trf\ A~oo ,Ri Vb W4 19~1-9% MANAGEMENT REPORT WEST GEORGIA TECHNICAL INSTITUTE LAGRANGE, GEORGIA AN ORGANIZATIONAL UNIT OF THE STATE OF GEORGIA YEAR ENDED JUNE 30, 1998 -. ----------- STATE OF GEORGIA DEPARTMENT OF AUDITS AND ACCOUNTS 254 WASHINGTON STREET ATLANTA, GEORGIA 30334-8400 WEST GEORGIA TECHNICAL INSTITUTE MANAGEMENT REPORT - TABLE OF CONTENTS - LETTER OF TRANSMITTAL SECTION I SELECTED FINANCIAL INFORMATION EXHIBITS A ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND B SCHEDULE OF FUNDS AVAILABLE AND EXPENDITURES COMPARED TO BUDGET BUDGET FUND "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION 2 C RECONCILIATION OF SALARIES AND TRAVEL 3 SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS SECTIONID 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 November 18, 1998 Honorable Zell Miller, 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 William Sellers, President West Georgia Technical Institute Ladies and Gentlemen: As part of our audit of the statutory basis financial statements of the 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 West Georgia Technical Institute. Accordingly, the financial statements and compliance activities of West Georgia Technical Institute were examined to the extent considered necessary in order to express an opinion as to the fair presentation ofthe fmancial 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 West Georgia 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 of management of West Georgia 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:gp SECTION I SELECTED FINANCIAL INFORMATION WEST GEORGIA TECHNICAL INSTITUTE ANALYSIS OF CHANGES IN FUND BALANCE BUDGET FUND YEAR ENDED JUNE 30. 1998 EXHIBIT "A" FUND BALANCE - JULY 1, 1997 Reserved Surplus ADDITIONS Adjustments to Prior Year's Accounts Payable Excess of Funds Available over Expenditures Exhibit "B" Prior Year's Checks Voided DEDUCTIONS Unreserved Fund Balance (Surplus) Retumed to Georgia Department of Technical and Adult Education - Administrative Central Office Year Ended June 30,1997 Adjustments to Prior Year's Accounts Receivable Refunds to Grantors Georgia Department of Technical and Adult Education - Administrative Central Office Federal Financial Assistance Reserved Fund Balance Carried Over from Prior Year as Funds Available "A" DEPARTMENT OF TECHNICAL AND ADULT EDUCATION tl8" LOTIERYFOR EDUCATION TOTAL $ 9,303.95 $ 9,303.95 82,325.74 $ 1,067.99 83,393.73 $ 91,629.69 $ 1,067.99 $ 92,697.68 $ 5,439.63 $ 6,455.24 $ 11,894.87 36,609.54 2.16 36,609.54 2.16 $ 42,051.33 $ 6,455.24 $ 48,506.57 $ 82,325.74 $ 1,067.99 $ 83,393.73 3,787.53 3,787.53 163.83 163.83 9,140.12 9,140.12 $ 95,417.22 $ 1,067.99 $ 96,485.21 FUND BALANCE - JUNE 30,1998 $ 38,263.80 $ 6,455.24 $ ==44:.=0=,7=1=9=.0=4 SUMMARY OF FUND BALANCE Reserved Federal Financial Assistance For Refund to Georgia Department of Technical and Adult Education - Administrative Central Office $ For Other Live Work Projects Prior Year Local Funds Surplus $ -1- 24,579.13 757.49 2,379.51 4,043.57 6,504.10 $ $ 6,455.24 24,579.13 757.49 2,379.51 4,043.57 12,959.34 38,263.80 $ 6,455.24 $ ==4=4:!:,7..1.=9.=0=,=4 WEST GEORGIA 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" EXPENDITURES Personal Services-Institutions Operating Expenses-Institutions Adult Literacy Grants Job Training Partnership Act Excess of Funds Available over Expenditures $ 6,514,522.00 $ 5,974,086.65 $ - - - --54-0',4-35-.3-5 $ 4,337,271.00 $ 4,147,719.64 $ 1,723,906.00 1,350,712.13 428,774.00 416,788.75 24,571.00 22,256.59 189,551.36 373,193.87 11,985.25 2,314.41 $ 6,514,522.00 $ 5,937,477.11 $ 5_77....:.,_044_.8_9 $ 36,609.54 $ ====3=6=,6:::0=9.=54== -2- WEST GEORGIA TECHNICAL INSTITUTE RECONCILIATION OF SALARIES AND TRAVEL YEAR ENDED JUNE 30, 1998 EXHIBIT "C" Totals per Annual Supplement Accruals June 30, 1998 June 30, 1997 Unlocated Variance SALARIES $ 3,636,663.08 $ TRAVEL 47,711.71 32,439.34 -57,131.35 3,413.11 $ 3,615,384.18 $ ======4=,::::!7,:=71==:1==:.7==1 - 3- SECTION II AUDITEE'S RESPONSE TO PRIOR YEAR FINDINGS AND QUESTIONED COSTS WEST GEORGIA 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 819-96-01 819-96-03 FS-819-97-01 Unresolved-See Corrective Action/Responses Further Action Not Warranted Unresolved-See Corrective Action/Responses CORRECTIVE ACTIONIRESPONSES ACCOUNTING CONTROLS (OVERALL) Inadequate Separation of Duties Finding Control Number: 819-96-01 The Institute is implementing appropriate procedures to satisfy