FINDINGS, CONCLUSIONS, AND
RECOMMENDATIONS
INDIRECT COST RATE PROPOSAL NOT
SUBMITTED ON TIMELY BASIS
The Agency did not submit an indirect cost rate proposal on a timely basis
resulting in delayed federal reimbursement of indirect costs and lost interest earnings
for the State.
The Agency had not prepared and submitted an indirect cost rate proposal to its federal
cognizant agency (U.S. EPA) for fiscal year 1998 until January 1998 and was prohibited
from claiming reimbursement for indirect costs pending approval of the rate. The indirect
cost rate proposal for fiscal year 1998 was required to be submitted prior to January
1997.
Agency officials have stated that the untimely submission was due to time constraints
and other obligations on the person who was responsible for its preparation.
The receipt of indirect cost reimbursements of approximately $3,395,000 was
delayed resulting in the loss of interest income to the State in excess of $6,000.
However, federal grant funds available to the Agency were fully reimbursed and all
allowable costs have been claimed. (Finding 98-1, pages 22-23)
Agency officials accepted our recommendation to establish adequate procedures to ensure
indirect cost proposals are filed on a timely basis and state that this condition has been
corrected.
DUPLICATE PAYMENT OF VENDOR INVOICES
The Agency had not established controls sufficient to prevent all duplicate
payments of vendor invoices. For fiscal years 1997 and 1998, 42 duplicate payments
totaling in excess of $59,000 were made to Agency vendors.
Differences in inputting procedures resulted in identical vendor invoice numbers being
entered more than one way in the system and bypassing the control feature. The State
Comptroller’s Office has established Statewide Accounting Management System Procedure
17.10.30 which requires the Agency to conduct a pre-audit of vouchers before processing
for payment.
The Agency did not have adequate data entry and pre-audit procedures to ensure
duplicate payment of invoices are not made. The amount reported above represents only the
known duplicate payments based on refunds received. Additional duplicate payments could
have been made and gone undetected or unreported due to the weaknesses in controls.
(Finding 98-3, page 26)
Agency officials accepted our recommendation to establish and implement adequate
controls to ensure that vendor invoice information is consistently entered into the system
and that adequate pre-audit procedures are utilized. Further, Agency officials stated that
procedures are being reviewed and they will establish controls to prevent this from
occurring in the future.
INADEQUATE ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS
The Agency did not adequately allow for estimated uncollectible accounts
receivable. The accounts receivable balance at June 30, 1998 was $9,515,000 with an
allowance for uncollectible accounts of $198,000.
Subsequent evaluation of the accounts receivable by the Agency determined that, of the
receivables turned over to the Attorney General’s Office, $1,044,000 should be
reserved as estimated uncollectible accounts at June 30, 1998.
Agency personnel stated that during the audit period they did not have formal
procedures to ensure that all offices and bureaus routinely reported on the amounts of
accounts receivable estimated to be uncollectible. (Finding 98-4, pages 27-28)
Agency officials accepted our recommendation that they review accounts receivable on a
quarterly basis to determine if the allowance for uncollectible accounts adequately
reflect those amounts.
INADEQUATE COMPUTER DISASTER
RECOVERY PLAN
The Agency did not have an adequate plan for reacting to disasters.
The Agency has approximately $7.6 million of computer equipment located at its
facilities throughout the State. The Agency has over 1,270 microcomputers connected to
local area networks (LANs) that process critical applications.
The planning document for the system is dated October 1992. The plan does not include
recovery procedures for LANs. No tests or updates have been made since June 1993. An
alternative work site has not been agreed on and the names, addresses and phone numbers of
essential personnel were not current.
An effective disaster recovery plan can greatly assist management in coping with
service disruptions resulting from fire, floods, storm, power failures or vandalism.
(Finding 98-7, pages 32-33)
Agency officials accepted our recommendation to provide an effective disaster
contingency plan for reacting to disasters and stated that with the completion of the
centralization process, the disaster recovery process will be restarted and a disaster
recovery plan should be completed and tested by December 31, 1999.
OTHER FINDINGS
The remaining findings and recommendations are less significant and have been given
attention by the Agency. We will review progress towards the implementation of our
recommendations during the Agency’s next audit.
The responses to our findings and recommendations were provided by Stuart Gresham,
Chief Internal Auditor.
AUDITORS’ OPINION
Our auditors state the June 30, 1998 and June 30, 1997 combined financial
statements of the Agency are fairly presented, except for the effects of such adjustments,
if any, as might have been determined to be necessary had they been able to examine
evidence regarding Year 2000 disclosures.
____________________________________
WILLIAM G. HOLLAND, Auditor General
WGH:TEE:pp
SPECIAL ASSISTANT AUDITORS
Our special assistant auditors were Sikich Gardner & Co, LLP. |
