DEPARTMENT OF REVENUE STATE OF LOUISIANA MANAGEMENT LETTER ISSUED DECEMBER 15, 2010
LEGISLATIVE AUDITOR 1600 NORTH THIRD STREET POST OFFICE BOX 94397 BATON ROUGE, LOUISIANA 70804-9397 LEGISLATIVE AUDIT ADVISORY COUNCIL SENATOR EDWIN R. MURRAY, CHAIRMAN REPRESENTATIVE NOBLE E. ELLINGTON, VICE CHAIRMAN SENATOR NICHOLAS NICK GAUTREAUX SENATOR WILLIE L. MOUNT SENATOR BEN W. NEVERS, SR. SENATOR JOHN R. SMITH REPRESENTATIVE CAMERON HENRY REPRESENTATIVE CHARLES E. CHUCK KLECKLEY REPRESENTATIVE ANTHONY V. LIGI, JR. REPRESENTATIVE CEDRIC RICHMOND LEGISLATIVE AUDITOR DARYL G. PURPERA, CPA, CFE DIRECTOR OF FINANCIAL AUDIT THOMAS H. COLE, CPA Under the provisions of state law, this report is a public document. A copy of this report has been submitted to the Governor, to the Attorney General, and to other public officials as required by state law. A copy of this report has been made available for public inspection at the Baton Rouge office of the Legislative Auditor. This document is produced by the Legislative Auditor, State of Louisiana, Post Office Box 94397, Baton Rouge, Louisiana 70804-9397 in accordance with Louisiana Revised Statute 24:513. Five copies of this public document were produced at an approximate cost of $14.35. This material was produced in accordance with the standards for state agencies established pursuant to R.S. 43:31. This report is available on the Legislative Auditor s Web site at www.lla.la.gov. When contacting the office, you may refer to Agency ID No. 3359 or Report ID No. 80100079 for additional information. In compliance with the Americans With Disabilities Act, if you need special assistance relative to this document, or any documents of the Legislative Auditor, please contact Wayne Skip Irwin, Administration Manager, at 225-339-3800.
EXECUTIVE SUMMARY Page Executive Summary...3 Management Letter...5 Budgetary Comparison Schedules (Unaudited)...7-1 -
DEPARTMENT OF REVENUE - 2 -
EXECUTIVE SUMMARY Our procedures at the Louisiana Department of Revenue (LDR) for the period July 1, 2009, through June 30, 2010, disclosed: The finding identified in the prior year report on LDR, dated May 6, 2010, relating to an inaccurate annual fiscal report has been resolved by management. No findings involving internal control and its operations that are necessary to bring to management s attention were identified. No findings of noncompliance with applicable laws and regulations or other matters that are required to be reported were identified. We did not audit the Annual Fiscal Reports of LDR; however, we did perform certain procedures in accordance with Government Auditing Standards issued by the Comptroller General of the United States of America as part of our audit of the State of Louisiana s financial statements. This report is a public report and has been distributed to state officials. We appreciate LDR s assistance in the successful completion of our work. Background LDR was created under Louisiana Revised Statute 36:451. LDR is responsible for assessing, evaluating, and collecting consumer, producer, and any other state taxes specifically assigned by law to the department. In addition, LDR has authority generally for alcoholic beverage control and the regulation of charitable gaming. LDR s established mission is to fairly and efficiently collect state tax revenues to fund public services and regulate the sale of alcoholic beverages, tobacco, and charitable gaming within Louisiana. The Office of Revenue is comprised of the following: Tax Collection Alcohol and Tobacco Control Charitable Gaming - 3 -
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LOUISIANA LEGISLATIVE AUDITOR DARYL G. PURPERA, CPA December 9, 2010 DEPARTMENT OF REVENUE STATE OF LOUISIANA Baton Rouge, Louisiana As required by Louisiana Revised Statute 24:513 and as a part of our audit of the State of Louisiana s financial statements for the fiscal year ended June 30, 2010, we conducted certain procedures at the Louisiana Department of Revenue (LDR) for the period from July 1, 2009, through June 30, 2010. Our auditors obtained and documented an understanding of LDR s operations and system of internal controls through inquiry, observation, and review of LDR s policies and procedures documentation including a review of the related laws and regulations applicable to the department. Our auditors performed analytical procedures consisting of a comparison of the most current and prior year financial activity using the LDR s annual fiscal reports and/or system-generated reports and obtained explanations from department management of any significant variances. Our auditors reviewed the status of the finding identified in the prior year engagement. In our prior report on LDR, dated May 6, 2010, we reported a finding relating to an inaccurate annual fiscal report. This finding has been resolved by management. Our auditors considered internal control over financial reporting; examined evidence supporting the tax revenues and receivables for individual income taxes, corporate income and franchise taxes, sales taxes, severance taxes, and motor and special fuels taxes; performed procedures related to claims and litigation and refunds payable balances; and tested LDR s compliance with laws and regulations that could have a direct and material effect on the State of Louisiana s financial statements. These procedures were performed in accordance with Government Auditing Standards as part of our audit of the state s Comprehensive Annual Financial Report for the fiscal year ended June 30, 2010. 1600 NORTH THIRD STREET POST OFFICE BOX 94397 BATON ROUGE, LOUISIANA 70804-9397 WWW.LLA.LA.GOV PHONE: 225-339-3800 FAX: 225-339-3870
