Beruflich Dokumente
Kultur Dokumente
June 11, 2012 To: CC: From: Jim Bucholz, Director Audit Committee and Agency Management Team Jason Robinson, Chief Audit Executive Classification Level: 3 Purpose: Assessing the governance of the Suspense Unit
BACKGROUND A fraudulent return with a high dollar refund was able to get past the scrutiny of the Suspense Unit. This process included: a first look and clearing of the return from a first level Suspense Unit employee, a first level review from a higher level Suspense Unit employee, 2nd level review from Suspense Unit Manager, and a supposed 3rd level review that should only be allowed by an administrator or delegate. OBJECTIVE and SCOPE The objective of this review was to provide a reasonable level of assurance to Agency Management that the policy and procedures governing the Suspense Unit are appropriate and working. The scope of the review was focused on the Suspense Unit within the PTAC Division at Revenue Main building located at 955 Center Street, NE, Salem Oregon. The review was conducted in accordance with the International Standards for the Professional Practice of Internal Auditing. AUDIT RESULTS We can conclude with a reasonable level of assurance that the Department of Revenue (DOR) Management has put into place policies and procedures that, when adhered to, would have thwarted this fraud from occurring. The result of this occurrence is due to employees not following policy and procedure during the initial processing of the return as well as the review process. Management has assured us that adherence to the review process will be emphasized in the future. During the review we noted items that could improve the efficiency of the Suspense Unit and possibly reduce the amount of human error that is possible with such manual processes. 1. Issue: When interviewing the manger and staff of the Suspense Unit we discovered incomplete, and in some cases, non-existent documentation on desk procedures. Manager and staff all admitted to being self-taught on the numerous ways to scrutinize the nearly two hundred computer edits that lead to a tax return suspending from processing for further review. Recommendation: Management should provide the resources that will allow Suspense Unit to create and document thoughtful processes for all levels of Suspense and management review. Response: Management agrees with this recommendation and has begun the process of creating unit desk procedures. Desk procedures are expected to be completed by December 31st, 2012.
5. Issue: The management position for the Suspense unit is required to review the work of every unit employee that has reviewed and cleared a return with a refund or liability of more than . This nd management review is called a 2 Level Review. The purpose of this review has never been defined (Is it a cursory review to find any glaring errors? Is it a review performed because of the risk of refunding large amounts of money in error?). With Internal Audit (IA), the review process for an auditors working papers is done to make sure there have been no mistakes made. The review is done by a higher level of auditor to verify that work was done appropriately. It seems to IA that the current manager has not been trained to do a proper review. She has very little experience in the current Suspense process and she has not been trained in any way to verify what her staff has submitted for review. IA does not feel that a cursory review of a significant amount of money meets the Agencys needs. A higher level review of tax returns would require years of knowledge that would be unavailable to any manager that would transfer into this position. IA noted that AS2s generally have a higher level of knowledge and understanding of the process of reviewing tax returns. Recommendation: Management should consider the possibility of having 2nd Level Reviews be conducted by a higher level of Suspense worker, thus freeing the Suspense Manager to manage the personnel aspects of the Suspense unit. Response: Management agrees with this recommendation and is looking into available options, such as having current AS2s in the Suspense unit or TA1s currently located outside of the unit review this work. Management will review and consider options by September of 2012. 6. Issue: DOR occasionally allows employees to take management positions over units in which they have little or no experience. For the majority of these opportunities there is not a critical step that the manager must perform that could damage the Agency. In cases where a manager must perform such a critical function as a second review over a function that can take years to learn such as the Suspense Unit, it would seem prudent to hire someone with those critical skills or backfill the position to learn from the exiting manager before they retire. Recommendation: Acknowledging that the Agency will likely wish to continue providing valuable staff and managers with new challenges, IA recommends that the Agency consider taking on the responsibility of properly training those staff and managers for the new leadership positions theyll face, specifically those positions with oversight authority to release cash. This includes not just staff management training, but also training in the systems and processes the managers will face in their new duties. Response: Management agrees with this recommendation and will pursue setting up training for new managers within the Program Services Section that have authority to release cash. The Program Services Section will review and consider options for training for new Managers by November 1st, 2012. 7. Issue: The Fraud Team and Suspense Unit work closely with each other passing work back and forth to get items processed faster. There currently is no formal policy that requires the two groups to work with each other besides the fact that both of the current managers of the separate units see the overall benefit to the Agency. Without formal agreements between work units, this type of cohesiveness may not be possible in the long-term. This can be seen in the breakdown of the relationship that once existed between Audit and Suspense to provide quality reviews on more complex items.