YELLOW SHEET
Office of the State Auditor of Missouri
Claire McCaskill
|
|
YELLOW SHEET Office of the State Auditor of Missouri |
Report No. 2005-25
March 2005
The following report is our review of the Office of the State Treasurer.
The Office of State Treasurer (STO) is an elective office as provided in the Missouri Constitution. The duties of the State Treasurer are to be the custodian of all state funds; to determine the amount of state monies not needed for current operating expenses; and to invest such monies as allowed by state law. The Office of State Treasurer operates in four major functional areas: 1) accounting and banking services; 2) disbursements and records; 3) investments and deposit programs; and 4) unclaimed property.
The STO's internal audits of the collateral securities system do not ensure custodial banks properly release collateral securities in accordance with the custodial contract. Our review of audits of three custodial banks for the quarter ended March 31, 2004, found the Internal Audit staff noted pledged securities that were included in the STO's collateral security records but not on the bank confirmations and vice versa. In six of the instances, for which letters were sent in May 2004 requesting additional information to resolve the issues, the office had neither received a response nor been followed up by the STO as of October 12, 2004. In 14 other instances, the Internal Audit staff was able to trace the release to a subsequent authorization letter; however, they did not contact the banks to determine the actual date of release or notify the banks of the apparent discrepancies. The failure to officially notify the custodial banks when possible violations are noted may weaken the STO's ability to enforce the contract requirements in the event of a bank default. Additionally, the STO Internal Audit staff does not summarize or report the audit results of the collateral securities to upper management. As a result, the STO's management staff is not made aware of recurring problems that might warrant further action with the bank.