department of legislative services

DEPARTMENT OF LEGISLATIVE SERVICES
OFFICE OF LEGISLATIVE AUDITS
MARYLAND GENERAL ASSEMBLY
Wurrcn G. Dcschcnuux
Executive Director
November 4, 2015
Thomas). Barnickcl III, CPA
Legislative Auditor
Senator Cdward .I. Kasemeyer, Chair
Senate Budget and Taxation Committee
Miller Senate Oflice Building, 3 West Wing
11 Bladen Street
Annapolis, Maryland 21401
Delegate Maggie Mcintosh, Chair
House Appropriations Committee
House Office Building, Room 121
6 Bladen Street
Annapolis, Maryland 2140 I
Dear Senator Kasemeyer and Delegate Mcintosh:
The Office of Legislative Audits (OLA) has conducted a review of the actions taken by
the Comptroller of Maryland - Revenue Administration Division (RAD) to resolve two repeat
findings in our August 23, 2013 audit report. This review was conducted in accordance with a
requirement specified in the April 2015 Joint Chairmen's Report (JCR), page 30. The JCR
required that, prior to the release of $200,000 of its administrative appropriation for fiscal year
2016, RAD must take corrective action on all unresolved repeat audit findings. The JCR
language further provided that OLA submit a report to the budget committees listing each
unresolved repeat audit finding along with a determination that each finding was corrected. The
OLA report is required to be submitted to allow 45 days for the budget committees to review and
release the funds prior to the end of the fiscal year. This is the second consecutive year that a
requirement regarding repeat audit findings has been included in the JCR for RAD. In response
to the requirement in the April 2014 JCR, we notified the budget committees on March I 0, 2015
that RAD had not resolved two of four repeat findings.
The August 23, 2013 audit report of RAD contained four repeat audit findings (findings
4, 6, 9, and I 0) that were addressed by five recommendations. In our March 10, 2015 letter we
concluded that findings 4 and 9 were resolved and consequently, the unresolved repeat findings 6
and 10 are the subject of our current review. In accordance with the April 2015 JCR
requirement, RAD provided a report to OLA, dated October 14, 2015, detailing the corrective
actions that it had taken with respect to the two unresolved repeat audit findings. We reviewed
this report and related documentation, performed limited tests and analyses of the information,
and held discussions with RAD personnel as necessary to assess the implementation status of the
related recommendations. Our review did not constitute an audit conducted in accordance with
generally accepted government auditing standards.
301 West Preston Street · Room 1202 ·Baltimore, Maryland 21201
410-946-5900/301-970-5900 · Fax 410-946-5999/301-970-5999
Toll Free in Maryland 877-486-9964 ·Fraud Hotline 877-FRAUD-11
Senator Edward J. Kasemeyer
Delegate Maggie Mcintosh
-2-
November 4, 2015
Exhibit I is RAD's October 14, 2015 status repo11, which indicated that corrective
actions had been taken to resolve the two remaining repeat findings. Our review confirmed that
RAD had taken the necessary corrective actions to satisfactorily address the recommendations
for these findings.
A summary of OLA's assessment of the status of each of the unresolved repeat audit
findings is included in the attached Exhibit 2. We wish to acknowledge the cooperation
extended to us by RAD during this review.
We trust our response satisfactorily addresses the JCR requirement. Please contact me if
you need additional information.
Sincerely,
72-J ~tJ.:g_
Thomas J. Barnickel III, CPA
Legislative Auditor
cc:
Senator Guy J. Guzzone, Co-Chair, Joint Audit Committee
Delegate Craig J. Zucker, Co-Chair, Joint Audit Committee
Joint Audit Committee Members and Staff
Senator Thomas V. Mike Miller, Jr., President of the Senate
Delegate Michael E. Busch, Speaker of the House of Delegates
Governor Lawrence J. Hogan, Jr.
Comptroller Peter V.R. Franchot
Treasurer Nancy K. Kopp
Attorney General Brian E. Frosh
David R. Brinkley, Secretary Department of Budget and Management
Wayne P. Green, CPA, Director, Revenue Administration Division
Joan Peacock, Manager, Audit Compliance Unit, DBM
Warren G. Deschenaux, Executive Director, Department of Legislative Services
Sierra S. Boney, Policy Analyst, Department of Legislative Services
Exhibit 1 to November 4, 2015 Letter to Joint Chairmen
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ll'"J'lle P. Gn·e11, CPA
D irt!Clo r
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(kloher 14. _li t .
