1:1 STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS LJ GA t.JAioo . ,RI . \JV) PS d.000-,::200 ( MANAGEMENT REPORT APPALACHIAN TECHNICAL COLLEGE JASPER, GEORGIA AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30# 2001 t~ ('. Gt t \! E c:L;; ,~ :,: ~~--;3 Russell W. Hirtt~H( FJ .:iMm~,s State Auditor APPALACHIAN TECHNICAL COLLEGE MANAGEMENT REPORT - TABLE OF CONTENTS - LETTER OF TRANSMITTAL Page SECTION I SELECTED FINANCIAL INFO_RMATION EXHIBITS A ANALYSIS OF CHANGES IN FUND BALANCE BUDGETFUND 1 SCHEDULESOFFUNDSAVAILABLEANDEXPENDITURES COMPARED TO BUDGET BUDGET FUND B "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 2 C "B11 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 W. RussELL HINTON STATE AUDITOR (404) 656-2174 DEPARTMENT OF AUDITS AND ACCOUNTS 254 Washington Street, S.W., Suite 214 Atlanta. Georgia 3033--t-8400 October 25, 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 Nancy G. Proffitt, President Appalachian 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 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, 2001, we have performed certain audit procedures at Appalachian Technical College. Accordingly, the financial statements and compliance activities ofAppalachian Technical College 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 Appalachian 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 of Directors of Appalachian Technical College and is not intended to be and should not be used by anyone other than these specified parties. Respectfully submitted, . _ 1 ~-~ Russell W. Hinton State Auditor RWH:gp SECTION I SELECTED FINANCIAL INFORMATION APPALACHIAN TECHNICAL COLLEGE ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND YEAR ENDED JUNE 30, 2001 EXHIBIT"A" FUND BALANCE - JULY 1, 2000 Reserved Surplus/(Deficit) ADDITIONS Unreserved Fund Balance (Deficit) Funded by Georgia Department of Technical and Adult Education - Administrative Central Office Year Ended June 30, 2000 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 30, 2000 Adjustments to Prior Year's Accounts Receivable Refunds to Granters Federal Financial Assistance Georgia Department of Technical and Adult Education - Administrative Central Office FUND BALANCE - JUNE 30, 2001 SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance For Refund to Granter Agency Georgia Department of Technical and Adult Education - Administrative Central Office Other Live Work Projects Prior Year Local Funds Surplus - 1- "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION "B" LOTTERY FOR EDUCATION $ 9,335.48 -71,928.54 $ 11,340.82 $ -62,593.06 $ 11,340.82 $ 71,928.54 142,766.34 88,898.21 $ 0.00 $ 303,593.09 $ 0.00 $ 11,340.82 $ 1,115.30 2,385.17 $ 3 500.47 $ 11,340.82 $ 2371499.56 $ 0.00 $ 1,922.07 17,799.40 59,743.96 38,521.85 $ 117,987.28 119,512.28 $ 0.00 $ 237.499.56 $ 0.00 APPALACHIAN 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 EXPENDITURES Personal Services-Institutions Operating Expenses-Institutions Capital Outlay Adult Literacy Grants Excess of Funds Available over Expenditures BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) $ 3,238,037.00 $ 3,238,037.00 $ 1,406,396.26 925,768.27 1 I 139,868.00 9921095.04 0.00 -480,627.99 -147 772.96 $ 51784,301.26 $ 5, 155,900.31 $ _ _-..;.6;;.;28~,4.;_;0..;.0,;.;,.9,;.5 $ 3,522,543.50 $ 3,392,378.69 $ 1,677,741.76 1,097,573.74 43,617.00 37,163.20 540,399.00 5391886.47 130,164.81 580,168.02 6,453.80 512.53 $ 517841301.26 $ 5,067,002.10 $ _ _ _7.;.17;_,;,2;;.;9..;.9.;_;.1,;.6 $ 881898.21 $ ====""""'"88:1,,8=98=.2=1 -2- APPALACHIAN 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 EXPENDITURES Equipment-Technical Institutes Excess of Funds Available over Expenditures BUDGET ACTUAL VARIANCEFAVORABLE (UNFAVORABLE) - - - - - - $ 109,973.00 $ 109,973.00 $ 0.00 - - - - - ~ $ 109,973.00 $ 109,973.00 $ 0.00 $ o.oo $ ======o=.o===o -3- SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS APPALACHIAN 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-840-98-03 FS-840-99-01 FS-840-99-02 FS-840-00-01 FS-840-00-02 Previously Reported Corrective Action Implemented Further Action Not Warranted Further Action Not Warranted Unresolved - See Corrective Action/Responses Unresolved - See Corrective Action/Responses CORRECTIVE ACTION/RESPONSES CASH AND CASH EQUNALENTS REVENUE/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Deficiencies in Accounting Procedures Finding Control Number: FS-840-00-01 Appalachian Technical College recognizes problems with its accounting records and controls. The College administration has provided additional support to the effort with the addition of a Director of Financial Aid and Accounting. DTAE is supporting the effort with additional training and help in reviewing the books. Appalachian Technical College will continue to work on this problem. EXPENDITURES/LIABILITIES/DISBURSEMENTS Agency Fund Overpayments Finding Control Number: FS-840-00-02 Appalachian Technical College is reviewing accounts on a monthly basis and unreconciled balances are researched and cleared as appropriate. SECTION ill CURRENT YEAR FINDINGS AND QUESTIONED COSTS APPALACHIAN TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUIVALENTS REVENUE/RECEIVABLES/RECEIPTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Deficiencies in Accounting Procedures Finding Control Number: FS-840-01-01 As in prior years, the financial accounting information presented for examination was in exceedingly poor condition. Numerous deficiencies were noted and are summarized as follows: 1) Cash and Cash Equivalents The accounting records for cash were found to be in poor condition. Bank reconciliations for the operating, payroll, equity and Pell accounts were not performed in a timely manner during the year under review. Interbank transfers were carried as a reconciling item for extended periods oftime. Extensive efforts were made to accurately reconcile cash by both Appalachian Technical College personnel and the auditors. 2) Revenue/Receivables/Receipts Our testing revealed instances where receivables and their corresponding revenues were not properly requested and/or recorded on the general ledger. Federal funds were not requisitioned in a timely manner, which resulted in deficit balances in several programs that had to be covered with local funds. Extensive procedures were required to produce a detail of valid accounts receivable at June 30, 2001. These procedures resulted in necessary adjustments of $425,827.27 to receivables in the Budget Fund. 3) Expenditures/Liabilities/Disbursements The College could not provide an accurate detail of valid accounts payable at June 30, 2001. Extensive procedures were required to produce a detail ofvalid accounts payable at June 30, 2001, resulting in adjusting entries of $427,065.00 to accounts payable in the Agency Funds. These deficiencies 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 ofinternal controls to provide reliable accounting records. - 1- APPALACHIAN TECHNICAL COLLEGE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2001 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS EXPENDITURES/LIABILITIES/DISBURSEMENTS Agency Fund Overpayments Finding Control Number: FS-840-01-02 The College's accounting procedures were insufficient to provide for adequate internal control over Agency Funds. Deficit balances of$778.58, $483.00 and $1,400.59 existed at year-end within the Hope account, the Pell account and the Private Trust Withholding account, respectively. These deficit balances were attributable to the poor condition of the accounting records. The College should establish appropriate internal controls to ensure that Agency accounts are reconciled monthly and necessary adjustments are recorded in a timely manner. Appropriate action should be taken by the College to ensure that payments are not made prior to collections for Agency Funds. -2-