State of Wyoming

 

Department of Audit

 

 

 

 

 

 

 

 

Strategic Plan

 

 

 

July 1, 2007 through June 30, 2010

MICHAEL GEESEY

DIRECTOR


DEPARTMENT OF AUDIT

STRATEGIC PLAN

 

Quality of Life Result:

 

The Department of Audit supports Wyoming state government is a responsible steward of state assets and effectively responds to the needs of residents and guests. (Result #6 Government)

 

Contribution to Wyoming Quality of Life:

 

To contribute to prosperity, the Department will audit and regulate to promote compliance with state revenue collections, state and local government accounting requirements and state regulation of financial service providers. The Department of Audit supports revenue collection by conducting audits to verify correct payment of the states self-reporting taxes, fees and royalties.  Without audits there would be no verification of monies paid to the state.  The department through auditing, verification, and monitoring procedures of state and local governments provides assurance that funds and assets are properly accounted for and information provided leadership is accurate.  Audits protect Wyoming consumers and support the availability of financial services through regulation and examination of state chartered banks and licensed credit providers.

 

Basic Facts:

 

The Department of Audit has 109 authorized positions as of July 1, 2005. The biennial budget for 2005-2006 of $16.6 million of which $10.2 million is general funds, $3.3 million federal money and $3.1 other (fee income). There are five-budget organizations: Administration, Banking, Public Funds, Minerals and Excise. The Department is in the compliance business with three basic functional areas: revenue, accounting and financial.  · Revenue compliance costs about $9.4 million of which $3.3 million is federally funded. This area assessed in the last two years an additional $57 million or about $6 dollars for every State dollar’s spent. · The accounting section cost $4.1 in general funds. Without this expense the State’s credit rating and federal moneys would be at risk along with the assurance of reliable accounting information. · The financial examination group cost $3.1 million all paid by fees collected from the financial industries they regulate.

 

Performance Measures

 

The performance measures most important to our work are:

1:  Percentage of State revenue paid correctly.

2:  Percentage of government entities complying with accounting requirements and regulations.

3:  Quality of financial service providers (1-5 ranking with 1 being a high quality provider).

 

Department of Audit – Revenue Compliance

Mineral Audit and Excise Tax Divisions

 

Basic Facts

 

The Mineral Audit Division audits companies that extract minerals on state and federal lands to ensure the state receives all ad valorem and severance taxes, and state and federal royalties, which it is legally entitled.  There are 1,039 mineral taxpayers, 1,160 active state leases, and 7,307 producing federal leases.  Approximately 60 audits are completed each year.  Over the last three years, the Mineral Audit Division has assessed $9.77 for every dollar spent.  Collections for the last three years totaled $20M.  The division budget for the 2005-2006 biennium is $6.2 million of which $3.3 million is federal funds.

 

The Excise Tax Division’s purpose is to ensure that the state receives all excise taxes and fees to which it is legally entitled.  There are 150,000 known sales and use tax accounts, 2,917 fuel tax and mileage accounts, and 39,528 corporate fee accounts. The Division audits approximately 500 entities annually.  The Excise Tax Division has assessed $12.96 for every dollar spent over the last three years.  Collections over the same period have been $18.5M.  The division budget for the 2005-2006 biennium is $3.2M in general funds.

 

Story behind the (last three years of) performance:

 

·         Wyoming’s natural gas production has continued to grow in order to meet worldwide demand.

·         The Excise Tax Division audits less than seven tenths of a percent of the total audit population. 

·         The risk factor for sales/use tax compliance increases significantly with the increased oil and gas activity.

 

 

What do you propose to do to improve performance in the next two years?

 

·         Due to increases in production and number of wells it is vital to increase auditors to insure royalty payments made to MMS, and 50% distributed to Wyoming, are in compliance.

·        Increase focus on high-risk business sectors with low compliance percentages.  Companies that move in and out of state.

·        Continue technical training, improve sampling techniques, and update computers.  Increased use of sampling techniques will allow greater coverage of complex companies while reducing costs.

·        The administrative agencies (DOR, DOT, SOS) willingness to provide consistent and complete taxpayer information will enable improvement in risk analysis to more easily identify at-risk taxpayers

 

Link to budget:  Provide detail on priorities identified above which show in the current or proposed budget.

