Our review of RMV’s financial transactions showed that it did not consistently retain source documentation in its hardcopy files for the required seven years to support electronic records detailing fee overrides, cash transfer logs, and cash deposits in ALARS. This creates the possibility that RMV would be unable to locate a key document as part of an investigation in a judicial action.
We requested documentation packages from a statistical random sample of 100 combinations of RMV service locations and dates, and RMV could not provide requested documentation for 24 of the 100. The revenue associated with the 24 documentation packages was $2.7 million out of $9.4 million for the sample of 100 tested. Based on the results of our statistical sample, we project, using a 95% confidence level, that between 16% and 33.5% of the documentation packages from the total population of 6,919 combinations of service locations and dates, related to as much as $208 million, could not be located.
According to Chapter 8 of RMV’s Cash System User Manual, RMV is required to keep original records in the office for two years and warehoused for seven years.
Reasons for Noncompliance
RMV internal audit staff members stated that the files could not be located because of misfiling. Large amounts of documentation from smaller offices are stored in larger offices because space is not always available in the smaller office where a record was created. There did not appear to be an adequate system to locate certain files.
RMV should update its system or create a new system for locating documentation related to a particular date and service location. The updated system should account for instances where the local office has limited space.
Finding #3 is a projection of the revenue associated with documents that the Auditor believes wouldn’t be found based on a small sample. It is important to note that all revenue transactions are recorded electronically. Furthermore, certain fee overrides in the ALARS system were automatically generated and the paper documents are a duplicative recording of the overrides. . . .
The RMV’s Cash Manual (2017 Edition) does reference document retention schedules for periods longer than required under the Secretary of the Commonwealth’s Record Conservation Board’s Record Retention Schedule that requires generally that records related to cash transactions be maintained for three (3) years.
The RMV Cash Manual also references longer retention periods than the Record Conservation Board’s Retention Schedule Series Number C12-18 that, for example, states that RMV cash transfer logs should be retained “1 year after audit or 7 years whichever is sooner.” Due to the fact that the Massachusetts Department of Transportation’s Internal Audit Department conducts cash audits of RMV service centers during each fiscal year, the RMV’s minimum practices are consistent with C12-18. For example, if MassDOT Internal Audit conducted cash audits of all RMV service centers in 2014, those records would only need to be kept until 2015. Those copies would not be onsite in 2017.
While required to maintain onsite storage of hard copy, paper documents like cash logs, the small size of some of the RMV’s older locations makes that requirement challenging in practicality. For this reason, the RMV has both sought more suitable space for its operations and has increased the utilization of electronic record keeping and document management systems. Since March 2015, the RMV has leased 7 new locations, providing additional secure space to meet storage requirements.
Lastly, the lack of storage space for certain cash logs does not “create the possibility that the RMV would be unable to locate a key document (such as a license application).” Since the retention of millions of pieces of paper is administratively challenging, we have successfully petitioned the Records Conservation Board to allow us to retain license application records electronically. All license application documents are scanned in at the point of customer interaction.
The second phase of the RMV’s ATLAS system will include an electronic inventory management system. During the definition systems for this new technology, the RMV will explore whether the system features will be compatible with recording the location of both physical assets and hard copy documentation.
Our report does not state or suggest that any of the RMV revenue that was tested was missing. Rather, OSA presents this issue as a problem with RMV’s documentation: RMV does not consistently retain source documentation in its hardcopy files for the required seven years to support electronic records detailing fee overrides, cash transfer logs, and cash deposits in ALARS.
In its response, RMV asserts that its Cash Manual does refer to document retention schedules that are longer than the periods required by the record retention schedule of the Secretary of the Commonwealth’s Record Conservation Board. However, although these requirements may be cited in this manual, our audit found that in some cases RMV could not substantiate that they were followed.
In its response, RMV states that although OSA could not locate the records in question, they are stored electronically. However, our statically valid sample found that the signed cash reconciliation sheets between the clerk and the teller, the signed reconciliation sheets between the bank and the total receipts, and the signed approvals of fee overrides were not in RMV’s electronic storage files. Moreover, approximately one out of every four documentation packages we requested could not be located by RMV officials.
|Date published:||September 6, 2018|