YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2000-35
May 12, 2000

The following findings were noted as a result of an audit conducted by our office of the Office of the State Treasurer.

The State Treasurer's Office maintains numerous bank accounts to handle state monies. Due to the volume of activity, and the number and complexity of reconciling items, many of the main operating accounts are normally reconciled daily. However, one of these accounts, the Electronic Receipt/Payment Account, was not being reconciled on a timely basis. A similar condition was noted in our prior report.

The Electronic Receipt/Payment Account is used to process many of the state's electronic transactions, such as wire transfer receipts of federal monies, credit card receipts, direct deposits of payroll checks, and electronic vendor payments. In response to our prior report, the State Treasurer's Office did increase their efforts in reconciling the account for a period of time. During our audit, we noted that the daily bank reconciliations for this account were current at July 23, 1999; however, the reconciliations were not performed again until December 6, 1999 when we discussed the issue with the State Treasurer's Office. The reconciliations were still five and one-half months behind at March 2, 2000.

The June 30, 1999 reconciliation identified approximately $7,400,000 in reconciling items, one-third of which had been outstanding for more than a month. Many such items require further research to determine what corrections or additional actions are necessary to resolve them. To allow errors and other reconciling items to be identified, researched, and corrected in a timely manner, bank reconciliations should be kept up-to-date.

Certain entities holding unclaimed property for persons they cannot locate are periodically required to send such property, along with available information about the owners, to the State Treasurer's Office. The Unclaimed Property Division (UPD) receives and records the unclaimed property and deposits unclaimed monies to the credit of the Abandoned Fund Account Fund. While the UPD deposits unclaimed funds and enters information about the holders into the UPD's unclaimed property management system database as it is received, the related individual owner information is not always entered in a timely manner.

At June 30, 1999, the UPD had approximately $3,524,000 in holder reports for which the owner information had not been entered, as compared to approximately $2,019,000 at June 30, 1998. Some of these reports had been submitted as much as eight months earlier. In addition, as of October 1, 1999 the amount had increased to approximately $3,821,000. The two main reporting periods during which unclaimed property is remitted to the UPD begin on May 1 and November 1 of each year.

The timely entry of owner information on the unclaimed property management system is critical to returning unclaimed funds to the original owners in a timely manner. While the UPD uses many marketing tools to publicize unclaimed funds and to encourage owners to inquire about monies possibly due them, owners can only identify and claim the amounts recorded in their name on the unclaimed property management system. Without the most current data, the value of this marketing is reduced.

As a follow-up to the action taken by the Office of State Treasurer on recommendations made in our report issued for the year ended June 30, 1998. We had recommended:

· The State Treasurer's Office continue to monitor the cash balance of the Abandoned Fund Account Fund and ensure that the necessary transfer is made at least once each fiscal year to reduce the balance to the level required by state law. - Implemented

· The State Treasurer's Office ensure that audits and other reviews of the Missouri First Linked Deposit Program are performed on a timely basis. In addition the audits should conform to the State Treasurer's Office's written guidelines. - Implemented

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