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Friday, December 21, 2012

Ind. Gov't. - More on "Auditors find accuracy and technology problems in state tax dept., follows $526M in errors"

Updating this ILB entry from Dec. 17th, the Fort Wayne Journal Gazette editorial today is titled "Heed advice on revenue errors." Some quotes:

Experts from Deloitte, a financial consulting firm, concluded the state agency placed so much emphasis on processing tax returns quickly that it compromised accuracy, resulting in errors state officials are still working to fix. * * *

Lesley Weidenbener of the Franklin College Statehouse news bureau noted that, on several occasions, Daniels had lauded the agency for its quick processing of tax returns.

“But the report said the agency’s strategic focus on cutting the time and cost of handling income tax returns meant ‘support areas such as information systems management and financial accounting and reporting appear to have been a lower priority for the organization,’ ” Weidenbener wrote.

The good news is that, under new leadership and with the addition of more than 20 top-level managers, the accounting mistakes have been corrected and no additional, significant errors were found. Auditors, however, noted the state is not using the integrated software system that might prevent problems.

“The issues identified did not arise overnight; neither will they be fixed overnight,” Deloitte’s Kathie Schwerdtfeger told budget officials. “Many of the issues are complex and will require a significant investment of time and resources to address, while others may be able to be addressed quickly. The task of evaluating, prioritizing and remediating these issues will be great, especially in light of other competing priorities and sustaining day-to-day operations.”

One of those priorities should be a switch to the integrated software system cited by Deloitte. Revenue Commissioner Mike Alley said he had considered buying one but estimated it could cost $50 million.

While it’s a hefty expenditure, $50 million spent certainly is preferable to $526 million lost. In fact, a more efficient software system seems like an obvious priority for that additional $1.28 billion in the rosy revenue forecast.

Posted by Marcia Oddi on December 21, 2012 10:22 AM
Posted to Indiana Government