 

·         The Mineral Audit Division is requesting 5 additional federal royalty audit positions to cover increases in oil and gas production.

·         The Excise Tax Division is requesting six (6) additional audit positions to cover increased oil and gas activity and expand overall audit coverage

·         Replace older equipment to maintain compatibility with our partners and clients.


Department of Audit – Accounting Compliance

Public Funds Division

 

Basic Facts

 

The Public Funds Division is responsible for the State’s single audit and its comprehensive annual financial report, which are performed through contract audits. Without these audits, federal funds would be withheld. They also audit school districts and state agency performance measures to verify the accuracy of the reporting. Financial reports submitted by local government entities are monitored for accuracy and completeness and are compiled into an annual report.  There are 1,105 state and local entities. The Division provides limited training to local governments. The Division is cost effective in providing the public with financial information not available from any other level of government. The discontinuance of these programs would leave the decision makers without adequate information.  The division budget for the 2005-2006 biennium is 4.1 million in general funds.

 

Story behind the (last three years of) performance:

 

·         Compliance with applicable performance statutes is measured by the accuracy of the reported performance measures. Accuracy has been poor due to lack of proper understanding and tracking.

·         The majority of the resources during 2005 were directed to special audits. These audits will continue in the future as an increase to the overall audit coverage of state programs with no additional staffing anticipated.

·         Over the last two years local government entities have increased their compliance with reporting requirements. This was done through statute changes and increased enforcement action.

·         The education audit program is relatively new and compliance has been relatively satisfactory.


 


What do you propose to do to improve performance in the next two years?

 

·         State changed strategic planning methods and improvements from the agencies are expected in the future.

·         Special audits will continue in the future as an increase to the overall audit coverage of state programs.

·         Improve local government compliance through additional training, investigation, audits and enforcement action.  Two new employees were received during the 2005 legislative session for the function.

·        Public Funds received four new auditors during the 2005 legislative session to support the education audit program. They will be used to meet the 3-year statutory deadline for auditing the school districts.

 

Link to budget:  Provide detail on priorities identified above which show in the current or proposed budget.

 

·        Sufficient funds are in the budget for the statewide audit to ensure that federal funds are not withheld or put the state’s credit rating at risk.

·        Replace aging equipment and programs to ensure we maintain technological compatibility and ability to receive and retrieve information.

 

Department of Audit – Financial Compliance
Division of Banking

 

Basic Facts

 

The Division of Banking supervises all state-chartered financial institutions and is responsible for their safety and soundness examinations.  The Division also licenses and examines various grantors of consumer credit to ensure compliance with consumer protection statutes.  There are 26 state banks and 34 branches, two trust companies, and 976 licensed consumer credit providers. The Division became responsible for the regulation of entities engaged in mortgage lending and brokering activities on April 1, 2005.  Approximately 40 examinations are performed each year.  The average percentage of examinations to number of charters and licensees is 5.23%.  The Division of banking is self-funded through the collection of fees and licensing.  The division budget for the 2005-2006 biennium is $3.1 million in other funds.

 

Story behind the (last three years of) performance:

 

·         The condition of financial services providers remains quite high. 

·         With statutorily mandated examinations of state banks and periodic examinations of licensed credit providers, overall financial, managerial, and compliance performance has been satisfactory.

·         There has been a 25% increase in the number of financial service providers over the last three years

 

 

What do you propose to do to improve performance in the next two years?

 

·         Continue with quality examinations of state chartered and licensed financial institutions to ensure the availability of quality financial services for Wyoming residents.

·         Expanding examination scope and coverage for all financial institutions to ensure compliance with anti-money laundering and anti-terrorism financing requirements, identity theft prevention measures, and Internet banking security.

·         The division will also start examining for compliance with the Wyoming Residential Mortgages Practices Act; ensuring consumer protection against predatory lending practices and identifying mortgage fraud within the industry.

 

Link to budget:  Provide detail on priorities identified above which show in the current or proposed budget.

 

·         The division is self-funded through licensing and examination fees it collects.

·         The Division of banking is requesting three (3) additional positions to expand its examination coverage.

·         The replacement of aging equipment will ensure that we maintain technological compatibility with Federal banking and law enforcement agencies.