Report No. 2009-103
Complete Audit Report
The following report is our audit of the Department of Corrections.
Significant General Revenue Fund monies, exceeding $2 million annually, were used to subsidize correctional facility canteen operations. As discussed in our prior report, this may be in violation of statutory provisions requiring the costs of goods and other expenses to be paid by the canteen fund. In fiscal year 2004, the DOC began making reimbursements from the Inmate Canteen Fund (ICF) to the General Revenue Fund for the salaries of canteen managers, and these reimbursements totaled approximately $1.7 million for the 3 years ended June 30, 2008. However, significant additional expenses, including canteen manager fringe benefit expenses, civilian canteen employee salaries and benefits, inmate canteen worker wages, and various other operating expenses, are paid from General Revenue Fund monies without reimbursement. During the 3 years ended June 30, 2008, the ICF bank account balance has increased significantly and it appears funds are available to fully reimburse the General Revenue Fund for canteen related expenses without requiring an increase in canteen retail prices.
As noted in previous audits, the DOC continues to retain monies seized from offenders who escaped from supervision, as well as monies remaining from old unredeemed canteen coupons. During fiscal year 2007, the DOC began spending escapee monies. At June 30, 2008, the DOC was holding approximately $973,000 and $19,000 in escapee and coupon monies, respectively. It is unclear whether the DOC has statutory authority to retain and spend these monies. Although the DOC disagreed with the prior audit recommendations that any such monies remaining after financial obligations are met should be considered abandoned property and turned over to the State Treasurer's Office (STO) Unclaimed Property Section, department officials did not consult with the STO to confirm the accuracy of their understanding.
The Inmate Finance Office does not prepare financial reports of the ICF activities as required by department policy and statements of department-wide ICF activities are not provided to department management or the comptroller.
Inmate canteen operations need improvement. The DOC has implemented a centralized point-of-sale inventory system; however, about half of the canteens do not maintain perpetual inventory records on the system. Various concerns with expenditures from the ICF were noted. Expenditure approval was not always documented as required by DOC policy, and bids and price analyses were not always performed as required by DOC policy. There is minimal oversight over the use of interest monies earned on the ICF bank account and no policies relating to the interest monies have been established. Decisions regarding the disposition of these monies are made by the Inmate Finance Officer (IFO). The ICF earned interest totaling more than $1.6 million for the 3 years ended June 30, 2008, and the Interest Fund balance at June 30, 2008, was $983,655. As mentioned in our prior report, the DOC does not maintain centralized records of canteen capital assets and has not established sufficient procedures for monitoring canteen capital assets. The Canteen Operations Policy does not require periodic physical inventories be performed and the IFO has not established procedures to ensure canteen capital assets are tagged.
The DOC reimburses counties and the City of St. Louis more than $40 million each year for costs incurred in the prosecution and incarceration of defendants sentenced to imprisonment in the DOC, and the transportation of prisoners. Although detailed written procedures for reviewing the criminal cost billings have been established and are being followed, these procedures have not detected some significant billing errors that resulted in overpayments. Our review of 18 payments totaling approximately $5.7 million to St. Louis County during the period March 2007 to May 2008, identified 43 instances where the DOC improperly reimbursed the county for multiple billings for the same prisoners and dates resulting in overpayments totaling at least $44,118. In addition, the DOC has not established policies and procedures to periodically compare criminal cost billings to the certification of prisoner incarceration days and/or jail records and relies on a manual review process for paying thousands of claims each year. In addition, the DOC's interpretation of the state law for reimbursing counties and the City of St. Louis for transporting convicted offenders to reception and diagnostic centers may provide excess reimbursements for these services. Also, our review of some extradition reimbursements and the related supporting documents found DOC procedures need to address meal and lodging limits and include requirements for itemized receipts.
As noted in several prior audit reports, Missouri Vocational Enterprises (MVE) receipts are not always transmitted for deposit on a timely basis. A cash count determined the MVE was holding $153,968, some of which had been held up to 50 business days. In addition, we noted significant conderns with the records and procedures over monies collected in the MVE Store. Receipt records are poorly organized and lack proper documentation and controls. As a result, there is little assurance all monies collected were accounted for properly and transmitted to the Accounts Receivable Office.
Competitive bids/proposals were not solicited for fuel, attorney services, and physician services. The DOC and the Office of Administration, Information Technology Division need to improve procedures for monitoring cellular telephone usage. Some employee expense reimbursements appeared excessive and/or were not supported with adequate documentation of actual expenses incurred. The DOC may be paying more than necessary for meals provided to employees attending training.
The DOC has not established formal written policies and procedures regarding the handling of old Inmate Revolving Fund accounts receivable balances related to discontinued program fees.
The department's internal audit section is not fully independent of the activities it audits. Internal audit engagements are determined by department policy, without utilizing risk assessment procedures.