November 8, 2010

Treasurer’s audit shows room for improvement

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By Megan Poinski
Megan@MarylandReporter.com

Auditors said the State Treasurer’s Office needs to improve oversight over how it manages finances and oversees the rest of the state’s money, according to a report released by the Office of Legislative Audits on Friday.

Legislative Auditor Bruce Myers said that there was nothing that really stood out among the findings in the audit of the operations of the Treasurer’s Office, which indicated 12 areas where improvements could be made. Treasurer Nancy Kopp wrote a very detailed response to the audit, pointing out exactly how each issue had been addressed.

“She is mainly saying that they do have good controls,” Myers said. “What we have found in the audit, these are enhancements.”

For the most part, Myers said he agrees with Kopp’s assessment. He thinks improvements definitely need to be made to the Injured Workers Insurance Fund, but believes that Kopp has outlined a plan that could correct the issues.

The state treasurer is responsible for receiving, disbursing and investing money from the state treasury. It also procures banking and financial services for the state, and maintains an insurance program for state property and employees. Additionally, the office coordinates general obligation debt functions for the Board of Public Works.

Items found in the audit include:

· Not making sure that all state agency bank accounts are in authorized banks. Auditors found 22 state accounts at banks that had not been authorized for state business.

· Not making sure that funds in “lockbox” accounts were transferred to the state for investment as often as it should.

· Not making sure that all state bank accounts have assets to back them up.

· Leaving too many contracts with banks incomplete, and not establishing a “remote deposit” policy for agencies to be able to deposit checks by scanning them.

· Failing to put the administration of the Injured Workers Insurance Fund up for competitive bid; it hasn’t been up for bids in nearly two decades.

· Lack of verification of claims reported by the Injured Workers Insurance Fund, to ensure payments were only for those with work-related injuries.

· Improper storage of state-owned securities. They were kept in a locked filing cabinet, when law dictates that they be stored in a vault at the treasurer’s office.

· Having employees able to both create and approve insurance claims. One employee could also record disbursements in the treasurer’s office accounting system and actually take funds from agencies without anyone reviewing it.

· Inadequate plans to be able to utilize data in case of emergencies.