Office of the State Treasurer and Receiver General

The audit was done to brief the incoming Treasurer, help the handoff from the prior administration, and flag control problems or legal compliance issues that needed attention.

“The purpose of our review was to inform the new State Treasurer of the status of fiscal and administrative operations as of the date he assumed office, to enhance the transition from the prior administration, and to identify either internal controls needing improvement or noncompliance with laws or regulations that need to be addressed and resolved.”

The Treasurer’s Office handles major public-money functions, including state funds, debt, payroll, pensions, unpaid checks, abandoned property, bills, and local aid.

“The OST is responsible for a variety of important financial functions, as established by Chapter 10, Sections 1 through 69, of the Massachusetts General Laws, including receiving, managing, and investing all funds paid to the Commonwealth; issuing and managing the state’s debt; paying state employees and retirees; administering the pension system for state employees and retirees; oversight of tax-deferred retirement savings accounts for over 280,000 government workers; processing and paying the Commonwealth’s bills in concert with the Office of the State Comptroller (OSC); managing the Unpaid Check Fund; receiving, safeguarding, and liquidating abandoned property; and making local aid distributions.”

If you are owed money from an old state check, the accuracy of this fund matters because it affects whether claims are paid correctly and whether unclaimed money is moved properly.

“Without a timely and accurate reconciliation, there is no assurance that funds have been received and accurately recorded on a timely basis, that claims have been accurately paid, and that funds have been accurately transferred to the Abandoned Property account.”

The audit did not describe fraud; it found management and compliance problems that the Treasurer’s Office needed to correct.

“The recommendations in our report are intended to assist the new administration in strengthening its internal control structure and implementing additional fiscal and administrative measures to ensure that the OST is operating in an economical, effective, and efficient manner and in compliance with all applicable laws and regulations.”

The Treasurer’s Office said it had started or planned fixes, including monthly reconciliation of unpaid checks and documenting policies and procedures.

“The Internal Auditor will work with OST staff to ensure that policies and procedures are documented for all processes and that the documentation is current and dated.”

One key issue involved a large mismatch: the Treasurer’s unpaid-check database and the state accounting system differed by $8.2 million.

“As of January 31, 2011, the balance in OST’s UPCF database was $49.8 million, while the balance in the UPCF appropriation within the Massachusetts Management Accounting and Reporting System (MMARS) was $41.5 million, resulting in a variance of $8.2 million.”

The Unpaid Check Fund is where the state holds checks that were issued but not cashed within a year, before moving still-unclaimed money to abandoned property.

“The UPCF is comprised of checks issued by the Commonwealth that have not been presented for payment within one year of the issue date.”