STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS GA- A'ooo -R\ \Jio AS5 ;;;.coo-~t:ol MANAGEMENT REPORT ATLANTA TECHNICAL COLLEGE ATLANTA, GEORGIA AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 2001 RECEIVED FEB 2 8 2002 w. DOCUMENTS Russell IWMOWRARl,ES State Auditor ATLANTA TECHNICAL COLLEGE MANAGEMENT REPORT - TABLE OF CONTENTS - LETTER OF TRANSMITTAL SECTION I SELECTED FINANCIAL INFORMATION EXHIBITS A ANALYSIS OF CHANGES IN FUND BALANCE BUDGETFUND 1 SCHEDULES OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND 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 SECTION ID CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS tussELL W. H1NTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street. S.W., Suite 214 Atlanta, Georgia 30334-8400 December 14, 2001 Honorable Roy E. Barnes, Governor Members of the General Assembly of Georgia Members of the State Board of Technical and Adult Education Members of the Local Board of Directors and Honorable Brenda W. Jones, President Atlanta Technical College Ladies and Gentlemen: As part ofour audit ofthe statutory basis financial statements ofthe State ofGeorgia presented in the State ofGeorgia Report ofthe State Auditor, the general purpose financial statements ofthe State of Georgia presented in the State ofGeorgi.a Comprehensive Annual Financial Report, and the issuance of a Statewide Single Audit Report pursuant to the Single Audit Act Amendments, as ofand for the year ended June 30, 2001, we have performed certain audit procedures at Atlanta Technical College. Accordingly, the financial statements and compliance activities ofAtlanta Technical College were examined to the extent considered necessary in order to express an opinion as to the fair presentation ofthe financial statements contained in the foregoing documents and to issue reports on compliance and internal control as required by the Single Audit Act Amendments of 1996. This Management Report contains information pertinent to the financial and compliance activities of Atlanta Technical College as of and for the year ended June 30, 2001. The particular information provided is enumerated in the Table of Contents. This report is intended solely for the information and use ofmanagement and members ofthe Local Board ofDirectors ofAtlanta Technical College and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, w.~..$ RWH:as State Auditor SECTION I SELECTED FINANCIAL INFORMATION ATLANTA TECHNICAL COLLEGE ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND YEAR ENDED JUNE 30, 2001 EXHIBIT"A" FUND BALANCE - JULY 1. 2000 Deficit ADDITIONS Unreserved Fund Balance (Deficit) Funded by the Department of Technical and Adult Education Administrative Central Office Year Ended June 30, 2000 Excess of Funds Available over Expenditures Exhibit "B" Exhibit "C" Prior Years Checks Voided DEDUCTIONS Adjustments to Prior Year's Accounts Receivable "Au DEPARTMENT OF TECHNICAL AND ADULT EDUCATION "B .. LOTTERY FOR EDUCATION $ -799,556.31 $ 0.00 $ 799,556.31 125,730.64 $ 0.00 17121.50 $ 942A08.45 $ 0.00 $ 37,108.00 $ 0.00 FUND BALANCE - JUNE 30, 2001 $ 105 744.14 $=======0-.0==0 SUMMARY OF FUND BALANCE Reserved Inventories Surplus $ 105,707.53 36.61 $ _ _ ___:::0.::.::.0=0 $ 105 744.14 $======0...0...0. - 1- ATLANTA TECHNICAL COLLEGE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION YEAR ENDED JUNE 30, 2001 EXHIBIT"B" FUNDS AVAILABLE REVENUES State Appropriation Federal Revenues Other Revenues Retained BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 12,071,650.00 $ 12,071,650.00 $ 1,227,314.63 1,302,718.52 7,132,665.37 3,521,810.07 0.00 75,403.89 -3,610,855.30 $ 20:431 ,630.00 $ 16,896, 178.59 $ -3,535,451.41 EXPENDITURES Personal Services-Institutions Operating Expenses-Institutions Capital Outlay $ 15,230,237.07 $ 12,884,445.62 $ 5,131,537.93 3,816,147.33 69,855.00 69,855.00 2,345,791-45 1,315,390.60 0.00 $ 20,431,630.00 $ 16,770,447.95 $ _ _3...,6.._6_..:1,_18_2_.0_5 Excess of Funds Available over Expenditures $ 125,730.64 $ ......,....,""'""12..5.,..,7,,..3..,.0..6..4.... -2- ATLANTA TECHNICAL COLLEGE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 2001 EXHIBIT"C" FUNDS AVAILABLE REVENUES State Appropriation Other Revenues Retained EXPENDITURES Equipment-Technical Institutes Excess of Funds Available over Expenditures BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 594,516.00 $ 594,516.00 $ 0.00 420.000.00 420.000.00 0.00 $ 1 014,516.oo $ 1,014,516.00 $ _ _ _ _ _o_.o_o 1 $ 1 014,516.oo $ 1,014,516.00 $ _ _ _ _ _o_.o_o 1 $ o.oo $ =======o,..,.o.o.. -3- ATLANTA TECHNICAL COLLEGE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30. 