Audit Division

Audit Summary


Department of Business and Industry

Real Estate Division


Report LA00-28

Results in Brief


††††††††† Although the Real Estate Division has made an effort to improve its financial controls since our last audit, weaknesses persist.For instance, thousands of dollars in fines are assessed against licensees; however, the Division does not have an effective process to account for and collect these fines.As a result, the Division collected about one-third of the amounts due.In addition, deposits are not verified against amounts collected, and money is not always deposited timely.Similar weaknesses in cash management controls contributed to an embezzlement discovered during our prior audit.Therefore, additional controls are needed to improve the Divisionís financial management practices.

Principal Findings


            The Divisionís accounts receivable reports are not complete or accurate.During fiscal year 2000, accounts receivable totaling $35,000 were not recorded in the Divisionís reports.In addition, the reports were not mathematically correct and did not always include the balances due. Unreliable accounts receivable information hinders the Divisionís recovery of moneys owed.

            The Division does not have adequate procedures to collect past-due accounts.Collection procedures are limited to a letter requesting payment.No other collection techniques are employed.As a result, the Division collected only $30,000 out of the $100,000 due in fiscal year 2000.

            The Divisionís cash handling practices should be strengthened.No one independent of the deposit process verifies the amounts deposited with the amounts collected.This weakness existed when we conducted our prior audit, contributing to the embezzlement of $21,000.

            The Division charges $100 to prospective licensees for taking the Real Estate or Appraiser examinations.However, this fee has not been established in regulation.As a result, those individuals affected did not have the opportunity to comment on its propriety and the fee was not subject to legal review.



Department of Business and Industry

Real Estate Division


Agency Response

to Audit Recommendations



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


††††††††† 1†††††††††††††† Develop policies and procedures to help ensure all receivables are †††††††††††††††††

†††††††††††††††††††††††††† properly accounted for.†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______


††††††††††† 2†††††††††††††† Enforce the collection of accounts receivable through the use of available

†††††††††††††††††††††††††††† collection techniques.††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______


††††††††††† 3†††††††††††††† Develop policies and procedures that help ensure uncollectible

†††††††††††††††††††††††††††† accounts receivable are properly written off.†††††††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______


††††††††††† 4†††††††††††††† Segregate key duties in the collection process.†††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______


††††††††††† 5†††††††††††††† Ensure deposits are verified with cash receipts by staff independent of

†††††††††††††††††††††††††††† the deposit process.††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______


††††††††††† 6†††††††††††††† Develop procedures to ensure cash receipts are deposited no later than

†††††††††††††††††††††††††††† Thursday of each week, and by the next working day if $10,000 or more

†††††††††††††††††††††††††††† accumulates.††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______


††††††††††† 7†††††††††††††† Establish examination fees in regulations.††††††††††††††††††††††††††††††††††††††††††††††††††††††† ___X____†† _______††††


††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ___7____††† ___0___