Overview
OST only published a list of qualified banks and transmitted it to the Governor one time during the two-year audit period, on November 22, 2019. If the list of qualified banks is not regularly published, there is an increased risk of an agency opening an account at an unqualified bank, possibly risking a loss of Commonwealth funds.
Authoritative Guidance
Section 34(a) of Chapter 29 of the General Laws states,
State officers, departments, institutions and other agencies may, with the written consent of the state treasurer, deposit a portion of the public monies in their possession in national banks, federal savings banks and federal savings and loan associations, lawfully doing business within the commonwealth, and in trust companies, savings banks and . . . cooperative banks chartered under the laws of the commonwealth. The state treasurer shall publish a list of qualified banks and shall transmit that list at least once every 6 months to the governor.
Reason for Issue
OST does not have a procedure that defines the process for publishing the list of qualified banks and transmitting it to the Governor every six months.
Recommendation
OST should develop and implement a procedure for publishing and transmitting the list of qualified banks to the Governor at least once every six months and should implement controls to ensure that this schedule is adhered to.
Auditee’s Response
The OST agrees with this finding and recognizes that one (1) bank list was published during calendar year 2019 and none were published in 2020.
It cannot be overstated that during the audit period, the Governor declared a state of emergency on March 10, 2020, prompting the OST to work with other Commonwealth agencies to minimize the disruption in meeting Commonwealth financial obligations, and preparing for the worst. While continuing to meet the Commonwealth’s financial obligations, OST was purchasing and deploying equipment so that OST employees could work remotely. This was done in [a] rapidly changing environment, which included supply chain issues, while taking measures to maintain the health of OST’s workforce. The first 2021 bank list was published in February 2021. The schedule for publishing this list has been established and is April and November of each year.
Further, during 2020, there were no substantial changes to the list of qualified banks that would affect a bank’s relationship with the Commonwealth. No qualified bank was removed from the list due to being inadequately capitalized under the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) nor did any qualified bank receive an unsatisfactory [Community Reinvestment Act] rating.
The Bank Account Maintenance Policy has been updated to reflect the creation of the Section 34(a) of Chapter 29 of the Massachusetts General Laws bank lists.
Additionally, the OST has suggested a legislative change for this bank list to be published and submitted to the Governor once per year.
Auditor’s Reply
Based on its response, OST is taking measures to address our concerns on this matter.
| Date published: | February 28, 2022 |
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