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION

2

C

"B" LOTTERY FOR EDUCATION

3

D RECONCILIATION OF SALARIES AND TRAVEL

4

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

SECTIONill CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS

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

DEPARTMENT OF AUDITS AND ACCOUNTS
254 Washington Street, S.W., Suite 214 Atlanta, Georgia 30334-8400
January 20, 2000

Honorable Roy E. Barnes, Governor Members ofthe General Assembly of Georgia Members ofthe State Board of Technical and Adult Education
and Honorable Kenneth H. Breeden, Commissioner Department of Technical and Adult Education
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 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 Department of Technical and Adult Education. Accordingly, the financial statements and compliance activities of the Department of Technical and Adult Education were examined to the extent considered necessary in order to express an opinion as to the fair presentation of the financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996.
This Management Report contains information pertinent to the financial and compliance activities of the Department of Technical and Adult Education as of and for the year ended June 30, 1999. The particular information provided is enumerated in the Table ofContents.
'Drls report is intended solely for the information and use ofmanagement ofthe Department ofTechnical and Adult Education and members ofthe Board and is not intended to be and should not be used by anyone other than these specified parties.
Respectfully submitted,

RWH:gp

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Russell W. Hinton
State Auditor


SECTION! SELECTED FINANCIAL INFORMATION

DEPARTMENT OF TECHNICAL AND ADULT EDUCATIQN ADMINISTRATIVE CENTRAL OFFICE {OVERIGHT !JNIT}
ANALYSIS QF CHANGES IN FUND BALANCE BUDGET Fl.IND
YEAR ENDED JUNE 30. 1999

EXHIBIT"A9

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 Transfer of Surplus from State Technical Institutes
DEDUCTIONS
Unreserved Fund Balance (Surplus) Returned to Office of Treasury and Fiscal Services Year Ended June 30, 1998
Adjustments to Prior Year's Accounts Receivable
Refunds to Grantors Georgia Department of Education Federal Financial Assistance Georgia Department of Human Resources Federal Financial Assistance State Grants and Contracts Georgia Department of Labor Federal Financial Assistance U. S. Department of Education Federal Financial Assistance
Reserved Fund Balance Carried Over from Prior Year as Funds Available
FUND BALANCE - JUNE 30, 1999

"A" DEPARTMENT OF
TECHNICAL AND ADULT EDUCATION

"B" LOTTERY FOR
EDUCATION

TOTAL

$ . 4,393,834.39 3701216.64 $
$ 4.7641051.03 $

$ 4,393,834.39

20,014.02

3901230.66

201014.02 $ 4.7841065.05

$

706,220.39 $

55,644.97 $ 761,865.36

20,476,063.72
350,746.60 3481954.81

13,322, 132.83 25,292.50 73.746.00

20,476,063.72 13,322, 132.83
376,039.10 422-700.81

$ 21 1881 1985.52 $ 1314761816.30 $ 3513581801.82

$

719,171.45 $

93,760.02 $ 812,931.47

229,126.69

229,126.69

3,668.69 3,452.92
40.38 19.55 72,306.36 413931834.39 $ 5-421 1620.43 $

3,668.69 3,452.92
40.38 19.55 72,306.36 41393,834.39 93.760.02 $ 51515,380.45

$ 21,224,416.12 $ 13A031010.3o $ 341627,486.42

SUMMARY OF FUND BALANCE
Reserved Construction Reserve Trust Fund Federal Financial Assistance Lottery Instructional Equipment State Grants and Contracts Year 2000 Project
Surplus

$ 11,135,655.83 $ 11,135,655.83

$

28,229.61

28,229.61

2,186,477.00

2,186,477.00

13,072.63

13,072.63

2018531209.67

2018531209.67

$ 20,894,511.91 $ 13,322,132.83 $ 34,216,644.74

3291904.21

80,937.47

4101841.68

$ 21.224.416.12 $ 13.403,070.30 $ 34,627,486.42 -1 -

DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT} SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 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)

