Audit of the Office of the State Treasurer and Receiver General Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Office of the State Treasurer and Receiver General.

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Office of the State Treasurer and Receiver General (OST) for the period July 1, 2022 through June 30, 2024.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the audit findings.

Objective	Conclusion
Did OST process unclaimed property claims for intangible property in accordance with Sections 4.04(2), 4.04(3), and 4.04(4) of Title 960 of the Code of Massachusetts Regulations and with the Unclaimed Property Division’s (UCP’s) “Claims Processing Policy”?	Yes
Did OST process veterans’ bonus (VB) claims in accordance with Sections 7.03, 7.04, and 7.07 of Title 960 of the Code of Massachusetts Regulations and with the VB Division’s “Determination of Eligibility Policy” and “Application Review Policy”?	Partially; see Finding 1

To accomplish our audit objectives, we gained an understanding of the OST internal control environment relevant to our objectives by reviewing applicable policies and procedures and by interviewing OST officials. We evaluated the design and tested the operating effectiveness of internal controls related to unclaimed property claims and VB claims. Specifically, we determined whether unclaimed property claims were only paid after receiving the required approvals. Also, we determined whether VB claims were reviewed and approved by the VB director before payment. In addition, to obtain sufficient, appropriate evidence to address our audit objectives, we performed the procedures described below.

Unclaimed Property Claims

To determine whether OST processed unclaimed property claims for intangible property in accordance with Sections 4.04(2), 4.04(3), and 4.04(4) of Title 960 of the Code of Massachusetts Regulations and with UCP’s “Claims Processing Policy,” we selected a statistical⁴ sample of 30 paid claims from the population of 291,642 claims that were paid during the audit period, using a 95% confidence level,⁵ a 0% expected error rate,⁶ and a 10% tolerable error rate.⁷ For our sample, we determined whether (1) the required supporting documentation was on file, (2) all required signatures were present and properly authorized, and (3) the claims were reviewed and approved at all required levels.

Additionally, we selected a statistical sample of 30 denied claims from the population of 2,894 claims that were denied during the audit period, using a 95% confidence level, a 0% expected error rate, and a 10% tolerable error rate. For our sample, we determined whether (1) the reason(s) for denial complied with OST policy and regulatory requirements and (2) the claims were reviewed and approved at all required levels.

For this objective, we found no significant issues during our testing. Therefore, we concluded that, based on our testing, OST met the relevant criteria regarding processing unclaimed property claims for intangible property.

VB Claims

To determine whether OST processed VB claims in accordance with Sections 7.03, 7.04, and 7.07 of Title 960 of the Code of Massachusetts Regulations and with the VB Division’s “Determination of Eligibility Policy” and “Application Review Policy,” we selected a statistical sample of 30 paid claims from the population of 4,597 claims that were paid during the audit period, using a 95% confidence level, a 0% expected error rate, and a 10% tolerable error rate. For our sample, we determined whether (1) the recipient met all eligibility requirements, (2) all required documentation supporting eligibility was on file, and (3) the bonus amount was calculated and paid accurately.

Additionally, we selected a statistical sample of 30 denied claims from the population of 2,175 claims that were denied during the audit period, using a 95% confidence level, a 0% expected error rate, and a 10% tolerable error rate. For our sample, we determined whether (1) the reason for denial aligned with program regulations and policies; (2) the denial decision was clearly documented, properly reviewed, and supported by documentation; and (3) the applicant was promptly notified of the decision.

Finally, we selected the population of 24 claims that were amended⁸ during the audit period and determined whether the adjustments corrected the prior inaccuracies and resulted in accurate final determinations.

For this objective, we found certain issues during our testing regarding how OST processed VB claims. See Finding 1 for more information.

Data Reliability Assessment

Abandoned Property System

To assess the reliability of the unclaimed property claim data from the Abandoned Property System, we interviewed the OST information technology employees who utilize the system. We also reviewed the vendor-provided System and Organization Control II report⁹ for the information system controls that were in place over the security, access, configuration, and contingency planning of the Abandoned Property System. In addition, we tested the data to ensure that it did not contain certain dataset issues (i.e., invalid records, duplicate records, and data corresponding to dates outside the audit period). Further, we observed the data extract process and verified that the record count shown during the demonstration agreed with the count of records received in the data file provided to us by OST.

VB Claim Processing System

The VB Division uses a claim processing system to approve and/or deny VB claims. To assess the reliability of the VB claim data from the claim processing system, we interviewed OST information technology employees who oversaw the system. In addition, we selected a random sample of 20 VB claims from the claim processing system and traced the claim information (i.e., application date, bonus identification, applicant name, bonus type, and bonus amount) to electronic copies of the veteran applications for agreement.

We selected a random sample of 20 electronic copies of veteran applications and traced information from these applications (i.e., application date, bonus identification, applicant name, bonus type, and bonus amount) to the list of VB claims from the claim processing system for agreement.

Based on the results of the data reliability assessment procedures described above, we determined that the information we obtained during the course of our audit was sufficiently reliable for the purposes of our audit.

4.    Auditors use statistical sampling to select items for audit testing when a population is large (usually over 1,000) and contains similar items. Auditors generally use a statistics software program to choose a random sample when statistical sampling is used. The results of testing using statistical sampling, unlike those from judgmental sampling, can usually be used to make conclusions or projections about entire populations.

5.    Confidence level is a mathematically based measure of the auditor’s assurance that the sample results (statistic) are representative of the population (parameter), expressed as a percentage.

6.    Expected error rate is the number of errors that are expected in the population, expressed as a percentage. It is based on the auditor’s knowledge of factors such as prior year results, the understanding of controls gained in planning, or a probe sample.

7.    The tolerable error rate (which is expressed as a percentage) is the maximum error in the population that is acceptable while still using the sample to conclude that the results from the sample have achieved the objective.

8.    An amended claim is defined as a claim that remains in an uncategorized status (i.e., it never gets either approved or denied), even after an attempted adjustment.

9.    A System and Organization Control report, issued by an independent contractor, is a report on controls about a service organization’s systems relevant to security, availability, processing integrity, confidentiality, or privacy.

Date published:	December 18, 2025