The state Department of Revenue overpaid $22.6 million in refunds to two companies, and the only reason the mistake was caught was because the businesses returned the money, according to an audit released Monday.
Legislative Auditor Daryl Purpera’s Office said the overpayments during the last budget year went through five levels of state review before they were sent. One company received an improper refund of $20.8 million and the other $1.8 million, according to the auditors.
“In both cases, the department was unaware of the errors until the taxpayers recognized the mistakes and returned the overpayments,” the audit says.
The revenue department said the complicated refunds were from legal settlements involving multiple tax periods and tax types. In a written statement, the department said the mistake was corrected, no money was lost to the state treasury and greater controls have been put in place for handling these “extremely rare types of settlements.”
Purpera’s office also criticized the agency as having lax controls over state-issued credit cards and said it lacked a proper internal audit structure to detect errors and fraud. The audit recommended ways to beef up its oversight.
Revenue Secretary Tim Barfield said he agrees with most of the auditor’s recommendations. But he added: “It is also important to note that none of the findings resulted in any loss of revenue for the state or agency and prior to the (auditor’s) findings, the Department had already proactively begun taking actions to address the matters.”
Credit cards were used to make unauthorized purchases, and employees didn’t file the proper documentation to verify they had approval for the purchases, according to the audit, which raised concerns about $164,508 in credit card charges. Auditors reviewed 33 monthly credit card statements for 21 different cardholders across the department.
The revenue department said none of the questioned charges involved improper spending, but it said it has added a monthly reporting process for the credit cards and new training for employees.
The agency also said it restructured its internal auditing oversight during the last year.
The audit is available at: http://bit.ly/1vK8wCQ