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An Audit Report on Financial Processes at the Department of Licensing and Regulation

September 2017

Summary Analysis

The Department of Licensing and Regulation (Department) generally had processes and related controls to help ensure that it administered financial transactions in accordance with applicable statutes, rules, and Department policies and procedures. However, it should strengthen policies and procedures for certain financial processes, improve certain controls over asset management and expenditures, and consistently monitor budgets for compliance with the transfer limits in the General Appropriations Act.

 Jump to Overall Conclusion

The Department had documented policies and procedures that addressed many of its financial processes. However, the Department’s policies and procedures were not always aligned with the Department’s current practices, did not exist for some of the areas audited, were not always dated, and/or were not always retained in compliance with retention requirements.

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The Department generally accounted for and safeguarded capital and controlled assets; however, it should improve certain controls to ensure that it appropriately records, tracks, and disposes of assets in compliance with the State Property Accounting (SPA) Process User’s Guide and to ensure the accuracy of capital assets and depreciation that the Department specifies in its annual financial report.

Jump to Chapter 2 

The 60 Department expenditures that auditors tested for fiscal year 2015 and fiscal year 2016 (through February 29, 2016) were allowable, supported with documentation, and entered accurately in the Department’s accounting system. Those 60 expenditures totaled $38,380. In addition, for the expenditures tested that were related to contracts, the Department generally made the expenditures in accordance with the contract terms and it had evidence that it followed proper bidding processes. However, the Department did not consistently document its review and approval of expenditures prior to payment.

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Overall, the Department ensured that the budget transfers tested for fiscal year 2015 and fiscal year 2016 (as of February 29, 2016), were appropriate, complied with transfer provisions, did not exceed appropriation balances, and were recorded accurately. However, the Department made one capital budget transfer in fiscal year 2015 that exceeded the transfer limits in the General Appropriations Act (83rd Legislature). Specifically, the General Appropriations Act required agencies to obtain approval from the Legislative Budget Board and the Office of the Governor if they transferred appropriations from a non-capital budget item to a capital budget item and the transfer exceeded 25 percent of the capital budget item. The Department did not obtain those approvals when it made a $23,540 transfer from a non-capital budget item to a capital budget item that represented 28 percent of its $82,812 appropriated capital budget.

Jump to Chapter 4 

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