An Audit Report on the Office of Injured Employee Counsel
March 2015
Report Number 15-027
Overall Conclusion
The Office of Injured Employee Counsel (Office) generally has processes to help ensure that it uses state funds and other assets in accordance with applicable statutes, rules, and Office policies and procedures. However, it should (1) consistently follow its policies and procedures for expenditures and (2) improve controls over certain types of expenditures and the documentation of its hiring process.
Office expenditures for fiscal years 2011 through 2014 totaled $40,028,624. The Office spent $37,655,956 (94.1 percent) of that amount on payroll and the remaining $2,372,668 (5.9 percent) on travel and other expenditures. The Office is administratively attached to the Department of Insurance. As a result, the Department of Insurance provides the Office with administrative support, including the processing of payroll, travel, and other expenditures.
The Office paid $17,226 for out-of-state travel to training and conferences when comparable training and conferences were available in Texas. In addition, auditors identified $2,346 in Office out-of-state travel expenditures that were not allowable under state requirements; that occurred because of control weaknesses at the Office. The Office also made at least $15,627 in other expenditures that were not in direct support of its statutory duties and responsibilities.
Auditors tested the Office's expenditures and determined the following:
- Payroll expenditures. Results of audit testing of the Office's payroll expenditures indicated that the Office's and the Department of Insurance's controls helped to ensure compliance with statutes, rules, and Office policies and procedures.
- Travel expenditures. A lack of oversight by former executive management and management override of certain controls contributed to weaknesses in the processing and payment of travel expenditures. For example, as discussed above, the Office paid $17,226 for out-of-state travel to training and conferences when comparable training and conferences were available in Texas and $2,346 for unallowable out-of-state travel expenditures. In addition, auditors were unable to determine whether amounts the Office reimbursed former executive management for meals were based on actual expenses or included unallowable items because the Office did not consistently require its former executive management to report actual meal expenses on their travel vouchers. See Appendix 2 for additional details on out-of-state travel expenditures.
- Other expenditures. For most other expenditures it made, the Office had proper support for and calculated those expenditures accurately. However, a lack of oversight and management override of certain controls contributed to weaknesses in the processing of and payment for certain Office purchases. Specifically, the Office spent at least $15,627 in state funds for items (such as $3,000 for wellness training) that were not in direct support of the Office's statutory duties and responsibilities.
In addition, in May 2014, the Office attempted to process $24,500 in advance tuition payments for the former deputy public counsel to attend the Executive Master in Public Leadership Program at the University of Texas at Austin. However, the Department of Insurance did not process the associated payments because that would have violated the Office's policy.
During this audit, auditors also referred indications of potential fraud to the State Auditor's Office's Special Investigations Unit for further investigation.
On October 31, 2014, a new public counsel was appointed to oversee the Office.
Auditors also communicated other, less significant issues related to travel and purchase voucher documentation to the Office in writing.