Report No. 2011-18
May 2011
Complete Report
Findings in the audit of the Department of Revenue, Administrative Functions
Sale of Information
The Department of Revenue (DOR) does not maintain adequate documentation to support the rates charged for the sale of Motor Vehicle and Drivers License (MV/DL) records. The Sunshine Law mandates that the cost charged for these public records not exceed the cost of producing the information, and in May 2010, the Missouri Court of Appeals Western District held that the rate DOR was charging for such records violated the Sunshine Law. Although the DOR provided some documentation, it did not provide any support for most of the expense and equipment charges included in the rate calculation. A similar condition was noted in a previous audit, Report Number 2001-08.
Integrated Motor Vehicle Drivers Licensing System
After spending over $6 million for an integrated motor vehicle drivers licensing system and record sales system to replace the 20 various systems being used, the DOR still does not have fully functioning systems and has not developed a plan for completing the systems since canceling the project almost 2 years ago. The DOR should look at its options (finish the started systems, develop new systems, or continue with the current systems) and determine which one makes the most fiscal sense.
Internal Compliance Bureau
The Internal Compliance Bureau (ICB) conducts internal audits of the DOR, but the current structure does not give the ICB complete independence from the activities it audits. The ICB reports to the Director of the Division of Administration rather than the Director of the Department of Revenue. This could prevent the ICB from giving complete and objective audits, especially when auditing programs or offices in the Division of Administration. The current reporting structure does not meet the Institute of Internal Audit standards.
Policies and Procedures
The DOR has not developed a procedure for municipalities to submit excess revenues from traffic violations to the DOR. Since the mid 1990s, state law has required that excess revenues from traffic violations be submitted to the DOR for distribution to the schools, but the DOR has yet to draft a rule and procedures for implementing this law. In a recent audit of one city municipal court, it was estimated approximately $40,000 to $50,000 in excess monies should have been sent to the DOR for distribution to the schools.
The audit also found the DOR paid $25,845 in salaries and other costs related to the Governor's office and the Office of Administration (OA). In fiscal year 2009, the funds went toward one staff member in the Governor's office, but in fiscal year 2010, the funding increased to three members of staff in the Governor's office and two in the OA. It appears these employees were located in, and supervised by, the Governor's office and the OA and performed functions related to those offices. The DOR also paid over $9,500 for 35 flights of the Governor's office, only 4 of which included DOR personnel. These practices circumvent the appropriations process and distort the operating costs of the DOR, the OA and the Governor's office.
The DOR lacks adequate procedures for ensuring that businesses are properly registered with the state. The DOR should match its database with those of the Secretary of State and the Department of Labor and Industrial Relations to ensure that businesses are properly registered and the state is receiving the required fees and taxes.
The DOR also lacks an adequate method for updating related parties information to ensure that no employees hire or supervise a related party. New hires are required to disclose any related employees, but this information is not updated periodically.
In the areas audited, the overall performance of this entity was Fair.*
American Recovery and Reinvestment Act 2009 (Federal Stimulus)
The DOR was appropriated federal stimulus funds from the Federal Budget Stabilization - Medicaid Reimbursement Fund and expended $2,578,612 of these funds in FY2010 to purchase license plates and tabs from Missouri Vocational Enterprises and reimburse counties for homestead exemption credits. Federal stimulus funds were also transferred from the Federal Budget Stabilization - Medicaid Reimbursement Fund to the General Revenue Fund to pay income tax refunds ($250,000,000 in 2009 and $305,305,975 in 2010).
*The rating(s) cover only audited areas and do not reflect an opinion on the overall operation of the entity. Within that context, the rating scale indicates the following:
Excellent:
The audit results indicate this entity is very well managed. The report contains no findings. In addition, if applicable, prior recommendations have been implemented.
Good:
The audit results indicate this entity is well managed. The report contains few findings, and the entity has indicated most or all recommendations have already been, or will be, implemented. In addition, if applicable, many of the prior recommendations have been implemented.
Fair:
The audit results indicate this entity needs to improve operations in several areas. The report contains several findings, or one or more findings that require management's immediate attention, and/or the entity has indicated several recommendations will not be implemented. In addition, if applicable, several prior recommendations have not been implemented.
Poor:
The audit results indicate this entity needs to significantly improve operations. The report contains numerous findings that require management's immediate attention, and/or the entity has indicated most recommendations will not be implemented. In addition, if applicable, most prior recommendations have not been implemented.
Complete Audit Report
Missouri State Auditor's Office
moaudit@auditor.mo.gov
