L,n A~oo iRI Vb A9 Iq'i1-q~ MANAGEMENT REPORT AUGUSTA TECHNICAL INSTITUTE AUGUSTA, GEORGIA AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 1998 - ~----- - - - - - - - --- ----._- -------- STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS 2S4 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400 AUGUSTA TECHNICAL INSTITUTE MANAGEMENT REPORT - TABLE OF CONTENTS - LETTER OF TRANSMITTAL SECTION I SELECTED FINANCIAL INFORMATION EXlllBITS A ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND 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 PRIORYEAR FINDINGS AND QUESTIONED COSTS SECTION III CURRENT YEAR FINDINGS AND QUESTIONED COSTS SCHEDULE OF FINDINGS AND QUESTIONED COSTS CLAUDE L. VICKERS STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.w., Suite 214 Atlanta, Georgia 30334-8400 September 17, 1998 Governor of the State of Georgia Members of the General Assembly of Georgia Members ofthe State Board of Technical and Adult Education Members of the Local Board of Directors and Honorable Terry Elam, President Augusta Technical Institute Ladies and Gentlemen: As part of our audit of the statutory basis financial statements ofthe State of Georgia presented in the 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, 1998, we have performed certain audit procedures at Augusta Technical Institute. Accordingly, the fmancial statements and compliance activities of Augusta Technical Institute 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 fmancial and compliance activities ofAugusta Technical Institute as of and for the year ended June 30, 1998. The particular information provided is enumerated in the Table of Contents. This report is intended solely for the use ofmanagement of Augusta Technical Institute. However, this report is a matter of public record and its distribution is not limited. Respectfully submitted, ~~ Claude L. Vickers State Auditor CLV:jb SECTION I SELECTED FINANCIAL INFORMATION AUGUSTA TECHNICAL INSTITUTE ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND YEAR ENDED JUNE 30,1998 EXHIBIT"A" FUND BALANCE - JULY 1 Reserved Surplus ADDITIONS Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures Exhibit "B" Exhibit "C" DEDUCTIONS Unreserved Fund Balance (Surplus) Returned to Georgia Department of Technical and Adult Education - Administrative Central Office Year Ended June 3D, 1997 Adjustments to Prior Year's Accounts Receivable Reserved Fund Balance Carried Over from Prior Year as Funds Available "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION liB" LOTTERY FOR EDUCATION TOTAL $ 845,611.87 107.90 $ $ 845,719.77 $ $ 0.00 0.00 $ 845,611.87 107.90 845.719.77 $ 1,766.29 570,841.60 $ $ 572,607.89 $ $ 0.00 0.00 $ 1.766.29 570,841.60 0.00 572,607.89 $ 107.90 $ 1,468.08 493,840.27 $ 495,416.25 $ 0.00 $ 0.00 $ 107.90 1,468.08 493,840.27 495,416.25 FUND BALANCE - JUNE 30 $ 922,911.41 $ 0.00 $ 922,911.41 SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance For Refund to Georgia Department of Technical and Adult Education - Administrative Central Office $ For Expired Grant Balances Inventories Live Work Projects Prior Year Local Funds Student Services Surplus 4,040.64 36.27 439,382.31 126,289.01 133,088.99 218.108.85 1,965.34 $ $ -=0.c.;:.00''_ 4.040.64 36.27 439,382.31 126,289.01 133.088.99 218,108.85 1.965.34 $ 922,911.41 $ 0.00 $ 922.911.41 - 1- AUGUSTA TECHNICAL INSTITUTE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION YEAR ENDED JUNE 30. 1998 EXHIBIT"B" FUNDS AVAILABLE REVENUES State Appropriations Federal Revenues Other Revenues Retained CARRY-OVER FROM PRIOR YEAR Transfer from Reserved Fund Balance BUDGET ACTUAL VARIANCE FAVORABLE (UNFAVORABLE) $ 11,025,402.00 $ 11,025,402.00 $ 2,785,174.00 2,379,256.60 3,554,476.00 3,361,283.94 $ 17,365,052.00 $ 16,765,942.54 $ 0.00 -405,917.40 -193,192.06 -599,109.46 0.00 493,840.27 493,840.27 $ 17,365,052.00 $ 17,259,782.81 $ _ _.....;-1...;..05:;.:.,2::..:6~9.....;.1~9 EXPENDITURES Personal Services-Institutions Operating Expenses-Institutions Quick Start Program Adult Literacy Grants Job Training Partnership Act $ 10,594,023.00 $ 10,388,451.00 $ 3,918,902.00 3,795,274.15 408,185.00 408,185.00 667,355.00 646,982.93 1,776,587.00 1,450,048.13 205,572.00 123,627.85 0.00 20,372.07 326,538.87 $ 17,365,052.00 $ 16,688,941.21 $ 6_76.....:,_11_0_.7_9 Excess of Funds Available over Expenditures $ 570,841.60 $ ===5=:7:::0=,8=4=1.