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An Audit of Financial Processes at the Alcoholic Beverage Commission

August 2017

Summary Analysis

The Alcoholic Beverage Commission (Agency) had adequate controls to help ensure that it administered revenues, payroll actions, asset management, and non-travel expenditures in accordance with applicable statutes, rules, and Agency policies and procedures. However, it should improve certain controls in most of those areas. In addition, it should strengthen and enforce controls over its processing of travel expenditures.

 Jump to Overall Conclusion

The Alcoholic Beverage Commission (Agency) collected $306.3 million and $69.3 million in revenues in fiscal year 2016 and the first quarter of fiscal year 2017, respectively. Revenue from taxes, licenses, fees, and permits represented 99.6 percent of revenues collected in fiscal year 2016 and the first quarter of fiscal year 2017. Auditors determined that overall, the Agency’s controls for the revenue process were operating effectively; however, the Agency should strengthen certain controls over the revenue process.

•   The Agency should improve processes for managerial review of revenue vouchers.

•   The Agency should improve the timeliness of its revenue review processes.

•   The Agency should improve processes for review and approvals of ports of entry revenues.

Jump to Chapter 1 

The Agency had adequate controls to ensure that it processed payroll actions in accordance with applicable statutes and Agency policies and procedures. However, it should strengthen certain payroll action processes to ensure that information on personnel action forms is accurate and that it properly processes, approves, and documents payroll actions.

•   The Agency did not consistently document approvals of payroll actions. For 16 (64 percent) of the 25 payroll actions tested, the Agency did not have appropriate approvals in accordance with Agency policy.

•   For 2 payroll actions tested, the Agency did not enter the payable overtime hours from the timesheets correctly on the personnel action forms. The Agency asserted that occurred because of data entry errors.

•   For 2 payroll actions tested, the number of hours in the Uniform Statewide Payroll/Personnel System (USPS) for which employees were paid was less than the number of hours documented on the personnel action forms.

Jump to Chapter 2 

The Agency accounted for vehicles and firearms in compliance with requirements in the State Property Accounting (SPA) Process User’s Guide and Title 34, Texas Administrative Code, Section 5.200. Auditors confirmed that all 44 vehicles and firearms tested existed, matched the description in the SPA system, and were accounted for in the SPA system.

Jump to Chapter 3 

Overall, the Agency had adequate controls over procurement and fuel card purchases, payments to unique vendors, and other non-travel expenditures to ensure that it:

•   Made purchases as allowed by state purchasing policies.

•   Procured items in the appropriate manner as required by the State of Texas Procurement Manual or received the required exemption from procurement requirements.

•   Reviewed and approved payment vouchers before it made payment.

•   Made payments in a timely manner.

Jump to Chapter 4-A 

The Agency did not consistently (1) ensure that travel expenditures complied with its travel policy or state law regarding approval of travel, (2) ensure that it coded payments to the correct object code, and (3) ensure that travel expenditures complied with the Agency’s travel policy or state law regarding timeliness of payment.

•   Twenty-four (46 percent) of the 52 travel expenditures tested did not contain (1) the approvals required by the Agency’s policy; Texas Government Code, Section 660.003(e)(4); or the Office of the Comptroller of Public Accounts’ (Comptroller’s Office) travel guidelines or (2) the approval of an individual other than the claimant. Those 24 expenditures totaled $15,548.

•   During the course of this audit, auditors determined that the former executive director personally reimbursed the State for out-of-state travel expenses associated with some conference travel. Within the 52 travel expenditures tested, auditors identified documentation of 4 reimbursements for out-of-state travel by the former executive director totaling $1,987 that matched to the travel voucher documents the Agency provided.

Jump to Chapter 4-B 

The Agency had controls over automated systems to ensure that it administered financial transactions in accordance with applicable statutes, rules, and Agency policies and procedures. However, it should improve certain controls over its accounting and asset management systems and its personnel action form application.

•   Four employees had the ability to edit a non-purchase-order voucher in CAPPS, post that voucher in CAPPS to a batch in USAS, and then release the batch in USAS without secondary review and approval.

•   The Agency also did not properly restrict user access to the State Property Accounting system for three users.

•   Three employees had more access to the personnel action form application than was required for their job functions.

Jump to Chapter 5 

Graphics, Media, Supporting documents

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