Summary of Report 97-048

Report Number 97-048

March 1997

Overall Conclusion

Significant control weaknesses and violations of state policy at the Board of Private Investigators and Private Security Agencies (Board) indicate a serious lapse of oversight by agency management and the governing board. Immediate steps should be taken to improve management within the agency and oversight performed by the board members.

Key Facts and Findings

Our follow-up review indicates that the Board had not implemented 8 of the previous 22 recommendations. Some of the weaknesses include:

- There is a lack of controls over financial management. Cash receipts, amounting to over $5 million in fiscal year 1996, were not safeguarded. There is a lack of separation of duties in accounting.

- Policies and procedures for Licensing, Examinations, and Accounting have not been developed and implemented. In addition, the Board has not evaluated the methods used to prioritize and process investigations.

- The Board needs to implement controls over human resource management such as performance appraisals, documentation for personnel actions, and Fair Labor Standards Act (FLSA) exemptions.

We identified additional issues during our follow-up review. Some of these are:

- The Board falsified vouchers, fabricated supporting documentation, and incurred unreasonable expenses for Board meetings. The total value of falsified vouchers was $31,571, and at least $14,256 were unreasonable expenses for Board meetings. According to agency staff, the practice dates back to 1988.

- The Board was not in compliance with state purchasing requirements and the timely payment statute.

- The Board paid first-class airfares without justifying the extra expense. The additional cost to the State for these first-class tickets was over $1,700.

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