2001 EXHIBIT"D" Totals per Annual Supplement Accruals June 30, 2001 June 30, 2000 Adjustments Frasso, Gittens, Lum, McDonald, Pinto, Walker, Wolfe, Young, Jerry Angela Deborah Timothy Bill Marvy Janice Michael SALARIES TRAVEL $ 10,528,556.09 $ 44,949.67 22,460.63 -35,669.89 1,821.82 -874.38 833.00 595.00 2,856.00 833.00 714.00 714.00 595.00 119.00 $ 10,522,605.83 $ 45,897.11 SECTION IT AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS ATLANTA TECHNICAL COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS FS-823-99-01 FS-823-00-01 Further Action Not Warranted Partially Resolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS REVENUE/RECEIVABLE/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER GENERAL FIXED ASSETS Deficiencies in Accounting Procedures Finding Control Number: FS-823-00-01 Cash and Cash Equivalents Atlanta Technical College will implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger on a timely basis and that all reconciling items are identified and corrected. The Accounting Director will manage this process. Adjustments necessary for reconciliations will be adequately identified and detailed. Revenue/Receivable/Receipts Subsequent to the fiscal year ended 2001, Atlanta Technical College made the appropriate adjusting entries to the general ledger to correct all prior year errors that pertain to receivables. The Accounting Director will analyze revenue and receivable accounts on a regular basis in order to identify future problem areas in a timely manner. In addition, additional guidance and training will be provided to staff involved in the revenue/receivable cycle. - 1- ATLANTA TECHNICAL COLLEGE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUIVALENTS REVENUEIRECEIVABLE/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER GENERAL FIXED ASSETS Deficiencies in Accounting Procedures Finding Control Number: FS-823-00-01 Expenditures/Payables/Disbursements Subsequent to the fiscal year ended 2001, Atlanta Technical College made the appropriate adjusting entries to the general ledger to correct all prior year errors that pertain to payables. The Accounting Director will analyze expenditure and payable accounts on a regular basis in order to identify future problem areas in a timely manner. In order to strengthen controls, the entire procurement cycle will be centralized under the supervision of the Vice President of Administrative Services. General Ledger Subsequent to the fiscal year ended 2001, Atlanta Technical College made the appropriate adjusting entries to the general ledger in order to properly reflect activity on a program/project basis. Additional guidance and training will be provided to staffinvolved in recording information into the general ledger by the Accounting Director. General Fixed Assets During fiscal year 2002, in addition to taking a physical inventory, Atlanta Technical College will incorporate procedures to test the accuracy of the equipment list. -2 - SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS ATLANTA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUNALENTS REVENUESIRECENABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER GENERAL FIXED ASSETS Deficiencies in Accounting Procedures Finding Control Number: FS-823-01-01 The College failed to adequately maintain the financial records on a program/project/fund basis, which contributed to the poor condition ofthe general ledger and supporting accounting records. The following deficiencies were noted as summarized below: 1) Cash and Cash Equivalents Monthly bank reconciliations for the operating, payroll, PELL, and HOPE accounts were not properly completed for the year under review. Due to the poor condition of the accounting records, cash could not be properly reconciled from the bank balances to the general ledger. Extensive cash procedures performed by the Department of Audits personnel resulted in adjusting entries to increase general ledger balances at June 30, 2001, for Budget Fund cash by $2,096,935.64 and to decrease Agency Fund cash by $3,624,392.54. The College should implement procedures to ensure timely reconciliation of all bank accounts. This would include, but not be limited to, proper documentation ofoutstanding items and correct identification of all adjustments between the general ledger and bank account balances. 2) Revenues/Receivables/Receipts Our testing revealed that on numerous occasions revenue and receivables were not properly recorded on a program basis. Also, appropriate receivable accounts were not properly credited when cash receipts were processed. As a result, significant errors were noted in the recording ofrevenues and receivables. Extensive procedures were required to compile an accurate detail of accounts receivable at June 30, 2001. These procedures resulted in adjustments to decrease receivable account balances at June 30, 2001, in the Budget Funds by $552,281.78 and to increase receivable account balances in Agency Funds by $416,113.00. The College should implement procedures to ensure that an accurate and detailed reporting ofrevenue and receivable accounts is available on a program basis. The College should maintain accurate accounts receivable subsidiary records which support totals reported in the general ledger. - 