An Audit Report on the Office of Violent Sex Offender Management
January 2015
Report Number 15-018
Overall Conclusion
The Office of Violent Sex Offender Management (Office) had evidence that (1) its case managers supervised the 136 sexually violent predators that the Office oversees and (2) those sexually violent predators received treatment. However, the Office did not have controls over the management of certain contracting and financial processes. Specifically, the Office should address deficiencies in the following areas:
- Contract management.
- Budgeting.
- Expenditure review.
- Processing the fees that sexually violent predators pay.
- Securing access to the Office's case management system.
Contract management. The Office's expenditures on contracts and memorandums of understanding for treatment, transportation, and other services for sexually violent predators totaled $7.5 million (67 percent) of the Office's $11.2 million in expenditures from September 1, 2011, through May 31, 2014. However, the Office did not have controls for the following:
- Planning. The Office did not conduct formal planning, including a needs assessment and a cost estimate, for any of the 54 contracts that auditors tested. The Office did not plan for treatment services by determining (1) how many treatment providers would be needed in each area of the state or (2) how much treatment services would cost each year.
- Procurement. With one exception, all of the Office's contracts were open-enrollment contracts for which the Office is not required to solicit formal bids. However, the Office did not have a formal process to identify, evaluate, and enroll contractors.
- Contract formation and rate/price establishment. For 53 of the contracts tested, the contracts did not contain detailed descriptions of the services the contractors would provide, how much those services would cost, sanctions for nonperformance, or evidence of a legal review of the contract terms. The Office was not able to provide a copy of one additional contract selected for testing (the Office had canceled that contract).
- Contract oversight. The Office monitored the seven part-time case managers with whom it contracted. However, it did not monitor contractor performance for 46 other contracts for services such as treatment and transportation. (As discussed above, the Office canceled one contract.)
In addition to contracts, the Office also uses memorandums of understanding to obtain housing services; auditors identified issues with those memorandums of understanding that were the same as the contracting issues discussed above.
Budgeting. The Office has not implemented a budgeting process to identify or plan for the services it provides, and it did not ensure that funds would be available to meet its needs. Although the Office had a process to track monthly expenditures, it did not track the amount of funds it had available for future expenditures.
Expenditure Review. Auditors tested 115 Office expenditures totaling $1,110,140. For 45 (39 percent) of those 115 expenditures, the Office did not have adequate supporting documentation for the associated services and/or the services provided were not specified in the contract. The portion of the expenditures tested for which the Office did not have adequate supporting documentation and/or were for services not specified in the contract totaled a net $54,018 (4.9 percent of the $1,110,140 in total expenditures tested).
Processing the fees that sexually violent predators pay. The Office has not implemented segregation of duties in its collection of fees that sexually violent predators pay for a global positioning system (GPS). Office case managers determine how much a sexually violent predator will pay, collect the fee, send the fee for deposit, and input the amount paid in the Office's case management system. Auditors could not find evidence that the Office used the revenue from the fees it had collected to offset the cost of the GPS system, as statute requires. The Office reported that, from September 2011 to May 2014, it had collected $140,072 in fees.
Access to the Office's case management system. The Office did not have adequate controls over access to the system that it uses to manage case managers' case loads. The information in that system also is the basis for invoices from treatment providers and transportation drivers.
The Department of State Health Services processes the Office's financial transactions and performs other administrative duties for the Office; however, the Office is responsible for establishing controls over its own business processes.
As of October 2014, the Office had filled vacant positions in its Austin office; those positions were responsible for many of the Office's administrative functions, including budgeting, financial functions, and legal counsel.
Auditors communicated other, less significant issues regarding invoices, payments to contractors, and policies and procedures to Office management separately in writing.