Audit: BMV ‘errors’ due to lax controls, lack of oversight

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INDIANAPOLIS (WISH) — A new audit report delivers a scathing review of Indiana’s Bureau of Motor Vehicles, finding that the agency overcharged and undercharged Indiana drivers because of a massive lack of oversight, weak internal controls and lax monitoring that allowed employees to change potential discrepancies without supervision.

The audit, performed by the independent accounting firm BKD, found that “control gaps and deficiencies identified within the BMV’s internal control systems permitted the condition for transactional errors to occur.” It goes on to state: “sufficient monitoring controls to ensure all refunds are appropriately issued are nonexistent…”

The BMV is the state’s second largest agency, responsible for collecting more than 1,200 unique fees and taxes and distributing them to other state agencies.

The release of the audit Monday follows years-worth of reporting by I-Team 8, which has chronicled the scandal over how the BMV overcharged Indiana drivers by nearly $60 million in fees and taxes. The issue has led to lawsuits which forced the agency to release a series of refunds to Hoosiers. The BMV also claims it has – at times – undercharged drivers, but has not sought repayments.

Last December, the BMV agreed to pay BKD up to $100,000 to perform an assessment of the agency.

The audit report released Monday specifically notes that – among the main issues – several employees had access to computer programs that control all the fees and transactions being processed. It goes on to state that one manager was able to make a change to a fee amount when a discrepancy was noted between the BMV manual and state law. The manager was able to edit the electronic manual without “any additional interpretation, oversight or internal review for appropriateness,” the auditors noted.

The report went on to state:

BKD determined that a number of people, including the former CIO, had access to edit values on the Master Fee Table. Because the data contained on the Master Fee Table is the basis for transactional process, access should be very limited to only a few individuals. BKD could not obtain a Master Fee Table File Maintenance Report, demonstrating the logging of additions/deletions/revisions of all BMV fees. Without the logging of these events, BMV management cannot actively monitor changes for appropriateness.

The report also hinted that some of those edits may have occurred while auditors were examining the agency.

“Simultaneous to our review, updates were being made by BMV associates to the Master Fee Table without our knowledge. Upon our discovery, we were unable to adequately determine what fields had been updated or the extent of the changes due to poor information technology change management processes and controls…,” auditors wrote.

Among the other findings in the report:

— Language authorizing the BMV to collect fees and taxes is “ambiguous and very complex.” Auditors urged the BMV to work with the Indiana legislature to review, reduce and simplify the overall Code structure for fees and taxes.

  • There is no centralized oversight of ongoing compliance with state law
  • The agency is using servers from 2008 to run its main computer application, STARS, which stands for System Tracking and Record Support, and is responsible for all transactions processed.
  • There’s no long-term information technology strategy in place.
  • The BMV’s central office has not been the subject of an internal audit for a number of years.

While harsh in totality, the report does commend the BMV for “proactively working to identify potential issues.”

In a statement released to I-Team 8, BMV Commissioner Kent Abernathy, said: “Necessary internal improvements have begun, which include the hiring of a Chief of Staff, adding a new Chief Information Officer and the formation of a Central Office Internal Audit Team. Now, with the assessment complete, we have a benchmark of where we are and how we will move forward. It’s time to proactively change the way we do business…”

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