Issue Area 1: Deficiencies in Internal Control within
the Office of the Attorney General Create a Lack of Overall Accounting
Integrity Due to One Individual Controlling Most Accounting Functions.
The accounting functions of the Office of the Attorney General (AG's Office) rely too heavily upon one individual: its controller. A component of generally accepted accounting principles is that internal controls should provide adequate internal control structure and design, appropriate segregation of duties, appropriate reviews and approvals, and provisions for the safeguarding of assets.
The controls in place within the AG's Office are largely dependent upon one individual and correspondingly, upon the integrity of that individual. Interviews with the controller show that he is the person responsible for administering Accounts Receivable, preparing invoices, preparing vouchers (for payment) and verifying documentation, and distributing special-handled checks. The effects and risks of the lack of controls and over-reliance on one individual can be revealed by a number of instances including documents having only the controller's signature on invoices and purchase order agreements, vendors payments which exceed $10,000 in value without going through the competitive bid process, and rejection rates on invoices of 7% to 9% which are considerably higher than the average rejection rates for all state agencies.
The controller does have three (3) employees assigned to that office who perform many of the data entry transactions. This segregation of duties certainly helps in high risk areas such as billing and accounts payable. However, the mitigating factor concerning these employees is that they are still under the "control" of the controller.
Internal control inadequacies have allowed for a vulnerability of state assets. That is, state funds could be misused due to the lack of proper internal controls within the AG's Office.
The AG's Office needs to implement a better system of internal controls whereby there is a segregation of duties within the system of accounting, especially with high risk areas such as purchasing and accounts payable and invoicing and accounts receivable.
Managing Deputies should begin to sign off on all transactions thus creating a level of accountability above the Controller and should also alternate signature responsibilities after certain specified periods of time.
Issue Area 2: The Attorney General's Office has Encountered Problems with Statewide Purchasing Card Usage according to the Guidelines Established by the WV Auditor's Office.
The AG's Office has been cited for numerous findings by the State Auditor's Office for its misuse of the statewide Purchasing Card Program (P-card). The State Auditor's Office has performed two audits of the AG's Office and findings were severe enough to place the office on probation. Some of the findings noted were late payments, cardholders not reconciling, individual log sheets not being kept, invoices not itemized, and stringing of invoices. The Post-Audit staff has systematically reduced the number of P-cards available to the AG's Office from six (6) cards down to three (3) and has drastically reduced the agency's credit limit from $100,000 down to $13,000. The AG's Office is in jeopardy of losing P-card usage entirely if it does not adhere to the established rules for usage. This would result in increased expense to the State of West Virginia if the cost-savings produced by the P-card are disallowed due to cancellation. However, new procedures have been implemented by the AG's Office which should alleviate many of the problems if they are enforced correctly.
The controls in place relating to use and administration of the statewide Purchasing Card Program should be followed and adhered to more strictly by the Attorney General's Office.
Issue Area 3: The Attorney General's Office Disregarded Executive Proposal and Legislative Intentions by Rejecting Across-the-Board Pay Raises for All Employees for FY 2001. However, The AG's Office Did Give Pay Raises to Certain Individuals.
During the 2000 Regular Session, the Governor submitted his proposed
budget for FY 2001. In the Budget, the Governor included an ACROSS-THE-BOARD
SALARY INCREASE for all full-time state employees. The Office of the Attorney
General, against the recommendation of the Governor and the Legislature,
opted to decline the $756 pay raise for many of its employees. The Attorney
General's Office did grant the pay raise to certain individuals working
in their office. However, the AG's Office did not provide the across-the-board
pay raise for ALL employees as recommended by the Governor and the Legislature.
As of December 31, 2000, there were still thirty-nine (39) employees who
have not received any additional pay for this fiscal year. This shows a
total disregard for the intent of the Governor and the Legislature.
The Office of the Attorney General should comply with the across-the-board pay raises consistent with Executive and Legislative intentions.