Legislative Audit Committee

Audit Committee Elects Officers and Hears Updates on More than 20 Audits

Committee: Legislative Audit Committee
Author: Angus Maciver
Posted on July 7, 2017

Image of the exterior of the Montana State Capitol

The Legislative Audit Committee met June 26-27 and elected new officers. Senator Mary McNally was elected chairperson, Representative Tom Burnett was elected vice-chairperson, and Representative Virginia Court was elected secretary. The committee also heard Performance Audit, Information Systems Audit, and Financial-Compliance Audit reports from Legislative Audit Division (LAD) staff on the following audits.

Performance Audits

Coordination of Liquor Licensing Compliance Programs (16P-02)
The Montana Department of Revenue and Department of Justice share responsibility for licensing and regulation of the state’s many classes of alcohol licenses. The agencies work closely to ensure the licensing process is as smooth as possible for applicants. Our audit work found that the agencies could take steps to improve licensee compliance with state laws and rules, in the areas of on-site inspections of licensed premises; communications with local law enforcement agencies; and ensuring certain categories of licensed businesses are operated in accordance with law.

State Employee Health Clinics Contract Management and Oversight (16P-03)
Since 2012, the Department of Administration (DOA) has expended approximately $26.1 million to operate the Montana Health Centers (MHC), also known as the employee health clinics. Audit work found there have been ongoing management challenges with operating the health centers beginning with a poorly drafted Request for Proposal (RFP), contract management weaknesses, and a lack of reliable data to assess contractor performance. Consequently, any reports of health care cost savings to the state of Montana cannot be corroborated. If this health care benefit is to continue, DOA needs to work with stakeholders, including legislators, state employees, the Montana University System, and private health care providers, to develop a long-term strategy for MHC operations and services. This would include developing a new RFP with a clearly defined vision and goals for MHC operations.

Montana Heritage Commission: Managing Virginia City, Nevada City and Reeder’s Alley Historic Properties (16P-05)
Montana Heritage Commission (MHC) earned revenues have increased every year since 2012. Since 2011, MHC has reduced staff by 60 percent and staff expenditures by more than $400,000 by cutting six positions. MHC manages their properties in a manner that both preserves their properties and encourages economic stability as required by state law. However, our audit work found opportunities for MHC to adopt a more business-oriented approach through engaging commissioners more fully, improving organizational planning processes, and gathering additional information to support its business plan.

Information Systems Audit

Integrated Justice Information Sharing (IJIS) Broker (15DP-05)
The IJIS Broker allows local, state, and federal agencies, as well as certain public entities, to share criminal justice information in a timely, accurate, and efficient manner. The expedient exchange of information is critical for justice agencies, most importantly law enforcement, to be able to carry out their mission and ensure public safety, including providing notifications for victims of violent crimes. The Montana Department of Justice has made progress to date, but the full potential of IJIS Broker has yet to be achieved, due to the necessity of additional exchanges, upgrades to electronic criminal records, and an enterprise case management system for Montana courts (Full Court). Based on the current status, crime victim notification through the IJIS Broker is inoperable at this time and may not be online when the Montana Constitutional Initiative 116, also known as Marsy’s Law takes effect in July 2017. 

Financial and Financial-Compliance Audits

University of Montana (15-10B)
An unmodified opinion was given on the university’s financial statements.

Montana State University (15-11B)
An unmodified opinion was given on the university’s financial statements.

Montana Water Pollution Control and Drinking Water State Revolving Fund Programs (15-25B)
One recommendation was made related to improving controls of the preparation and fair presentation of the financial statements and notes.

Montana State Lottery (15-30B)
A $400,000 error in calculating the statutory allocation of lottery net revenue between the general fund and a scholarship fund administered by the Commissioner of Higher Education was identified. 

Montana Facility Finance Authority (16-12)
One recommendation was made to the authority related to internal controls over financial reporting.

Office of the Secretary of State (16-19)
A qualified opinion was given on the office’s financial schedules due to the effect of errors made in capitalizing the cost the office’s new computer system.

State Auditor’s Office (16-20)
No recommendations were made.

Montana Board of Public Education (16-22A)
One recommendation was made related to internal controls for monitoring case collected for teacher license fee revenue.

Department of Military Affairs (16-25)
Issues related to federal grant reimbursements, revenue and expenditure accruals, and noncompliance with state law resulted in four recommendations.

Department of Public Service Regulation (16-26)
Three recommendations were made related to accruing federal revenue, writing off accounts receivable, and internal controls.

Judicial Branch (16-27)
One recommendation related to timely deposits of attorney license tax and well as related contracting law and procurement rules was made.

Dawson Community College (16C-06)
An unmodified opinion was given on the college’s financial statements.

Miles Community College (16C-08)
An unmodified opinion was given on the college’s financial statements.

Flathead Valley Community College (16C-07)
An unmodified opinion was given on the college’s financial statements.

Montana Medical Legal Panel (17C-05)
An unmodified opinion was given.

The committee was also updated on the implementation of the following audits: Montana University System Workforce Data Reporting (17SP-16), Combined Healthcare Information and Montana Eligibility System for Medicaid-Enterprise Architecture (17SP-09), and Railroad Safety (17SP-28). Committee members also heard about on-going audit work including projects related to Tax Increment Financing Districts, Medicaid Program Integrity, Tracking Remediation and Environmental Actions Data System (TREADS). Other items on the agenda included the prioritization of performance audits for fiscal year 2018, and the review and approval of Fiscal Year 2018 Operating Plan Review.

For additional information on specific audits, contact the LAD office or check the LAD website at http://leg.mt.gov/audit and refer to the alpha-numeric identifiers listed in parenthesis after the audit titles. For more information about the meeting, visit the committee’s website http://leg.mt.gov/audit or contact Angus Maciver, Legislative Auditor, at 444-3122.