Re: Audit of lhc Comptroller of i'vlaryland - Ren:nue Admini strat ion Di' is ion:
Report Dmc: August 23 . 201 3
Thomas J. Barnickel Ill. CPA
Legisl ativi: Auditor
JO I Wesl l'rcslnn Slreet
Room 1202
Bnltimorc. i\•ID 21 20 1
IJcar i\•lr. Bamickd :
r h.: Revenue 1\dmi nistration Oi' i~ion of the C11mplwllcr oi" M11 ryland J>ro\ 1dc:- the f1 1llowing,
informatiun with n:~p.:ct to com.:cti' c :u:tiuns taJ..cn h1 addrc~s two unresolved repeat nudit lir1di ngs
(find ings 6 nnd I0) as noted in the August 23. 2013 audit report issued by the Onice of Legislative
Audits (OL1\ 1:
Finding
(1
Al·cou11t:1hility :ind \'erilic:il ion prucl•durcs fur rcrund
cheel.~
need lo he impru\'Cd.
lkcon11nendntion 6
We recommend that RAD:
a. \'crif) the proper dispoi.ition of returnee.I rdunc.I checks h) :ii:: rceing the origin:1l log
of n·turncd cl1l·clu lo the record U.!>cd lo H'rif~· lhl· disposition of those chc1:k.!>
(repeat);
h. uiu: the lo ~ prcpurcd h)' the cmpln) cc re.'i pun:o.ihlc for n.:- n111ilin g returned checl;..~ tu
\'erify the proper d isposition of those checks (repeat).
Appropri.ilc corrective action 10 uddrc's th is fi nding was implemented based on information
i:ontnined in the March I 0. 201 5 OLA report to the Budget Commi ttees. and \ \ C ha\'C
con lirmcd conli nuing compliance.
llc•· ,· 1111~
,\ d111ini>1rali<•11 l'c111cr • I Ill Carrull S1m:1 • Annnpoli•.
Fu.\: ·I 10-97·1-34~1 •
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~luryland Rein~·
711 •
'.! l-l l 1-00UI •
-ll0·2W·i~45
"'t'l;\\ .n lil rylun d ta\CS~t.: ttm
• 1-800.{,)8.29.17 (MD)
Audit of the c ~11 11 pu ulkr ol Maryland - lh:\ cmK·
. \<l1111n i ~lrJliun
!JI\ i:mm
FinllinJ! 10
l>epo,it nrification
procedure~
for certain collccliuns were not ,ufficient.
Hccom mcndation I 0
\\ c recommend Iha I RAD:
11. l'll~urc that c1111ll11ycfs "hn prc1lllrc the initi11l record of collections forw11rtl :i cop~ of
thitt record directly to thf indqH:ndcnt employee rcsponsihll· for p<"rforminJ! the
deposit \ crilicittions (rcpci1t).
Agcni:v Rcsnons.;-:
1\pproprime corrective nction to implement lhis rccommcndatinn was performed b:1scd nn
infonn11ti1111 contuin.;-d in the Mardi 10. 2015 OLA report 10thi.~13udgct Committees ;111d \W
ha\'c con ti nncd continuing compliance.
The Revenue Administrntion Di\'isiun of the Cumplroller·s Ol'ficc hdieves that it has taken the
11ecc.ssury corrective nction rd11ting to all four repent findings noted i11 the Lcgislali\'c ,.\udit rcporl
dated Augu:;t 23. 2013. Accurdingly. we request that the Otfo:c of 1.cgislati\'C Audits confirm thal
our actions ha ve appropriate!) addressed the rccomrm:ndat ions such that the npplicabk notice can
be s11b111il1cd In the buclgel cnnunillce clmirs lo pmvide lor the release or the $20fJ.00tJ wi1hheld
appropriat ion in our fi scal year 2016 budget.
Sincerelv.
/,Jj~ ? /j.cl,,,,
Wayne I'. Gret·n. [Jirector
Exhibit 2 to November 4, 2015 Letter to Joint Chairmen
Status of Remaining Two Repeat Findings in OLA's August 23, 2013 Audit
Report on the Comptroller of Maryland - Revenue Administration Division
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, p rior
· R ecommen d a t"wns p er t ammg
· · t o u nreso 1ve d R epea t F"me1mgs
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Individual Income Tax Return Processing
6.
We recommend that RAD
a. verify the proper disposition of returned refund checks by
agreeing the original log of returned checks to the record
used to verify the disposition of those checks.
b. use the log prepared by the employee responsible for remailing returned checks to verify the proper disposition of
those checks.
Cash Receipts
10. We recommend that RAD
a. ensure that employees who prepare the initial record of
collections forward a copy of that record directly to the
independent employee responsible for performing the
de osit verifications.
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Status
OLA Based
R . on
ev1ew
Corrected
Corrected
Corrected
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