Key Findings and Recommendations
The Department of Revenue did not properly monitor its sales tax clearing account and resolve the excess cash balance in the account. As of June 30, 2003, the account contained approximately $5 million that should have been transferred to another fund. The department uses the clearing account to process the sales tax receipts it collects on behalf of the cities and counties. However, the department did not monitor fund level activity to ensure that the account did not accumulate an unauthorized balance. We recommended that the department monitor the account on a periodic basis and transfer any excess cash to the appropriate fund.
The Department of Revenue has not reconciled its Individual Tax Return System (ITRS) to the Refunds Processing Module (RPM) since January 2003. The department began using the ITRS in 2002 to process individual and property tax returns. Although the department monthly reconciled RPM to MAPS, it has not reconciled ITRS to RPM since January 2003. The department needs to complete the monthly reconciliations between ITRS and RPM.
Our office also conducted an information technology audit of selected components of the systems that support individual income tax processing. The Legislative Audit Report 04-16 contained nine findings related to computer security weaknesses.
Management letters address internal control weaknesses and noncompliance issues found during our annual audit of the state’s financial statements and federally funded programs. The scope of work in individual agencies is limited. During the fiscal year 2003 audit, our work at the Department of Revenue focused on the material tax revenues, such as individual income, corporate income, sales, fuel, state property, mortgage and deed, health care, gross earnings, and tobacco. Our work also focused on the material expenditure programs, such as property tax refunds, local government aids, homestead and agricultural credit aid, county criminal justice aid, family preservation aid, and police and fire state aid.
