Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Commerce
Internal Control and Compliance Audit

 

Financial Audit Division Report 10-36

Released December 9, 2010

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Conclusion

The Department of Commerce did not have adequate internal controls to ensure that it accurately billed insurance companies for the cost of its examinations and investigations or to collect penalties assessed to regulated companies. The department generally had adequate internal controls to ensure it safeguarded receipts, accurately paid employees and contractors in accordance with management’s authorization, produced reliable financial data, and complied with finance-related legal requirements. For the items tested, the department generally complied with finance-related legal requirements. However, the department had weaknesses in its internal controls and noncompliance with certain finance-related legal requirements. The department resolved five prior audit findings, but did not resolve two prior findings related to unclaimed property.

Key Findings

• The Department of Commerce could not identify or support some amounts it billed insurance companies to recover its investigative costs and did not always know whether insurance companies paid the billed amounts.
• The Department of Commerce did not adequately pursue recovery of penalty amounts.
• The Department of Commerce did not sufficiently identify, analyze, and document risks and internal controls related to some significant financial operations and compliance requirements.
• The Department of Commerce allowed employees excessive or unnecessary access to update its licensing systems.

Audit Objectives and Scope

Objectives	Period Audited
Internal Controls Compliance	July 1, 2007, through March 31, 2010
Programs Audited
Assessments to Companies License Receipts Fines and Penalties Securities Registration	Employee Personnel/Payroll Employee Travel Reimbursements Professional/Technical Contracts Unclaimed Property