1- ATLANTA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUESIRECEIV ABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER GENERAL FIXED ASSETS Deficiencies in Accounting Procedures Finding Control Number: FS-823-01-01 3) Expenditures/Liabilities/Disbursements The College could not provide an accurate detail listing of accounts payable at June 30, 2001. This condition occurred because accounts payable subsidiary records were not reconciled to the general ledger and adjustments were not made by the College to establish or liquidate many payables during the period. As a result of these deficiencies, extensive procedures were required to produce a detail of accounts payable at June 30, 2001. These procedures resulted in net adjusting entries of$274,274.11 and $28,948.58 to accounts payable balances at June 30, 2001, in the Budget Funds and Agency Funds respectively. Our testing of expenditures also revealed instances where vendors were not paid in a timely manner, payments were not properly posted to the general ledger, and adequate documentation was not on file to support expenditures incurred. The College should implement procedures to ensure that an accurate and detailed reporting ofexpenditure and payable activity is available on a program basis. The College should maintain an accurate accounts payable subsidiary records which reconcile with totals reported in the general ledger. Policies should be established to ensure that vendor invoices are processed and paid in a timely manner, and that expenditures are posted to the proper category, fund, and program with appropriate supporting documentation maintained. 4) General Ledger The College's general ledger was not maintained on a program/project basis. Due to the College's inability to provide documentation to identify financial activity on a program basis, we could not verify that all Federal, state, local, and agency fund balances were being accounted for properly. The College should maintain the general ledger such that all programs/projects are clearly identified in unique self-balancing program codes to ensure proper compliance with Federal, state, local, and agency fund program or project requirements. -2- ATLANTA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUNALENTS REVENUES/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS GENERAL LEDGER GENERAL FIXED ASSETS Deficiencies in Accounting Procedures Finding Control Number: FS-823-01-01 5) General Fixed Assets a) The College failed to record donated equipment items in the Assets Management Module at estimated fair value. b) The College failed to reconcile the Assets Management Module to the equipment inventory listing provided. c) Equipment purchases shown in the general ledger accounts could not be reconciled with additions reported in the Assets Management Module. d) Adequate supporting documentation for additions (non-purchases)/deletions could not be provided. e) In May 2001, the College performed a physical inventory of equipment. However, our testing revealed that significant inventory items, such as motor vehicles and aircraft components used in vocational instruction, were not included in the inventory count. The College should perform a comprehensive physical inventory to ensure that all items are recorded in accordance with guidelines set forth by the Georgia Department of Technical and Adult Education. Policies and procedures should be established to ensure that monthly reconciliations are performed for the General Fixed Assets Management Module and equipment subsidiary records. Also, reconciliation procedures should be performed to ensure that equipment purchases, along with other additions/deletions are properly recorded in the Asset Management Module. The deficiencies disclosed in the above control categories occurred because management failed to ensure that proper internal control procedures were implemented for basic accounting procedures as noted above. Management should establish necessary changes to provide for an adequate system of internal controls and reliable accounting records. -3- ATLANTA TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Improper Use of Student Activity Funds Finding Control Number: FS-823-01-02 Our review of Agency Fund activity revealed that a portion ofStudent Activity fund revenues were allocated for the President's use. The President exercised control over requisition and expenditure of these funds without securing approval and/or authorization from the Student Activity Fund Committee. The Department ofTechnical and Adult Education's Student Activity Fund policy states, "The Student Activity Fund Committee shall approve any expenditures from the Student Activity Fund". The College should implement controls to ensure that Student Activity funds are being used for student-sponsored and endorsed activities in accordance with guidelines set forth by the Department of Technical and Adult Education's Student Activity Fund policy. -4-