Results in Brief

The Administrative Office of the Courts has improved its guidance to the courts on accounting, financial management, and internal controls since our 1995 audit. However, internal control weaknesses persist throughout the court system. Strong internal controls help reduce the risk of embezzlement. Since the release of our 1995 audit, embezzlements have been detected at four courts totaling more than $90,000. In addition, strong internal controls help detect errors and ensure information generated by the courts is reliable, improving accountability.

Collection rates for fines and administrative assessments at district, justice, and municipal courts improved from those reported in our 1995 audit. However, this improvement was not consistent across the courts reviewed, and some courts continue to have difficulty with collections. As a result, enforcement of penalties is not consistent across the State. In addition, low collection rates result in less revenue flowing into the court system and to state and local governments.

Principal Findings

· Although improvements have been made since our 1995 audit, internal control weaknesses persist throughout the court system. Twenty of 26 district, justice and municipal courts examined lacked an appropriate segregation of duties among staff. In addition, 11 of 24 justice and municipal courts did not have written policies and procedures to guide staff, and 8 of 24 justice and municipal courts did not reconcile deposits made to payments received or had ineffective reconciliation procedures. Since the release of our 1995 audit, embezzlements totaling more than $90,000 have been found at three justice courts and one district court. Weak internal controls provide opportunities for such crimes to occur. (page 9)

· Basic financial information was not readily available from a number of courts responding to our survey. For example, 80% of the district, justice, and municipal courts responding to our survey reported they do not produce accounts receivable reports. Forty percent of survey respondents either did not report amounts collected, estimated amounts collected, or did not report how fines and administrative assessments were distributed. (page 11)

· This audit found the overall collection rate at the justice and municipal courts to be 81%, up from the 63% reported in 1995. However, 6 of the 23 justice and municipal courts we reviewed had collection rates of less than 75%, with 3 of those courts experiencing collection rates of less than 55%. (page 13)

· Collection actions taken by the justice and municipal courts reviewed were untimely. The first collection action was taken on average 45 days after a court date or payment was due, but ranged up to 316 days. Collection actions are generally more successful when taken within 30 days. (page 14)

· Collection rates at the court system’s two largest district courts improved from our 1995 audit, but they remain poor. The rate of collection of fines and administrative assessments for criminal cases tested at the two courts was about 23%. In 1995, the district courts collected only 13% of the fines and administrative assessments in our sample. Testing found no evidence of collection or enforcement actions taken against those offenders who failed to comply with the terms of their sentences. Instead, most district courts rely on the Department of Prisons and the Division of Parole and Probation to carry out and monitor an offender’s compliance with court orders. (page 16)

· Bench warrants issued by courts to collect delinquent fines and administrative assessments have limited effectiveness and are more costly than other collection actions, like sending notices or using collection agencies. This is especially true for out-of-state offenders. Testing revealed 57% of the citations issued to out-of-state offenders when bench warrants were issued did not result in a payment. Bench warrants were more effective for in-state offenders, although 35% of those citations were not paid. (page 17)

· Justice and municipal courts remitted more than $13 million in administrative assessments to the State in fiscal year 2001. However, the AOC has not established a process to reconcile the amounts of administrative assessments collected by justice and municipal courts for the State with the amounts subsequently remitted to the State Controller. We found several problems with remittances, including a local treasurer not forwarding $11,725 of assessments to the State, and three courts that incorrectly calculated the state’s share of assessments. One reason for these errors may be that the form used by the courts to report assessment distribution has not been updated since 1991. (page 21)

Supreme Court Response

to Audit Recommendations

Recommendation Number		Accepted	Rejected

1	Adopt the revised minimum accounting standards developed b the Nevada Judicial Collections Task Force and extend the order regarding adherence to minimum accounting standards to include district courts.	X

2	Develop standard collection methodologies recom-mended for use by all courts in the judicial branch.	X

3	Develop a policy covering the imposition of admin-istrative assessments on bench warrant financial charges.	X

4	Provide regular training for staff at all courts in the judicial branch covering minimum accounting standards, internal controls, collection practices, the recording of financial information, and the development of policies and procedures.	X

5	Develop procedures for reconciling state fines and administrative assessments collected by justice and municipal courts with amounts subsequently transferred by local governments to the State.	X

6	Work with the State Controller to develop appropriate forms for use by the courts in remitting administrative assessment revenues.	X

	TOTALS	6	0