Audit raises concerns about how FWP manages vehicles, aircraft

A legislative audit report found that Montana’s Fish, Wildlife and Parks division may not be setting aside enough money for its aircraft, and that it may not be approving fleet vehicle purchases properly.

Auditors also found that it could not determine whether a grant that helped fund an auditor within the division was accounted for properly, according to a report released by the Legislative Audit Division. The fiscal audit, which was released this month, is conducted every two years and examines whether the financial details of the executive branch and state agencies are being properly followed, and auditors often make recommendations to lawmakers, who may consider changing state law.

The three items auditors noted in the audit were largely related to how the FWP allocates and spends money, but none of the issues were flagged as a matter of fraud or waste, rather problems centering on how the department accounts for and manages expenses.

Negative fund balance

Montana state agencies, including FWP, keep “internal service funds.” These funds track expenses and purchases that provide support and services to other parts of the agency from a central group. For example, one internal service fund for FWP, the Fish and Game Warehouse Inventory fund, accounts for the uniforms worn by some staff. Another fund, the Aircraft fund, covers aircraft the department uses, owns and operates.

State law requires that the agency charge back or allocate costs back to the specific divisions within the department to adequately maintain inventory, perform maintenance or replace equipment.

Auditors discovered that the Fish and Game warehouse inventory had not kept pace with the costs. In Fiscal Year 2020, it maintained only four days of working capital in the fund, but by Fiscal Year 2021 that number had fallen to -73 days. State auditors said that fund balances should have 60 days of working capital.

Meanwhile, the aircraft operating fund had plummeted from 62 days of working capital in 2020 to -61 days in the fund in 2021.

In a written response addressing the concerns, FWP said that it was working to improve the internal controls, and the aircraft fund had been depleted after it acquired a new helicopter, and the chargebacks had not been readjusted.

“Because the department did not charge fees commensurate with costs, maintain a working capital within the 60-day allowance, or had a negative working capital fund balance, it is not in compliance with state law,” the audit said.

Fleet problems

Auditors also recommended FWP implement new procedures or enforce current ones when it comes to fleet or aircraft expenditures. They noted that a process of review and approval is normally required for the purchases to make sure the costs are allowable and accurate.

“During the current audit, we sampled 36 operating expenditure transactions and identified 18 expenditures that were not approved by a program supervisor related to the department’s fleet usage,” the report said.

Fleet expenditures during the two-year audit cycle were pegged at $3.1 million. Department officials said they agree with the audit findings and are redoubling efforts at training and communicating the department’s policy.

Accounting challenges

One other area that auditors flagged was how the department allocated an employee’s time as part of a federal grant project.

The Montana FWP obtained an administrative grant from the U.S. Fish and Wildlife Services for an internal audit to make sure that money granted by the federal government was being used according to law. The grant paid for the auditor’s time, but required documentation of the chargeback.

“We reviewed time charged to the grant for activity performed by the internal auditor and found that 40 percent of the internal auditor’s time was charged to the federal grant,” the report said. “However, the employee did not track time in a way that allowed us to determine what portion of the time benefited the grant and was allowable to be charged to the grant.”

Auditors couldn’t get the records that exist to match up with tasks performed for the grant.

The department said it did not believe it was necessary to track time by allocation.

“Therefore, the department cannot demonstrate compliance with federal regulations, resulting in questioned costs,” the audit said. “We question $28,105, the entire amount of the internal auditor’s salary and benefit expenditures charge to the grant in FY20.”

Auditors noted a similar concern two years ago at the time of the last audit.

“Based on this work, we determined the prior audit recommendation was not implemented,” the audit said.