BATON ROUGE - Today, the Louisiana Legislative Auditor (LLA) released a news release and summary of the results of a recent financial audit performed on the Louisiana Department of Revenue (LDR). The Auditor’s Office issued a list recommendations to LDR based on its findings.
“For the most part, we agree with the recommendations made by the Louisiana Legislative Auditor’s Office,” said Secretary of Revenue Tim Barfield. “It is also important to note that none of the findings resulted in any loss of revenue for the state or agency and prior to the LLA’s findings, the Department had already proactively begun taking actions to address the matters.”
Below is a list of the topics noted in the Legislative Auditor’s report and LDR’s responses regarding each matter:
Internal Audit Function
In late 2013, the Department recognized the focus of the Internal Audit Division was disproportionately weighted toward compliance. In February 2014, LDR applied to the Louisiana Department of State Civil Service to split compliance and internal audit functions into two divisions. Approval was received from Civil Service and on March 6, 2014 the split into two divisions was implemented, followed by the subsequent hiring of two directors – a director of internal audit and a director of compliance. In May 2014, the new director of internal audit restructured the division and started working with the Institute of Internal Auditors to perform a quality assurance review of the efficiency and effectiveness of the Department’s internal audit activities and develop a reasonable internal audit plan for 2014. All of these actions took place prior to the LLA’s review, but we believe these actions will address the LLA's concerns.
Preparation of the Annual Fiscal Report
This finding did not include any financial loss to the state or agency. LDR has implemented a corrective action plan to address these types of errors and has already begun additional review processes for monthly and quarterly reports. Additionally, LDR has introduced new procedures, allowing more time for review and analysis of the final report.
LaCarte Card Purchases
LDR believes that none of the matters identified represent any misappropriation. LDR recognizes the importance of controls over the LaCarte Card Program, and has implemented a corrective action plan, including training sessions for card holders and approvers to improve overall compliance. Additionally, LDR has instituted a monthly reporting process to identify non-compliant employees and will reduce, suspend and/or eliminate spending authority as needed. In August 2014, LDR hired an assistant director of the Controllers Division who oversees the LaCarte Card Program.
Refunds from Legal Settlements
The settlements involved complicated matters that included multiple tax periods, issues and types and occurred during the 2013 Amnesty period, which required the refunds to be calculated manually instead of through the use of the Department’s systems. Through working with the taxpayer, LDR became aware of the refunds immediately after the incident occurred, corrected the taxpayer’s account, and in January 2014 swiftly moved forward in implementing greater controls and procedures for these extremely rare types of settlements. Going forward, the Department has mandated review and approval by both the Audit and Litigation Divisions of settlement reconciliations before any refunds are issued.