We issued an audit report in 1989 on the Big Game Tag Draw System. This report identified many weaknesses associated with the drawing and issuing of game tags. Subsequent to the audit, the 1991 Legislature enacted Senate Bill 506 for the development of a computer program for the issuance of tags. Pursuant to this bill, the Division outsourced the development and administration of the game draw.

Since the outsourcing of the game draw, approximately $37 million in application, tag, and license fees have been collected. Of this amount, the contractor refunded over $28 million to unsuccessful applicants. Despite these significant dollar amounts, the Division has not established adequate oversight controls over the financial administration of the game draw. The contract and application hunt procedure manual identified numerous oversight and control features, including periodic review of the process to ensure the proper financial administrative control of the draw. However, we found no evidence the Division adequately reviewed or monitored the financial administration of the game draw. Because of the lack of oversight by the Division, game draw revenues and disbursements have not been controlled. For instance, there was about a $40,000 unexplained cash variance and about $97,000 of checks issued that had not been formally reported to the Division. Furthermore, the Division has not safeguarded game tag inventory resulting in about

• We found no evidence the Division monitored the reconciliation of the contractor's game draw bank account. There was an unexplained variance of about $40,000 between the cash book balance and the contractor's reconciliation. The Division had to adjust several key accounting records in attempting to explain this variance. (page 16)

 

• The Division has not voided approximately $95,000 in uncashed applicant refund checks dating back to 1993. The game draw contract requires refund checks not cashed in a valid period of time to be voided and the funds redeposited to the state treasury. (page 19)

 
• The contractor handles approximately $9 million annually associated with the game draw and reports the disposition of these funds to the Division on a revenue and disbursements register. The Division did not perform adequate procedures to verify the accounting for these funds is either accurate or complete. (page 20)

• The Division did not fully account for funds transferred to the contractor's game draw bank account. Division records indicated the contractor received $68,000 less than was actually transferred. As a result, this money has not been accounted for in the Division's fiscal records. (page 21)

• The Division did not always account for game tags in a timely manner nor were its inventory records accurate or complete. Over 300 game tags from the 1996 hunt year were unaccounted for as of March 31, 1998. Further, about 20,000 non-resident hunting licenses were destroyed without proper documentation. Game tags and licenses have an inherent value and must be carefully controlled. (page 23)

 
• The Division's current system of recording and accounting for game draw revenues and disbursements does not ensure that all financial information is complete or accurate. Four of the nine game draws conducted during fiscal year 1997 did not have a revenue and disbursements register prepared. In addition, revenues were not always recorded to the correct fiscal year and were not always recorded based on the supporting game draw documentation. (page 26)

• The Division did not have controls to ensure the contract was paid in accordance with its terms. We also found the contractor did not comply with certain requirements designed to protect the State. For example, the Division did not require the contractor to submit financial statements, obtain bonding, or obtain necessary insurance coverage. (page 29)



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Recommendation
Number                                                                             Accepted         Rejected

1 Establish controls over the game draw bank
account to ensure the account is reconciled on
a monthly basis and monthly status reports
are received and reviewed.....................................                     X

2 Develop procedures to ensure all game draw refund
checks are formally reported to the Division,
properly recorded, and issued in sequential order..                     X

3 Void uncashed refund checks in excess of 180 days
and record in the Division's records.......................                     X

4 Return all monies associated with the uncashed
refund checks to the State Treasurer.....................                     X

5 Generate adequate fiscal records to account for cash
transfers made by the State Treasurer to the
contractor's game draw bank account.....................                  X

6 Develop procedures to verify the accuracy and
reasonableness of game draw revenues and
disbursements.......................................................                   X

7 Develop procedures to ensure physical control and
accountability over the game tag and license
inventory, including:

• Timely transfer and reconciliation of game tag

and license information....................................

• Preparation of disposal documentation............

• Accurate and reliable inventory records...........                X

Recommendation
Number                                                                                     Accepted         Rejected

9 Develop procedures to ensure game draw trans-
actions are properly recorded in the Division's
fiscal records, including:

• Revenue and disbursements registers prepared

for all game draws.............................................

• Revenues recorded to the proper fiscal year......

• Revenues and disbursements recorded based

on supporting documentation.............................                     X

11 Pay contracts based upon services provided instead
of contract maximums...........................................                            X

12 Develop procedures to ensure the contractor:

• Submits financial information or annual

reports..............................................................

• Obtains adequate bonding.................................

• Obtains proper insurance coverage...................                     X