the separation of duties requirement. In the areas of expenditures, liabilities and cash disbursements and bank: reconciliations, the Institute has evaluated j ob functions and reassigned staff persons in these areas. By the end of the current fiscal year, complete resolution of this finding will be obtained. CASH AND CASH EQUIVALENTS Inadequate Accounting Procedures Finding Control Number: FS-819-97-01 The Institute implemented a corrective action plan, but did not correct the deficiency and the stated condition remains. The monthly payroll bank: statements were reconciled for each month by June 30. Numerous adjustments were necessary to reconcile the operating bank: account and the Federal bank: account. The Institute is implementing appropriate procedures and controls to ensure that all reconciling items are identified and corrected each month. All unresolved reconciling items from prior year audit will be addressed in the current year. PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS FINDING CONTROL NUMBER AND STATUS 819-96-02 819-96-05 Unresolved-See Corrective Action/Responses Unresolved-See Corrective Action/Responses - 1- WEST GEORGIA TECHNICAL INSTITUTE AUDITEE'S RESPONSE SUMMARY SCHEDULE OF PRIOR YEAR FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998 PRIOR YEAR FEDERAL AWARD FINDINGS AND QUESTIONED COSTS CORRECTIVE ACTIONIRESPONSES CASH MANAGEMENT Excessive Cash Balances Finding Control Number: 819-96-02 The Institute implemented a corrective action plan, but did not correct the deficiency and the stated condition remains. Reorganization and the reassigning ofjob responsibilities in some areas will enable the Institute to resolve this finding and adequately forecast the cash needs of the program. FEDERAL FINANCIAL REPORTS Federal Cash Transactions Report Not Reconciled Finding Control Number: 819-96-05 The Institute implemented a corrective action plan, but did not correct the deficiency and the stated condition remains. The Institute notes that the resolution of the cash and cash equivalents administrative requirement finding will aide in providing adequate detail for the reconciliation of this report. -2- SECTIONlli CURRENT YEAR FINDINGS AND QUESTIONED COSTS WEST GEORGIA TECHNICAL INSTITUTE SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 1998 FINANCIAL STATEMENT FINDINGS AND QUESTIONED COSTS CASH AND CASH EQUNALENTS Inadequate Accounting Procedures Finding Control Number: FS-819-98-01 For the year under review, it was noted that the Institute's accounting procedures did not provide adequate internal control over the bank reconciliation process. The accounting procedures related to cash were found to be deficient as follows: (1 ) The monthly bank statements have not been reconciled since September of 1997 for the operating account and since February of 1998 for the Federal account. At June 30, 1998, there was an unreconciled variance between the general ledger and the bank statement of $78,465.70 for the operating account and $58,914.02 for the Federal account. . (2) Book errors disclosed through the bank reconciliation process were carried as reconciling items for extended periods of time. These conditions occurred because management did not implement appropriate procedures and controls to ensure that all bank statements were reconciled to the general ledger on a timely basis and that reconciling items were identified and corrected promptly. The Institute should implement appropriate procedures and controls to ensure that all bank statements are reconciled to the general ledger on a timely basis and that reconciling items are identified and corrected promptly. The Institute should establish procedures which ensure that cash and cash equivalents are adequately safeguarded. GENERAL LEDGER Detail of Salaries Not Reconciled Finding Control Number: FS-819-98-02 For the year under review, the detail of salary payments made to employees, as reported to the Georgia Department of Audits, did not reconcile with the amounts recorded as salaries in the general ledger as presented for examination. A comparison of the amounts submitted to the Department to the general ledger disclosed a difference of$3,413.11. The difference of$3,413.11 is reflected as an unlocated variance on the "Reconciliation of Salaries and Travel" exhibit of this report. The Institute should ensure that the detail reports submitted to the Georgia Department of Audits are balanced to the general ledger.