Group Insurance Commission Examination of Annual Internal Control Questionnaire

This is a limited audit of the Group Insurance Commission’s annual internal control questionnaire for fiscal year 2014.

“In accordance with Chapter 11, Section 12, of the Massachusetts General Laws, the Office of the State Auditor has conducted a limited-scope performance audit of certain information reported in the ICQ for the state’s Group Insurance Commission (GIC) for the period July 1, 2013 through June 30, 2014.”

The auditor wanted to check whether some of GIC’s answers to the state comptroller were accurate.

“The objective of our audit was to determine whether certain responses that GIC provided to OSC in its fiscal year 2014 ICQ were accurate.”

If an agency does not properly track and verify its assets, public property can be lost, stolen, misused, or recorded incorrectly.

“Without properly identifying its capital assets and performing and documenting a physical inventory of them each year, GIC is not ensuring that its capital assets are properly safeguarded against loss, theft, or misuse and that its inventory records are complete and accurate.”

GIC handles insurance benefits for a large number of public employees, retirees, dependents, and some municipal workers, so weak controls can matter to many residents connected to those benefits.

“As of February 2014, GIC covered approximately 413,000 people.”

GIC said it did not have certain capital assets, but the audit found it did; it also failed to certify the questionnaire properly before sending it in.

“GIC’s 2014 ICQ had inaccurate responses on the subject of its capital-asset inventory.”

GIC’s chief financial officer said the agency would start procedures to record assets, do yearly physical inventories, and reconcile them.

“GIC’s chief financial officer told us he would implement procedures that would include recording, and accounting for, capital assets with a useful life of more than one year as well as conducting an annual physical inventory and reconciliation of assets.”

These questionnaire answers are not just paperwork; outside auditors use them when judging the Commonwealth’s internal controls overall.

“External auditors use department ICP and ICQ responses, along with other procedures, to render an opinion on the internal controls of the Commonwealth as a whole.”

An Internal Control Questionnaire is the yearly form state departments use to report whether their checks and safeguards are working.

“Each year, the Office of the State Comptroller issues a memorandum (Fiscal Year Update) to internal control officers, single audit liaisons, and chief fiscal officers instructing departments to complete an Internal Control Questionnaire designed to provide an indication of the effectiveness of the Commonwealth’s internal controls.”