Summary of Report 02-006

October 2001

Report Number 02-006

Poor documentation of decisions and processes, absence of basic controls and oversight, and noncompliance with some statutory requirements prevent the Parks and Wildlife Department (Department) from effectively collecting and managing revenue. The Department has an ongoing history of problems with financial management. As a fee-based agency, these significant weaknesses could prevent the Department from collecting revenue that it relies on to fund its programs.

• The Department has not collected all revenue from its $63 million point-of-sale (POS) licensing system due to inadequate oversight, contract deficiencies, and poor vendor performance. There is recurring evidence that all revenue has not been collected from license deputies over the life of the contract.

  Information Subsequent to Completion of Fieldwork: On July 23, 2001, the Department released the POS contractor from all liability for uncollected revenue without adequate analysis to determine the amount of uncollected funds. The settlement of $700,000 was based on the contractor's analysis of its own incomplete database. The settlement, therefore, may be insufficient to cover the potential loss to the State. In addition, the Department will now have to cover all costs associated with identifying and collecting unswept revenue from license deputies.

• The Department has not consistently allocated supercombo license revenue to statutorily restricted stamp funds. A combination of allocation methods has resulted in inaccurate fund balances in the Uniform Statewide Accounting System (USAS).
• The Department's mailroom and cash handling procedures increase the Department's risk of losing revenue due to fraud and abuse.
• Poorly designed processes contribute to a high rate of non-value-added activities in the finance division's revenue branch. Of 48 positions analyzed, activities equivalent to 19 full-time equivalent employees were assessed as non-value-added. The salaries associated with these activities equate to $474,480 per year excluding benefits.
• The Department has not reconciled revenue in USAS and its internal accounting system since 1998. There is $23.4 million more revenue recorded in USAS than in its internal accounting system. This prevents the Department from having accurate, timely information on revenue and leaves the Department open to fraud and abuse.

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