A Performance Audit
An Audit Report on Financial Processes at the State Office of Risk Management
June 2018
Summary Analysis
The State Office of Risk Management (Office) had significant weaknesses in its contracting processes and lacked key controls to ensure that it consistently performed required activities related to contract planning, procurement, and formation.
The Office processed and paid Workers’ Compensation claims and calculated the annual Workers’ Compensation assessments in accordance with applicable statutes, rules, and Office procedures. The Office also had processes in place to help ensure that travel expenditures complied with applicable rules and procedures, and it had adequate information technology controls for its accounting and travel systems. However, the Office should strengthen its processes to ensure proper segregation of duties for travel expenditure approvals and improve its controls over its Claims Management System.
The Office had significant weaknesses in its contracting processes and lacked key controls to ensure that it consistently performed required activities related to contract planning, procurement, and formation.
The Office had adequate controls over its acceptance or denial of Workers’ Compensation claims and over the processing of claims payments. The payments that auditors tested at the Office complied with state statutes and rules and Office procedures.
The Office had processes in place to ensure that its travel reimbursement payments complied with applicable rules and procedures. All 25 of the travel vouchers that auditors tested were processed from September 1, 2016, through January 31, 2018, were supported, were for official state business, were properly coded, and were approved as required. However, the automated system that processed payments after September 1, 2017, does not prohibit the same person from approving his or her own travel request or voucher. Auditors tested expenditures totaling $16,202 (56 percent) for those individuals and did not identify any instances in which the traveler approved the reimbursement vouchers.
The Office had processes and controls in place to help ensure that it calculated the annual Workers’ Compensation assessments in accordance with applicable rules (see text box). The Office also collected the correct annual assessment amounts from the selected participating State entities. However, the Office did not have a documented process to follow up on assessment payments not received from agencies within the required time frames.
The automated systems that the Office uses to administer financial transactions had controls to help ensure that the Office administered financial transactions in accordance with applicable statutes, rules, and Office policies and procedures. The selected controls were adequate for the accounting and travel systems; however, the Office should improve certain controls over its Workers’ Compensation Claims Management System (CMS). The Office of the Attorney General maintains the accounting system and has contracted with a third-party vendor to maintain the travel system. The Office maintains (CMS).
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