$ 102,119,191.00 $ 101,924,687.63 $

18,851,055.00

12,164,060.18

10,973,497.00

5,832,789.68

$ 131,943,743.00 $ 119,921,537.49 $

-194,503.37 -6,686,994.82 -5, 140,707.32
-12,022,205.51

0.00

41393,834.39

41393,834.39

$ 131,943,743.00 $ 124,315,371.88 $ -7,628,371.12

EXPENDITURES
Personal ,Services Regular Operating Expenses Travel Equipment Computer Charges Real Estate Rentals Telecommunications Per Diem, Fees and Contracts . Personal Services - Institutions Operating Expenses - Institutions Quick Start Program Area School Program Regents Program Adult Literacy Grants Salaries and Travel of Public Libraries Public Library Materials Talking Book Centers Public Library Maintenance and Operations Job Training Partnership Act Year 2000 Project

$ 8,757,489.00 $ 7,351,895.05 $

1,489,763.00

1,250,149.43

477,981.00

319,905.33

276,844.00

138,521.33

2,712,277.00

1,883,496.49

1,013,677.00

890,352.81

294,815.00

255,128.30

1,520,880.00

1,167,561.82

455,679.00

441,627.87

2,488,282.00

2,044,024.44

10,630,906.00

10,584,757.26

6,612,651.00

6,262,430.00

4,583,382.00

4,482,164.74

9,575,937.00

7,265,809.20

15,833,471.00

15,537,184.74

5,993,345.00

5,742,013.98

1,075,353.00

1,075,352.96

7,947,385.00

7,920,874.00

801,527.00

687,386.86

49,4021099.00

2815381671.55

1,405,593.95 239,613.57 158,075.67 138,322.67 828,780.51 123,324.19 39,686.70 353,318.18 14,051.13 444,257.56 46,148.74 350,221.00 101,217.26
2,310,127.80 296,286.26 251,331.02 0.04 26,511.00 114,140.14
20,863,427.45

$ 1311943,743.00 $ 103,839,308.16 $ 28,104,434.84

Excess of Funds Available over Expenditures

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$ 20,476,063.72 $ 20,476,063.72

DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT) SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES
COMPARED TO BUDGET BUDGET FUND
"B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 1999

EXHIBIT"C

FUNDS AVAILABLE REVENUES
State Appropriation
EXPENDITURES Equipment - Technical Institutes Repairs and Renovations -Technical Institutes

BUDGET

ACTUAL

VARIANCEFAVORABLE (UNFAVORABLE)

- - - - - - $ 8,464,677.00 $ 15,908,475.61 $

7,443,798.61

$ 2,464,677.00 $

279,115.00 $

6,000,000.00

2,307,227.78

2, 185,562.00 3,692,772.22

$ 8,464,677.00 $

__ __ 2,586,342.78 $

5.,._8_7..8..,,;3_3. 4.22

Excess of Funds Available over Expenditures

$ 13,322,132.83 $ 13,322,132.83

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DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE {OVERSIGHT UNIT)
RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30. 1999

EXHIBIT"D"

Totals per Annual Supplement
Accruals June 30, 1999

SALARIES

TRAVEL

$ 8,930,922.01 $ 578,553.04

____

476.25

$ 8,930,922.01 $ 579,029.29

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

DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATNE CENTRAL OFFICE (OVERSIGHT UNIT)
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

FINDING CONTROL NUMBER AND STATUS

FS-415-97-01 FS-415-97-03 FS-415-98-01 FS-415-98-02 FS-415-98-03

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

CORRECTIVE ACTION/RESPONSES

GENERAL FIXED ASSETS/PROPERTY MANAGEMENT
Inadequacies in Operation ofProperty Management System Finding Control Number: FS 415-98-03

See our corrective action/response to finding number FA-415-98-01 in the Prior Year Federal Awards Findings and Questioned Costs.

PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

FINDING CONTROL NUMBER AND STATUS

FA-415-97-02 FA-415-98-01

Further Action Not Warranted Partially Resolved - See Corrective Action/Responses

CORRECTIVE ACTION/RESPONSES

EQUIPMENT AND REAL PROPERTY MANAGEMENT
Inadequacies in Operation ofProperty Management System Finding Control Number: FA-415-98-01

The Department continued efforts to resolve this finding in Fiscal Year 1999, but to date has not completed all tasks as outlined in the Corrective Action Plan for Fiscal Year 1997. The Corrective Action Plan as previously presented for this finding is still a viable plan. The Department is committed to completing these tasks in Fiscal Year 2000.

SECTION ID CURRENT YEAR FINDINGS AND QUESTIONED COSTS

DEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATNE CENTRAL OFFICE (OVERSIGHT UNIT)
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
ELIGIBILITY Failure to Award Grants on a Competitive Basis as Required Vocational Education-Basic Grants to States (CFDA 84.048) Finding Control Number: FA-415-99-01
Our examination included a review of the procedures utilized by the Department of Technical arid Adult Education (DTAE) to award grants to subrecipients for the (1) single parents, (2) displaced homemakers and
(3) single pregnant women programs. According to 34 CFR sections 403.13(a)(14) and 403.80, these grants "must be allocated on a competitive basis". However, for the year under review, our testing revealed that DTAE predetermined funding levels for subrecipients instead ofdistributing the funds on a competitive basis.
This noncompliance occurred because management was unaware ofthe requirement concerning the awarding of grants on a competitive basis.
DTAE should implement procedures to ensure that grants are awarded to subrecipients in accordance with Federal regulations.
SUBRECIPIENT MONITORING Inadequate Internal Controls and Compliance Deficiencies Finding Control Number: FA-415-99-02
For the year under review, internal control and compliance testing performed on Subrecipient Monitoring requirements revealed deficiencies in the following areas:
(1) The Department of Technical and Adult Education (DTAE) failed to have any subrecipient monitoring procedures in place for 1996 and 1997 grant award recipients of the LSCA- Title I Program funds. DTAE failed to request or receive any corrective action plans from subrecipients of the LSCA - Title I Program for the 1996 and 1997 award years.
(2) DTAE failed to properly follow-up on four findings reported in the Statewide Single Audit Report for 1998 relating to the improper use ofVocational Education- Basic Grants to States funds.
(a) In three findings, expenditures of Vocational Education funds to support Student Financial Aid office operations were questioned. The Institutes involved were instructed that DTAE should contact the U.S. Department of Education (USDOE) to resolve the questioned costs of$101,688.54. DTAE has yet to contact USDOE regarding resolution of these questioned costs.
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PEPARTMENT OF TECHNICAL AND ADULT EDUCATION ADMINISTRATIVE CENTRAL OFFICE (OVERSIGHT UNIT)
SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1999
FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
SUBRECIPIENT MONITORING Inadequate Internal Controls and Compliance Deficiencies Finding Control Number: FA-415-99-02
(b) In a fourth finding, DTAE appeared to exceed its authority concerning the resolution of a finding dealing with excessive compensation paid to an instructor using Vocational Education funds. According to the details of the finding, an instructor of one Technical Institute received $5,872.00 in unallowable overtime and holiday compensation. DTAE issued a letter dated January 11, 2000, resolving this finding without requiring the institute to provide any documentation substantiating the validity ofthe additional compensation paid. DTAE also failed to contact USDOE regarding resolution ofthis questioned cost.
These situations occurred because management was unaware ofall the Federal requirements concerning the monitoring of subrecipients. Management should familiarize themselves with the Federal regulations dealing with the Subrecipient Monitoring compliance requirement in order to develop an adequate internal control structure consisting of procedures designed to provide for the achievement ofcompliance objectives for all Federal grants awarded. DTAE should contact the grantor agency in regard to the resolution of prior year findings and questioned costs.
Federal Programs/Awards Affected:
U. S. Department ofEducation Vocational Education - Basic Grants to States (CFDA 84.048) LSCA - Title I Program (CFDA 84.034)
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