Treasury Botched Payouts
After an identify thief collected $151,420 from the state Treasury’s Unclaimed Property Division, the rightful owner stepped forward to collect what was due.
So the state paid out the same amount again.
In another case, the Treasury paid $36,674 to the wrong individual because the person had the same first, middle and last name as the rightful claimant. Again, the state had to shell out a second time when the legitimate owner made a claim.
Those cases were highlighted in a searing state auditor’s report that rapped the Treasury for weak controls over the division charged with reuniting owners with their often long-neglected financial property.
“Operations within the Unclaimed Property Division were not managed as needed … and internal controls were not always followed,” the auditor said in a report published Feb. 20 and widely released this month. The auditor focused on the division’s operations in 2005 and 2006.
State Treasurer Denise Nappier said in phone interview she was “very, very disappointed to learn about some of the findings. Every penny that’s not accounted for properly bothers me.”
Improvements Underway
In the department’s formal response to the audit’s findings, the Treasury said it was working to “improve controls and minimize, if not eliminate, future errors.”
The Unclaimed Property Division collects and safeguards money and other valuables that have not been claimed for a specific period of time, generally three to five years, according to the state Treasury’s website.
Those assets can include savings or checking accounts, uncashed checks, deposits, stocks, bonds or mutual fund shares, travelers’ checks or money orders, life insurance policies and safe deposit box contents.
The report concluded that the division paid claims without verifying the owners’ supporting documentation for claims.
It paid claims to the wrong people and made duplicate payouts.
It miscalculated stock sale proceeds and overpaid claimants. It also paid interest incorrectly.
Furthermore, the division failed to accurately document the status of certain claims. For example, one claim filed was not updated to reflect its “paid” status, leaving it vulnerable to a duplicate payment. It also failed to properly approve some claims.
Recovery Underway
In its formal response, the Treasury noted that during the time frame of the auditors’ report, the Treasury was handling a massive amount of claims and cash.
In 2005 and 2006, the agency received about $250 million in unclaimed property and paid 34,717 claims, which totaled more than $46 million.
That was 9,411 claims and $26.2 million more than the previous audit period.
In addition, the agency also noted that “almost all of the overpayment errors were recovered or are in the process of being recovered,” and that the division’s “procedures to prevent overpayments are constantly being reviewed and strengthened.”
Dispute Claim
State auditors disputed that second assertion, claiming that internal controls had in fact “been weakened to the point that we believe they are insufficient to prevent improper payments.”
“The auditors typically have the last word,” Nappier said.
She declined to comment on specific points in the report and stood behind her agency’s initial responses, which were included in the pages of the document.
“It becomes tit for tat,” Nappier said of making additional public comments. “We just make a situation worse…if I start arguing with the auditors.”
To rectify the lack of proper internal controls, the auditors’ report urged the division to “act responsibly to assume, account for, update, publish and keep a permanent record of unclaimed property.”
It also advised that the Treasury “should follow internal control procedures designed to prevent improper payments.”
Accepts Blame
Nappier said her agency has made “record-setting progress” in retrieving, returning and safeguarding unclaimed property.
However, she maintained that any errors were the responsibility of herself and her department.
“The findings are the findings, and they are accurate,” Nappier said. “I am committed to holding ourselves accountable.”
Nappier also said that the Treasury has made significant managerial changes since the audit report and that she believes it can be strengthened even further to prevent future problems.
“My position is we shouldn’t be giving [the auditors] anything to write,” she said. “My goal is to ensure the safekeeping of all assets.”
WBJ Web Partners
Most Recent
Most Recent
0 Comments