DEPARTMENT OF REVENUE Our auditors prepared Budgetary Comparison Schedules for LDR for the fiscal year ended June 30, 2010, using the Annual Fiscal Reports of LDR and additional data in the Integrated Statewide Information System, the state s accounting system. These schedules are presented as additional information but have not been subjected to auditing procedures. The Annual Fiscal Reports of LDR are not audited or reviewed by us, and, accordingly, we do not express opinions on those reports. LDR s accounts are an integral part of the State of Louisiana s financial statements, upon which the Louisiana Legislative Auditor expresses opinions. Based on the application of procedures referred to previously, we found no significant control deficiencies, noncompliance, or errors related to analytical procedures; tax revenues and receivables for individual income taxes, corporate income and franchise taxes, sales taxes, severance taxes, and motor and special fuels taxes; and claims and litigation and refunds payable balances that required disclosure in this management letter or in the Single Audit Report for the State of Louisiana. This letter is intended for the information and use of LDR and its management, others within the entity, and the Louisiana Legislature and is not intended to be, and should not be, used by anyone other than these specified parties. Under Louisiana Revised Statute 24:513, this letter is a public document and it has been distributed to appropriate public officials. Respectfully submitted, EMS:CGEW:EFS:THC:dl Daryl G. Purpera, CPA, CFE Legislative Auditor LDR 2010-6 -
BUDGETARY COMPARISON SCHEDULES (UNAUDITED) Agency 440 - Office of Revenue...9 Agency 441 - Louisiana Tax Commission...11 Page - 7 -
DEPARTMENT OF REVENUE - 8 -
UNAUDITED DEPARTMENT OF REVENUE AGENCY 440 - OFFICE OF REVENUE Budgetary Comparison Schedule For the Fiscal Year Ended June 30, 2010 APPROPRIATED REVENUES: VARIANCE TOTAL BEFORE AGENCY ADJUSTED REVISED FAVORABLE ADJUSTMENTS ADJUSTMENTS TOTAL BUDGET (UNFAVORABLE) General Fund - direct $1,617,270 $1,617,270 $1,617,270 General Fund - fees and self-generated from prior and current year collections 182,671,806 182,671,806 95,588,319 $87,083,487 General Fund - interagency transfers 310,884 310,884 447,578 (136,694) Statutory dedications - Tobacco regulation enforcement 655,879 655,879 839,650 (183,771) Federal aid 359,000 359,000 394,000 (35,000) Total Appropriated Revenues $185,614,839 NONE $185,614,839 $98,886,817 $86,728,022 APPROPRIATED EXPENDITURES: TAX COLLECTION ALCOHOL AND TOBACCO CONTROL OFFICE OF CHARITABLE GAMING UNALLOTTED PROGRAM TOTAL Salaries $35,129,845 $3,671,311 $855,087 $39,656,243 Other compensation 1,672,074 54,711 1,726,785 Related benefits 14,042,770 1,203,061 266,778 15,512,609 Travel and training 461,367 26,449 7,499 495,315 Operating services 10,858,389 819,592 197,678 11,875,659 Supplies 338,745 43,473 5,764 387,982 Professional services 7,973,824 152,501 8,126,325 Other charges 4,636,219 44,393 4,680,612 Capital outlay 1,051,680 298,476 16,005 1,366,161 Interagency transfers 8,672,539 114,272 75,332 8,862,143 Total appropriated expenditures before adjustments 84,837,452 6,428,239 1,424,143 NONE 92,689,834 System adjustments (7,330) (7,330) Total Appropriated Expenditures 84,830,122 6,428,239 1,424,143 NONE 92,682,504 Revised Budget 90,128,843 7,231,362 1,490,773 $35,839 98,886,817 Variance Favorable (Unfavorable) $5,298,721 $803,123 $66,630 $35,839 $6,204,313 NOTE: This schedule was prepared using information from the Integrated Statewide Information System (ISIS), the state's accounting system. Additional detail is available on request. - 9 -
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DEPARTMENT OF REVENUE AGENCY 441 - LOUISIANA TAX COMMISSION Budgetary Comparison Schedule For the Fiscal Year Ended June 30, 2010 UNAUDITED APPROPRIATED REVENUES: VARIANCE TOTAL BEFORE AGENCY ADJUSTED REVISED FAVORABLE ADJUSTMENTS ADJUSTMENTS TOTAL BUDGET (UNFAVORABLE) General Fund - direct $2,942,265 $2,942,265 $2,942,265 Statutory dedications - Tax Commission Expense Fund 512,714 512,714 612,110 ($99,396) Total Appropriated Revenues $3,454,979 NONE $3,454,979 $3,554,375 ($99,396) APPROPRIATED EXPENDITURES: PROPERTY TAXATION REG/OVERSGHT SUPR & ASST TO LOCAL ASSESSORS TOTAL Salaries $2,087,859 $2,087,859 Related benefits 768,203 768,203 Travel and training 111,890 111,890 Operating services 187,892 187,892 Supplies 20,508 20,508 Professional services 169,407 169,407 Other charges 8,956 $49,432 58,388 Interagency transfers 50,832 50,832 Total Appropriated Expenditures 3,405,547 49,432 3,454,979 Revised Budget 3,504,375 50,000 3,554,375 Variance Favorable (Unfavorable) $98,828 $568 $99,396 NOTE: This schedule was prepared using information from the Integrated Statewide Information System (ISIS), the state's accounting system. Additional detail is available on request. - 11 -
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