Audit Division

Audit Summary

 

Department of Employment, Training and Rehabilitation

Rehabilitation Division

Bureau of Services to the Blind and Visually Impaired

Report LA02-08

 

 

Results in Brief

 

††††††††† The Bureau of Services to the Blind and Visually Impaired has not established effective financial management practices over the Business Enterprise Program.The Bureauís oversight and monitoring of the program does not ensure vending facility operators deduct only allowable expenses, report appropriate financial information, and pay accurate fees.In addition, the Bureau has done little to oversee and monitor operators who do business with companies in which they have an ownership interest.Correct payment of fees is important to the Business Enterprise Program because these fees are the programís primary source of revenue.Fees collected by the Bureau are used to provide assistance and benefits to all vending facility operators, and administration of the program.

Principal Findings

 

       Bureau personnel did not adequately monitor information reported by operators on monthly profit and loss statements.This lack of monitoring resulted in the Bureau failing to detect an operator who routinely deducted expenses that were not allowable.Nearly $26,000 in unallowable deductions were taken by the operator for gifts, travel, and personal expenses.These deductions were taken in the period from October 1999 to September 2000. (page 7)

       Some of the problems addressed in this report could have been avoided if a recommendation from our previous audit had been implemented.The audit report issued by the Legislative Auditor in 1991 stated that periodic reviews of the vending facilities would help ensure internal controls are in place and the State is receiving the correct amount of fees.The audit recommendation was for the Bureau to conduct periodic comprehensive reviews of blind vending facilities, including the adequacy of accounting controls.However, our current audit found no evidence these reviews were performed. (page 8)

       The Bureau has recently developed policies to address weaknesses described in a report by the Departmentís Internal Auditor.However, these policies have not been followed.Although current staff responsibilities include fiscal monitoring functions, the Bureau intends to contract for independent audits of certain operators. (page 9)

       The Bureau directed vending facility operators to inappropriately report expenses on monthly profit and loss statements.The inappropriate reporting resulted in $40,000 in unpaid fees, and inaccurate information reported to the State and Federal Government.This method of reporting was used because the Bureau wanted to indirectly compensate the operators for certain expenses.Therefore, by inflating the amount of expenses reported, the amount of fees payable by the operators to the Bureau was reduced. (page 11)

       The Bureau has done little to oversee and monitor operators who do business with companies in which they have an ownership interest.Although one operator made significant inventory purchases from a separate, family-owned company, the Bureau had not taken action to determine if these transactions were appropriate.Not monitoring these transactions in-creases the risk of financial information being manipulated to reduce fees paid to the Bureau. (page 13)

Department of Employment, Training and Rehabilitation

Rehabilitation Division

Bureau of Services to the Blind and Visually Impaired

 

Agency Response

to Audit Recommendations

 

 

Recommendation

       Number        ††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† Accepted†††† Rejected

 

††††††††††† 1†††††††††††††† Conduct periodic comprehensive reviews of vending facilities to verify

†††††††††††††††††††††††††††† information on operatorsí financial reports is accurate, and expenses

†††††††††††††††††††††††††††† deducted are allowable.†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††        X      †††             †††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

††††††††††† 2†††††††††††††† Provide appropriate guidance to operators to ensure fees are paid

†††††††††††††††††††††††††††† correctly, and equipment purchases are accurately reported and

†††††††††††††††††††††††††††† recorded as state property.†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††        X      †††             †††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††

††††††††††† 3†††††††††††††† Monitor activities of operators and businesses in which they have an

†††††††††††††††††††††††††††† ownership interest to ensure transactions are appropriate.†††††††††††††††††††††††††††††        X      †††             

 

†††††††††††††††††††††††††††††††† TOTALS††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††        3     †††††       0     †††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††