YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2006-85
December 2006

The following findings were included in our audit report on the Office of the Attorney General.

The Office of the Attorney General (AGO) is not billing the Department of Social Services (DSS) correctly for employee salaries and fringe benefits related to certain federal programs.  Some monthly billings tested totaled over $170,000 and included salaries and fringe benefits for over 30 attorneys and nearly 20 support staff.  The office selects which attorneys and support staff to include in the allocation based on the impact those hours will have on the reimbursement amount.  The audit also noted all allowable Financial Service Division (FSD) expense and equipment expenditures may not be included in the billing calculation.  The extent to which the DSS programs may have been under-billed or over-billed could not be determined.

The Governmental Affairs Division (GAD) has not established adequate procedures to ensure the number of hours billed for work performed by the division's attorneys are properly charged to the applicable professional boards.  Also, the GAD discards timesheets after the professional boards review and approve the billings.

In July 2005, the office's Case Tracking System (CTS), which is utilized for case docketing, billing various entities for work performed by the office, tracking costs by case for some divisions, and for other case management purposes, was implemented.  The current process of preparing timesheets and then entering the timesheets into the CTS is a time consuming process which is susceptible to errors.  Our review of 55 timesheets identified numerous problems.  In addition, the CTS is not adequately utilized to track costs per case.  Our review of 15 cases noted that costs incurred were generally not recorded on the CTS, with the exception of Labor Division cases.  Office personnel indicated that costs per case are not tracked when reimbursement is not available because they believe the process would be burdensome.

Accounting duties in the Financial Services Division (FSD) were not adequately segregated, and the FSD's controls over the office's accounts receivables records were not sufficient.  In addition, our review of accounts receivable records and procedures disclosed instances where improvement of collection efforts is needed.  Database balances were not always accurate, and more improvement is needed to ensure the accuracy of the balances.  Also, FSD did not maintain a control list of all uncollectible accounts which had been written-off nor does office management review or approve significant accounts written-off.  Finally, the office does not disburse some restitution monies held for other parties nor transmit receipts to the fiscal unit or other entities in a timely manner.

The controls and procedures over cellular telephones and blackberries need improvement. Some costs incurred for additional minutes, roaming, and toll fees were not covered by applicable cellular telephone plans, and personal calls appeared to contribute to some of these additional charges.  Also, some telephones were used for a limited amount of time and call detail was not obtained for all phones.  Additionally, the office does not use its blackberries for telephone service.

Office expenditures (excluding payroll) totaled approximately $10.3 million, $6.1 million, and $4.9 million for the years ended June 30, 2006, 2005, and 2004, respectively.  In addition, payments were made for professional services, such as outside legal counsel, expert witnesses, court reporters, and other professional court services, from the State Legal Expense Fund through an Office of Administration (OA) appropriation, but based on the approval of the AGO.  According to OA records, over $1.8 million was paid during the three years ended June 30, 2006, for legal and other professional services, based upon approval by the AGO.  We noted written agreements were not prepared for some professional services.  A written engagement letter, signed by both parties, was not prepared for 61 percent of expenditures reviewed for expert witnesses and outside legal counsel services.  Also, there were seven payments, totaling approximately $22,000, which included charges which were not in accordance with the engagement letters.   Additionally, documentation supporting the method/criteria for selecting expert witnesses and outside legal counsel services was not always prepared and retained.  Finally, some invoices for professional services did not include sufficient documentation regarding the services provided and expenses claimed. 

Some professional services and supplies/equipment were obtained without documented prior approval by appropriate office employees.  For 52 percent of payments for items such as audio tapes, computers, software, conference fees, and supplies, the proper approval for these purchases was not documented.  In addition, bids were not obtained for 78 percent of payments reviewed for court reporting services, when the vendor was paid in excess of  the $3,000 legal limit during the applicable fiscal year.

The audit also includes recommendations related to other office policies and procedures.

Complete Audit Report