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Glenn Hegar  ·  Texas Comptroller of Public Accounts

Fiscal Management Post-Payment Audit Report Summary
Texas Department of Banking
Fiscal 2010 Fourth Quarter

We audited a sample of the Texas Department of Banking's (Department) payroll, purchase, and travel transactions that were processed through USAS and USPS during the period beginning March 1, 2009, through Feb. 28, 2010.

We reviewed payroll transactions for compliance with the GAA, the Payroll Guide, and other pertinent statutes. Our audit of the Department's payroll transactions identified two personnel files that were missing the original hiring personnel action forms (PAF) and one personnel file where a prior state service form was not obtained.

We reviewed purchase transactions for compliance with the GAA, Purchase Guide, Procurement Manual, and other pertinent statutes. We did not identify any errors in the purchase transactions.

We reviewed travel transactions for compliance with the GAA, Textravel, and other pertinent statutes. We identified one improper payment of a non-mandatory rental fee.

We reviewed the Department's voucher signature cards and electronic approval security effective during our audit period. The security review entailed identifying any of the Department's employees with security in USAS, USPS, TINS, or on the voucher signature cards who were no longer employed or whose security had been revoked. Upon termination or revocation, certain deadlines must be observed so that security can be revoked in a timely manner. We identified one employee who retained the ability to expend funds after the employee was terminated.

We also reviewed the Department's internal control structure. Our review was limited to obtaining an understanding of the Department's controls sufficient to plan our audit and did not include tests of control policies and procedures. We noted certain areas of risk involving the internal control structure and its operation. The Department had two employees who could adjust payment instructions in TINS and approve vouchers without oversight, process and release payrolls and payments through USAS, process and release payments between its internal system and USAS, and pick up warrants from the Comptroller's office.

We concluded a prior post-payment audit of the Department's payroll, purchase, and travel transactions on March 26, 2007. During the current audit, we noted one recurring error, control weakness over expenditure processing.

House Bill 2774 (81st Legislature) allows the Department to operate as a self-directed semi-independent agency effective September 1, 2009. The bill removed the Department from the legislative budgeting process requiring the Department's policy making body (The Finance Commission of Texas (Commission)) to adopt and approve the Department's budget. We understand the Department's budget is comprised of assessments from state-chartered commercial banks. Therefore, its budget is not subject to the limitations of the GAA.

Although the Department is no longer subject to all of the State travel guidelines, during the audit, we noted instances where the Department could have reduced travel expenditures by using rental vehicles instead of reimbursing employees for using their personal vehicles.

According to Tex. Gov't Code Ann. Sec 660.007(a) (Vernon 2008), a state agency shall minimize the amount of travel expenses paid or reimbursed by the agency. The agency shall ensure that each travel arrangement is the most cost effective considering all relevant circumstances.

Further, the Commission's Reimbursement Policy (as of December 2009), states that "It is generally the policy of the finance commission to conserve funds to the extent possible by approximating the standard state limitations on travel unless circumstances warrant an exception. The finance commission encourages its members to minimize the amount of travel expenses incurred by ensuring that each travel arrangement is cost-effective considering all relevant circumstances."

The Department should ensure that it minimizes the amount of reimbursement paid to an employee by conducting a cost benefit analysis when applicable, to determine the most cost effective mode of transportation for each travel destination.

Glenn Hegar
Texas Comptroller of Public Accounts
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