Audit Division Audit Summary Judicial Branch of Government Administrative Office of the Courts Report LA98-8

Results in Brief

Although the AOC has some controls over its financial administration, improvements are needed to ensure revenues and expenditures are properly accounted for, assets are safeguarded, and laws, rules, and policies are complied with. The AOC lacked written agreements for $370,000 of expenditures, and did not have adequate documentation for another $400,000 of expenditures. In addition, the AOC did not always comply with Supreme Court rules and policies regarding purchasing, fixed assets, and personnel matters. Furthermore, control weaknesses exist over the collection of money and written internal accounting and administrative procedures are not adequate.

Prinicipal Findings

The following are selected findings from our audit of the Administrative Office of the Courts. We found the Agency:

Provided lower courts with about $250,000 during the audit period without written agreements covering the terms and conditions of the payments. The funds were provided to help fund automation of court operations. (page 8)

Did not prepare written agreements setting forth terms, duties, and responsibilities with two independent contractors or document its determination of independent contractor status for these two individuals. Since August 1995, the contractors were paid $120,900. Without a written contract, the Supreme Court may not receive needed services, and would have little recourse. (page 9)

Lacked documentation explaining why checks totaling $379,280 were written to lower courts but never sent. Several months later, the AOC canceled the checks. Delays in canceling the checks caused various misstatements in the state's financial records; therefore, management and policy makers lacked accurate financial information concerning the uniform system account. (page 10)

Lacked documentation to support the authorization of purchases of office equipment and supplies, including three computers, made with personal funds. However, when receipts were submitted, the AOC reimbursed the employee. No encumbrance forms were prepared for these purchases totaling $13,361 during the audit period. (page 11)

Has an inadequate internal accounting and administrative control system. An effective control system is important since the budget accounts administered by the AOC had about $28 million in expenditures during the audit period. Many problems cited in this report are partially the result of the inadequately documented control system. (page 15)

Agency Response to Audit Recommendations

Recommendation
Number Accepted Rejected

1 Prepare written agreements for all grants and loans
made to courts to fund automation efforts................ X

2 Prepare written contracts for all independent
contractors................................................................ X

3 Document the determination of independent contractor
status for parties providing services to the court...... X

4 Document all expenditure transactions......................... X

5 Prepare written justification when canceling checks..... X

6 Establish guidelines for controlling purchases with
personal funds.......................................................... X

7     Comply with Supreme Court rules concerning physical
        inventories of assets and disposal of surplus
        property....................................................................       X

8 Separate key duties involving the collection of money. X

9 Ensure money awaiting deposit is safeguarded........... X

10 Prepare employee performance evaluations re-
quired by Supreme Court policy.............................. X

11 Develop written procedures to carry out an internal
control system for the Supreme Court..................... X

12 Perform periodic reviews of the internal control
system................................................................... X

TOTALS 12 0