MICHIGAN DEPARTMENT OF STATE POLICE

1 FINANCIAL AUDITINCLUDING THE PROVISIONS OF THE SINGLE AUDIT ACTOF THEMICHIGAN DEPARTMENT OF STATE POLICEO ctober 1, 1997 through September 30, 199955-100-0055-100-001 EXECUTIVE DIGESTMICHIGAN DEPARTMENT OF STATE POLICEINTRODUCTIONThis report contains the results of our financial audit*,including the provisions of the Single Audit Act, of theMichigan DEPARTMENT of STATE POLICE (MSP) for the periodOctober 1, 1997 through September 30, PURPOSEThis financial audit of MSP was conducted as part of theconstitutional responsibility of the Office of the AuditorGeneral and is required on a biennial basis by Act 251, , to satisfy the requirements of the Single Audit ActAmendments of 1996 and Office of Management andBudget (OMB) Circular A-133, Audits of states , LocalGovernments, and Non-Profit 's mission* is to provide leadership, coordination, anddelivery of law enforcement and support services for thesafety and protection of people and property.

2 The MSPdirector is appointed by and serves at the discretion of theGovernor. The director is charged with the responsibilities ofestablishing a highway patrol, cooperating with peaceofficers for the purposes of prevention and discovery ofcrimes, apprehending criminals, and preserving law andorder throughout the STATE .* See glossary at end of report for had 2,192 enlisted and 1,072 civilian employees as ofSeptember 30, 1999. MSP gross expenditures andoperating transfers out totaled approximately $ millionin fiscal year OBJECTIVESAND CONCLUSIONSA udit Objective: To audit MSP's financial schedules,including the schedule of expenditures of federal awards, forthe fiscal years ended September 30, 1999 and September30, : We expressed an unqualified opinion onMSP's financial schedules. In addition, we expressedan unqualified opinion on MSP's schedule ofexpenditures of federal awards, and its othersupplemental financial schedules, in relation to thefinancial schedules taken as a Objective: To assess and report on MSP'scompliance with certain provisions of laws, regulations,contracts, and grants, noncompliance with which could havea direct and material effect on the financial schedules, andon its internal control* over financial reporting, based on ouraudit of the financial : Our assessment of compliance did notdisclose any instances of noncompliance that couldhave a direct and material effect on the financialschedules.

3 Also, our assessment of internal controlover financial reporting did not disclose any materialweaknesses* . However, we identified reportableconditions* related to internal control over accountingfunctions, operating transfers, controls over MichiganAdministrative Information Network* (MAIN) user access,* See glossary at end of report for over procurement cards*, and cash management(Findings 1 through 5).In addition, our assessment indicated that MSP was insubstantial compliance with the requirements set forthin Sections - of the MICHIGAN CompiledLaws pertaining to its systems of internal accountingand administrative Objective: To assess and report on MSP'scompliance with requirements applicable to each majorfederal program and on its internal control over compliancein accordance with OMB Circular : Our assessment of compliance applicableto each major federal program disclosed instances ofnoncompliance related to the Motor Carrier SafetyAssistance Program* , the schedule of expenditures offederal awards, and the monitoring of subrecipientsthat are required to be reported under OMB Circular A-133 (Findings 6 through 8).

4 However, our assessmentof internal control over compliance applicable to eachmajor federal program did not disclose any materialweaknesses. We did identify reportable conditions relatedto the Motor Carrier Safety Assistance Program, theschedule of expenditures of federal awards, the monitoring ofsubrecipients, internal control over accounting functions,controls over MAIN user access, and controls overprocurement cards (Findings 6 through 11).AUDIT SCOPEOur audit scope was to examine the financial and otherrecords of the MICHIGAN DEPARTMENT of STATE POLICE for theperiod October 1, 1997 through September 30, 1999. Our* See glossary at end of report for was conducted in accordance with generally acceptedauditing standards; the standards applicable to financialaudits contained in Government Auditing Standards issuedby the Comptroller General of the United states ; and OMBC ircular A-133, Audits of states , Local Governments, andNon-Profit Organizations, and, accordingly, included suchtests of the records and such other auditing procedures aswe considered necessary in the circumstances.

5 AGENCY RESPONSESAND PRIOR AUDITFOLLOW-UPOur audit report contains 8 findings and 8 correspondingrecommendations. MSP's corrective action plan indicatesthat it agrees with the recommendations and plans toimplement disclosed in MSP's summary schedule of prior auditfindings, MSP fully complied with 1 of the 4 prior SingleAudit* recommendations and partially complied with theremaining 3 prior Single Audit recommendations. One of theprior recommendations (see Finding 8) is repeated in thisreport.* See glossary at end of report for 18, 2000 Colonel Michael D. Robinson, DirectorMichigan DEPARTMENT of STATE Police714 South Harrison RoadEast Lansing, MichiganDear Colonel Robinson:This is our report on the financial audit, including the provisions of the Single Audit Act, ofthe MICHIGAN DEPARTMENT of STATE POLICE for the period October 1, 1997 thoughSeptember 30, report contains our executive digest; description of agency; audit objectives andconclusions, audit scope, and agency responses and prior audit follow-up; schedule offindings and questioned costs.