=60= -2- AUGUSTA TECHNICAL INSTITUTE SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "B" LOTTERY FOR EDUCATION YEAR ENDED JUNE 30, 1998 EXHIBIT"C" FUNDS AVAILABLE REVENUES State Appropriations BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 188,860,00 $ 188,860.00 $ 0..;,..0_0 EXPENDITURES Equipment-Technical Institutes $ 188,860.00 $ 188,860.00 $ --=-O:..:..O~O Excess of Funds Available over Expenditures $ 0.00 $ =====0';';,0=0 -3- AUGUSTA TECHNICAL INSTITUTE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 1998 EXHIBIT"D" Totals per Annual Supplement Accruals June 30, 1998 June 30, 1997 SALARIES $ 9,236,680.03 $ TRAVEL 145,349.19 64,591.71 . -39,833.01 $ 9,261,438.73 $ 145,349.19 -4- SECTION II AUDlTEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS AUGUSTA TECHNICAL INSTITUTE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998 PRIOR YEAR FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 824-96-01 824-96-02 FS-824-97-01 FS-824-97-02 FS-824-97-03 Further Action not Warranted Further Action not Warranted Previously Reported Corrective Action Implemented Partially Resolved - See Corrective Action/Responses Previously Reported Corrective Action Implemented CORRECTIVE ACTIONIRESPONSES REVENUESIRECEIVABLESIRECEIPTS Inadequate Accounting Control Procedures Finding Control Number: FS-824-97-02 Outstanding receivables from prior years are pursued for collection. Records of students who owe past balances are sealed and no information is released until balances are paid. Augusta Technical Institute continues to review procedures for financial aid eligibility and to implement electronic processes in an effort to reduce and/or eliminate students becoming ineligible for financial aid. The Institute has changed the procedure for notification by the bank for returned checks. A more timely notification should assist in locating students who write checks for insufficient funds before they drop out of classes. SECTIONlli CURRENT YEAR FINDINGS AND QUESTIONED COSTS AUGUSTA TECHNICAL INSTITUTE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998 FEDERAL AWARD FINDINGS AND QUESTIONED COSTS ACTIVITIES ALLOWED AND UNALLOWED Improper Expenditures for Financial Aid Services Vocational Education - Basic Grants to States (CFDA 84.048) Questioned Costs: $48,930.95 Finding Control Number: FA-824-98-0 1 During the year under review, the Institute utilized Vocational Education funds of$48,930.95 in support of personal service costs for the director, secretary and clerk ofthe Student Financial Aid (SFA) office. The use of Vocational Education funds for these personal service costs was included in the Institute's Georgia Department of Technical and Adult Education approved application. However, Section 235 of the Carl D. Perkins Vocational and Applied Technology Education Act of 1990 (Act) and provisions of34 CFR403.111 (c) and (d) stipulate that Vocational Education funds are to be used for activities that pertain to (1) providing vocational education in programs that are effective and integrate academic and vocational courses and (2) providing for the equitable participation ofmembers of special populations in vocational education so these populations have an opportunity to enter vocational education that is equal to that afforded to the general student population. We did not fmd where the payment ofpersonal service costs for the operation of the SFA office was in conformity with the scope and intent of Section 235 of the Act and 34 CFR 403.111 (c) and (d). Additionally, in accordance with 34 CFR 668.15; 34 CFR 668.16; and provisions of its SFA program participation agreement, the Institute is responsible for providing resources necessary to manage Pell grant and other SFA programs. The Institute's ability to administer SFA programs is thus based on its own available resources and is not contingent on the availability and use of Vocational Education funds. The use of Vocational Education funds for the payment ofpersonal service costs for its SFA office, rather than using the Institute's funds to pay personal service costs for the SFA office, constitutes noncompliance with the "supplement versus supplant" rule included in 34 CFR 403.196. This noncompliance occurred because of management's failure to consider those Federal regulations governing the use of Vocational Education funds for allowable activities and the Federal provisions dealing with the "supplement versus supplant" rule. The Institute should implement procedures to ensure that Vocational Education funds are used only for allowable activities and to supplement (rather than to supplant) State and local funds. The Institute, through Georgia Department of Technical and Adult Education, should consult with the U. S. Department of Education to resolve the questioned cost of $48,930.95.