A recently completed audit of the Office of the Treasurer found internal control deficiencies and several instances where the office was not complying with its internal procedures.

Connecticut’s state Auditors of Public Accounts looked at certain operations in the treasurer’s office for the fiscal years ending June 30, 2021, and 2022, with the objective of looking at the office’s controls over “significant management and financial functions,” compliance with internal policies, and the effectiveness and efficiency of “certain management practices and operations.”

The audit uncovered three findings, one of which was a repeat from a previous audit.

In reviewing 20 assets worth $164,373 that were removed from the treasurer’s office inventory, the audit found four instances where disposal authorization records were not completed and 13 instances where the office did not remove the assets from its records until one to three years after they had been disposed. In another four instances, the office did not have a complete disposal authorization record.

The audit selected 20 assets, of 395 assets the office removed from its inventory during the time period covered by the audit, for review. The improper records were the result of a move to a new office face in 2020, which led to the surplus of old items. Management in the office did not update inventory records to reflect what items were moved.

The result of the deficiency, which is a repeat finding from an audit conducted for fiscal years 2019 and 2020, is an increased risk of property going missing or being improperly disposed of according to the audit.

The treasurer’s office noted that internal controls over asset disposal have improved since the move.

In its second finding, the audit requested ethics and confidentiality agreements, which the Office of Policy and Management (OPM) requires all employees participating in the request for proposal (RFP) to sign at the beginning of the process, from between February 2021 and September 2022. It found the office lacked four certification forms and that 19 forms had been signed one to four months after the process had begun. In addition, the office did not ensure RFP participants were recertified after receiving responses from interested vendors, which OPM also requires, in four instances.

According to the audit, the result of the violations is that participants may not “be as vigilant about the risks of conflicts of interest.” The audit also reported that the treasurer’s office used “alternative procedures that it believed satisfied the OPM requirements.”

Finally, the audit found that the Unclaimed Property Division (UPD) in the treasurer’s office failed to follow its processes in approving claims prior to payment. The UPD requires the assistant treasurer to give final approval for approving claims over $250,000.

The audit reviewed 55 unclaimed property claims and identified five, totaling roughly $2.3 million, that were over $250,000 and did not receive approval from the assistant treasurer. In addition, the office properly approved a $254,688 claim but lacked supporting documentation for it.

The audit “judgmentally selected” larger claims for review. During the audit period, the treasurer’s office paid 31,305 claims worth roughly $104.5 million. Management turnover and “the implementation of a new unclaimed property management system” that went into effect during the second half of fiscal year 2022 were the cause of the deficiencies. Failure to follow the approval process increases the risk of undetected errors according to the audit.

The audit also found that four issues that had arisen during the previous audit had been resolved.

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