An Audit Report on Internal Controls and Financial Processes at the Cosmetology Commission
February 2004
Report Number 04-019
Overall Conclusion
There was gross fiscal mismanagement at the Cosmetology Commission (Commission) during fiscal years 2002 and 2003. During that time, the Commission significantly mismanaged its fiscal responsibilities and exposed state funds to the risk of loss and abuse. It did not maintain proper control over assets, did not discharge fiscal obligations in a timely manner, misused state funds, and did not keep adequate fiscal records. Most significantly, the Commission has not collected $2.8 million of the $4.8 million in penalties it assessed from September 1999 through June 2003 and has not followed statutory and regulatory requirements for the collection of administrative penalties. Control weaknesses in the Commission's financial operations could lead to future errors and violations of laws and regulations. In addition, the Commission had a budget shortfall at the end of fiscal year 2003 that caused it to place 38 employees (85 percent of its 44.5 full-time equivalent positions) on leave without pay and to receive an emergency deficiency grant from the Governor's Office.
The Commission had two executive directors during the time period that we audited. Throughout our audit, the Commission had difficulty locating records and providing explanations for issues we identified. The current executive director was hired in July 2002 and has begun to take steps to address our findings. These steps include beginning to draft financial policies and procedures, as well as resuming administrative hearings to collect unpaid penalties. We have not audited the new procedures the Commission has developed and therefore cannot assure that they are adequate. Fully correcting the Commission's gross fiscal mismanagement will require both immediate action to correct certain deficiencies and the implementation of a long-term financial remediation plan.
Contact the SAO about this report.
Download the PDF version of this report. (.pdf) (HTML)*
Download the Acrobat version of this report summary. (.pdf) (HTML)*
*HTML equivalents for PDF documents are generated utilizing Adobe's PDF Conversion by Simple Form.