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ATLANTA DISTRICT OFFICE
ADMINISTRATIVE & FINANCIAL CONTROLS

AUDIT REPORT NO. 256
March 21, 1997

SUMMARY

In October 1996, we performed an audit of administrative and financial controls in the Atlanta District Office (ADO). The audit found that ADO controls were generally functioning adequately. We are recommending certain improvements, as summarized below and described in the Audit Results section.

The ADO should improve controls over the transportation subsidy program; improve physical security over the imprest fund; correct several errors in its accounting records; separate the functions of authorizing and approving overtime authorizations; and provide the Administrative Officer with adjustments to travel vouchers.

Generally, the ADO agreed with our findings and recommendations, and has already begun corrective actions. Its comments are attached.

SCOPE AND OBJECTIVES

We reviewed administrative and financial controls of the Atlanta District Office. Our objective was to determine whether the ADO's controls were adequate, were being implemented economically and efficiently, and were in compliance with Commission policies and procedures.

The audit steps included interviews with administrative and financial staff and tests of controls. Because of time and resource constraints, the scope of testing was more limited than it would have otherwise been.

We performed the review during October 1996, in accordance with generally accepted government auditing standards.

BACKGROUND

The Atlanta District Office is headed by a District Administrator, and divided into offices headed by Assistant District Administrators (Enforcement and Regulation). In turn, the offices are divided into branches (enforcement, broker dealer and transfer agent examinations, investment company/investment adviser examinations, full disclosure, and reorganization).

The District Administrator reports to the Regional Director of the Southeast Regional Office (SERO) in Miami. The SERO is responsible for administering Commission programs, subject to oversight by the Division of Enforcement, in the states of Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee, as well as Puerto Rico and the Virgin Islands.

The Administrative Officer (AO) is responsible for most day-to-day administrative matters. His duties include time and attendance, travel, personnel, purchasing, and budgeting and accounting.

The ADO receives guidance from and coordinates with relevant headquarters offices. For example, the Office of the Comptroller has overall responsibility for processing travel expenditures and maintaining the Commission's official accounting records.

AUDIT RESULTS

We found that ADO controls were generally functioning adequately. Administrative records were well maintained and organized, and the ADO saved approximately $1,700 in fiscal year 1996 by taking advantage of prompt pay discounts with vendors. We are recommending certain enhancements, as discussed below.

Transportation Subsidy Program

Fifteen ADO staff currently participate in the transportation subsidy program, but only four signed eligibility certifications for 1996. In addition, the same person orders and picks up the transportation subsidies. These duties should be separated. Finally, the ADO has not submitted a report on the program since 1992 (the Office of Administrative and Personnel Management is currently revising the report's content).

Recommendation A

The ADO should ask all participants in the transportation subsidy program to sign eligibility certifications.

Recommendation B

The ADO should separate the duties of ordering and picking up transportation subsidies.

Recommendation C

The ADO should prepare a transportation subsidy program report (after the Office of Administrative and Personnel Management finishes revising the report's content)

In response, the ADO indicated it did not realize that participants needed to be recertified annually. It notified each participant of the need to recertify annually and will do so in the future. It must be noted that no participant received tokens without certification.

A new procedure was adopted for obtaining tokens. The administrative contact will issue the purchase order and someone else will get them from the vendor.

The ADO will begin preparing a transportation subsidy program report as soon as OAPM finishes revising the report’s content.

Imprest Fund Security

During our review, we noted that the imprest fund was kept in an unlocked metal box, in a file cabinet accessible to ADO staff. Consequently, the fund was not secure, and subject to possible theft or loss.

Recommendation D

The ADO should improve physical security over the imprest fund, for example, by locking the fund in a safe.

To address this issue of security, the ADO purchased a safe specifically for the imprest fund.

Obligation of Funds

Our review identified eight ADO travel obligations totaling $2222 which had been paid, but were still classified as unliquidated. The obligations originated between November 1995 and July 1996. Two involved duplicate obligation entries, while in the other six, expenditures for airfare (object class 2210) were included in expended amounts under object class 2105 (meals and other expenses). The original obligation for object class 2110 was consequently left unliquidated.

We also identified a small purchase obligation of $3500 for which no funds had been expended and no documentation was available. Another small purchase obligation for $41,000 had the same document number, suggesting that the $3500 obligation may have been a duplicate entry.

As a consequence of these errors, the Comptroller's accounting records were misstated.

Recommendation E

The ADO, in consultation with the Comptroller's Office, should correct the accounting errors described above. In the future, the ADO should research any obligations that are not timely liquidated.

In response to our recommendation, the ADO submitted a request to the Office of the Comptroller to deobligate these amounts.

The ADO will review travel records for any obligations that are not timely liquidated and resolve the problem.

Overtime Authorizations

Twelve of ninety-nine overtime authorizations we reviewed were signed by the same person as both the authorizing and approving official. Commission regulations require that these duties be separated as a management control.

Recommendation F

The ADO should remind its staff that overtime authorizations should be authorized and approved by different persons.

In response to our recommendation, the ADO agreed to separate the authorization and approval functions for overtime authorization. A memo to this effect has been issued to all ADO staff.

Travel Voucher Adjustments

When the Comptroller's Office adjusts travel vouchers, it sends a written notification describing the adjustment to the traveler. The administrative specialist who reconciles ADO's accounting records does not get a copy of the notification, making the reconciliation more difficult.

Recommendation G

 The ADO should ask its staff to notify the administrative specialist when they receive travel voucher adjustments from the Comptroller's Office.