Office of the Legislative Auditor - Financial Audit Division

Report Summary
Department of Employee Relations
Internal Control and Compliance

 

Financial Audit Division Report 08-15

Released May 22, 2008

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Conclusions

Generally, for the majority of its financial operations, the department’s internal controls were adequate to ensure that it safeguarded receipts and other assets, accurately paid employees and vendors in accordance with management’s authorization, produced reliable financial information, and complied with finance-related legal requirements. For the items tested, the department generally complied with finance-related legal requirements over its financial activities.  However, the department had six weaknesses related to internal control and legal compliance over some significant aspects of its operations. We highlight the key findings below.

Key Findings

• The department did not adequately safeguard or promptly deposit certain insurance receipts.
• The department did not verify that health plan administrators met some performance measures used in the calculation of incentive payments.
• The department did not obtain assurance that adequate internal controls existed at contractors that processed state employee pre-tax expense account and public employee insurance claims.
• The department accumulated excess balances in the funds it used to administer the state employee pre-tax expense accounts.
• The department did not adequately resolve all instances where employees did not certify their timesheets or primary supervisors did not authorize the timesheets.

Audit Objectives and Scope

Objectives	Period Audited
Internal Controls Compliance	July 1, 2005, through December 31, 2007
Programs Audited
Payroll and Other Administrative Expenditures    State Employee Pre-Tax Expense Accounts	Insurance Premiums Insurance Claims

Background

As the personnel, insurance benefits, and labor relations office, the Department of Employee Relations assists all other agencies in issues relating to state employment. The department received General Fund appropriations of about $6.2 million for operations each of the past three fiscal years. The department also collected insurance receipts and paid claims that exceeded over $500 million each year.