6 And independent auditor's reports on the financialschedules, on compliance and on internal control over financial reporting, and oncompliance with requirements applicable to each major program and on internal controlover compliance in accordance with Office of Management and Budget CircularA-133. This report also contains the MICHIGAN DEPARTMENT of STATE POLICE financialschedules and notes to the financial schedules, supplemental financial schedules, otherrequired schedules, and a glossary of acronyms and findings and recommendations are organized by audit objective. The agencypreliminary responses are contained in the corrective action plan. The MichiganCompiled Laws and administrative procedures require that the audited agency develop aformal response within 60 days after release of the audit appreciate the courtesy and cooperation extended to us during this page left intentionally OF CONTENTSMICHIGAN DEPARTMENT OF STATE POLICEINTRODUCTIONPageExecutive Digest 1 Report Letter 5 Description of Agency 9 Audit Objectives and Conclusions, Audit Scope, and Agency Responses and Prior Audit Follow-Up 10 SCHEDULE OF FINDINGS AND QUESTIONED COSTSS ection I: Summary of Auditor's Results 13 Section II: Findings Related to the Financial Schedules 14 1.

7 Internal Control Over Accounting Functions 14 2. Operating Transfers 18 3. Controls Over MAIN User Access 19 4. Controls Over Procurement Cards 20 5. Cash Management 21 Section III: Findings and Questioned Costs Related to Federal Awards 236. Motor Carrier Safety Assistance Program 237. Schedule of Expenditures of Federal Awards 248. Monitoring of Subrecipients 269. Internal Control Over Accounting Functions 2710. Controls Over MAIN User Access 2711. Controls Over Procurement Cards 2755-100-008 INDEPENDENT AUDITOR'S REPORTS AND FINANCIAL SCHEDULESI ndependent Auditor's Report on the Financial Schedules 28 Independent Auditor's Report on Compliance and on Internal Control Over Financial Reporting 30 Independent Auditor's Report on Compliance With Requirements Applicable to Each Major Program and on Internal Control Over Compliance in Accordance With OMB Circular A-133 32 MICHIGAN DEPARTMENT of STATE POLICE Financial SchedulesSchedule of General Fund Revenue and Operating Transfers 35 Schedule of Sources and Disposition of General Fund Authorizations 36 Notes to the Financial Schedules 37 SUPPLEMENTAL FINANCIAL SCHEDULESS chedule of Certain General Fund Assets and Liabilities 41 Schedule of Disposition of General Fund Authorizations by Appropriation Unit 42 Schedule of Expenditures of

8 Federal Awards 44 OTHER REQUIRED SCHEDULESS ummary Schedule of Prior Audit Findings 51 Corrective Action Plan 54 GLOSSARYG lossary of Acronyms and Terms 6055-100-009 Description of AgencyThe MICHIGAN DEPARTMENT of STATE POLICE (MSP) is one of the principal departments of Stategovernment. MSP's mission is to provide leadership, coordination, and delivery of lawenforcement and support services for the safety and protection of people and property. The MSP director is appointed by and serves at the discretion of the Governor. The director ischarged with the responsibilities of establishing a highway patrol, cooperating with peaceofficers for the purposes of prevention and discovery of crimes, apprehending criminals, andpreserving law and order throughout the carry out its responsibilities, MSP is comprised of executive and administrative staff, theOffice of the Director, the Office of Organizational Development, and three operating bureaus.

9 The Administrative and Information Services Bureau is responsible for the financial andadministrative operations of MSP. This Bureau is also responsible for criminal records,communications, and the Criminal Justice Data Center. The Uniform Services Bureauconsists of enlisted and other personnel at posts throughout the STATE who perform highwaypatrol, complaint investigation, motor carrier enforcement, and other activities. TheInvestigative Services Bureau consists of enlisted and other personnel who performinvestigations related to fraud, narcotics, organized crime, and other criminal activities. ThisBureau also includes the Forensic Science Division. Responsibilities for federal grantmanagement are shared by the divisions carrying out the grant activities and theAdministrative and Information Services had 2,192 enlisted and 1,072 civilian employees as of September 30, 1999.

10 MSP grossexpenditures and operating transfers out totaled approximately $ million in fiscal Objectives and Conclusions, Audit Scope,and Agency Responses and Prior Audit Follow-UpAudit Objectives and ConclusionsOur financial audit, including the provisions of the Single Audit Act, of the MichiganDepartment of STATE POLICE (MSP) had the following objectives:1. To audit MSP's financial schedules, including the schedule of expenditures of federalawards, for the fiscal years ended September 30, 1999 and September 30, expressed an unqualified opinion on MSP's financial schedules. Inaddition, we expressed an unqualified opinion on MSP's schedule ofexpenditures of federal awards, and its other supplemental financialschedules, in relation to the financial schedules taken as a To assess and report on MSP's compliance with certain provisions of laws,regulations, contracts, and grants, noncompliance with which could have a direct andmaterial effect on the financial schedules, and on its internal control over financialreporting, based on our audit of the financial assessment of compliance did not disclose any instances ofnoncompliance that could have a direct and material effect on the financialschedules.