Repeat Findings: What are they and how to avoid them

Mike Bozymski, CPADeputy State Examiner

Indiana State Board of Accounts

About the State Board of Accounts

• Created in 1909• Audit clients:– State Agencies Counties– Cities Towns– Townships Schools– Special Districts Libraries– Public Hospitals Not-for-profits

• 180 field staff in 18 districts throughout the State

Types of Audits and Exams

• Financial

• Federal A-133

• Compliance

• Special Investigations or Fraud Audits

Frequency of Audits

• Annual– State of Indiana– Cities– Counties– Towns with population greater than 5,000– Public hospitals

• Biennial– All others

Findings – What are They?

• Federal– OMB Circular A-133– Compliance Supplement

• Non-federal audits– Failure to comply with specific law– Failure to comply with uniform compliance

guideline

Common Federal Findings

• Inadequate Monitoring of Grant Awards• Cash Management• Inaccurate Reporting to Grantor Agency• Inadequate Monitoring of Subrecipients• Overpayments or Improper Payments• Lack of Internal Controls

Common Local Government Findings

• Daily Deposits• Bank Reconcilements• Capital Asset Records• Condition of Records• Overdrawn Cash or Appropriation Balances• Old Outstanding Warrants • Official Bonds• Not Adhering to Ordinances and Resolutions• Lack of Internal Controls

Common State Agency Findings

• Contract Violations• Collection of Revenue Issues• Capital Asset Violations• Violations of Procurement Regulations• Lack of Internal Controls

Causes of Findings and Repeat Findings

• Lack of Internal Controls• Lack of Knowledge• Turnover of Personnel• Indifference• Lack of Penalties

How to Avoid Repeat Findings

• Strengthen Internal Controls• Education and Training– SBOA Manuals– SBOA Bulletins– SBOA Conferences– Government Associations – AIC, IACT, etc.

• Legislative Changes

Charge Audits

• What are they?

• Interaction with Other Agencies

• Recent Examples

Town of Brownstown

• $393,96.98 Charge– Salary Overpayment– Unauthorized Personal Services– Penalties and Interest

• Internal Controls– Incorrect Bank Reconcilements– Lack of Posting– Lack of Supporting Documentation

East Chicago Public Library

• Library Board Member Compensation• Per IC 36-12-2-21 “A member of a library

board shall serve without compensation….”• Over a 3-year period the Library paid

$200,948.32 in health, dental, vision and life insurance premiums on behalf of the board members.

Town of Poseyville

• $53,557 Charge– Salary Overpayment– Personal Charges on Purchasing Card

• Internal Controls– No Bank Reconcilements– Altered Bank Statements

Town of West Terre Haute

• $391,564.69 Charge– Undeposited Utility Receipts– Expenditures Without Supporting Documentation

• Internal Controls– Lack of Segregation of Duties– Deputy Clerk Bypassed Controls

Town of Merrillville Court

• $310,325 Charge– Cash Bond Collections Not Deposited

• Internal Controls– Lack of Segregation of Duties– Controls in Software Program Not Being Used– Signature Stamps Not Safeguarded

City of Hammond Water Utility

• Unallowable Expenses– Golf Outing– Limo Bus Service to Cellular One Field

• Guideline– Expenses paid should be directly related to the

operation of the utility.