Audit Division

Audit Summary

Judicial Branch of Government

Administrative Oversight of

The State Court System

Report LA96-2

Results in Brief

Significant and widespread management control weaknesses exist within Nevada's court system. Because of poor financial and administrative practices at many of the courts, millions of dollars in state fines and assessments have gone uncollected, and millions more may have been improperly distributed to local governments instead of going to the State. In addition, many courts have not established adequate internal accounting controls to ensure money collected from fines is safeguarded against fraud and misuse.

The Administrative Office of the Courts, under the direction of the Supreme Court, has the authority to (1) establish internal controls for the state's court system, (2) periodically review those controls, and (3) make recommendations for improvements to financial and administrative procedures. This authority could be used to establish internal control standards and monitor the financial and administrative practices of the state's courts.

Principal Findings

1. The way courts account for fines directly affects the distribution of the money. We noted a number of different methods used to classify, record, and distribute payments received. As a result, of the $6.7 million in fines collected from NHP citations during 1993, local governments received about $5.5 million and only $1.2 million went to the State. (page 10)

2. We estimate about $4.2 million received by justice courts from NHP citations in 1993 was classified as bail forfeitures and therefore went to the counties. In the opinion of the Legislative Counsel, these payments are more characteristic of a fine and should have gone to the State as required by the State Constitution and the laws of Nevada. (page 14)

3. We estimate about $1.3 million in fines collected from NHP citations was retained by local governments because the citations were changed from violations of state laws to violations of local ordinances. We noted a number of courts that amend all NHP citations to violations of local ordinances. Therefore, these courts remitted no fines to the State from NHP citations in 1993. According to the Legislative Counsel, certain requirements must be met when changing NHP citations from violations of NRS to local ordinances. However, based on available information, many amendments may not have met these requirements. (page 15)

4. Improper accounting methods resulted in local governments receiving fines that should have gone to the State. We noted 3 justice courts that record fines from NRS violations as local fines despite legal requirements that the money go to the State. (page 17)

5. During 1993, justice and municipal courts collected only 60% of the fines imposed on NHP citations. We estimate about $2.4 million more could have been collected if effective collection procedures were in place. Poor collection procedures have allowed over $16 million in uncollected state fines, warrant fees, and assessments to accumulate in recent years. (page 18)

6. Collection efforts at most district courts are not adequate. As a result, district courts collected only $590,000 of the estimated $4 million in fines imposed during 1993. Furthermore, almost none of the fines imposed for felony DUI convictions were collected at 1 court. (page 21)

7. Many courts have not established adequate internal controls for collecting, recording, and depositing fine payments. Of the 49 courts responding to our survey, only 13 indicated they had developed written internal control procedures. Because of internal control weaknesses, instances of fraud and misuse of funds have occurred within the state's court system. (page 24)

8. There is a need for guidance and oversight of the state's court system. Nearly of the courts responding to our survey indicated at least some improvement would be made if statewide accounting and administrative procedures were developed. Even basic accounting and administrative procedures will help ensure fines are properly classified, recorded, and safeguarded. In addition, these procedures should increase the amount of fines and administrative assessments collected for use by state and local governments. (page 26)