SDAT Budget Analysis Takes Steps to Correct Audit Findings

The Health and Human Services Subcommittee of the Senate Budget and Taxation Committee held the budget hearing for the Maryland Department of Assessments and Taxation (SDAT) on February 20.  In its budget analysis, the Department of Legislative Services suggested two recommended actions, one of which will address repeat findings in a recent audit of the Department.

The first recommended action limits the amount of special funds that can be used to fund the Office of the Director.  The second recommended action withholds $100,000 of SDAT’s appropriation until it has taken action to address the repeat audit findings raised by the Office of Legislative Audits (OLA).  To meet this requirement, the OLA is to submit a report to the budget committees along with a determination that each  repeat finding was corrected.  A prior post on Conduit Street summarizes the issues raised in the audit.

The repeat audit items raised include the following:

  1. Certain verification procedures designed to help ensure the accuracy of information submitted on personal property returns, franchise tax returns, and applications of homeowners’ and renters’ tax credits were not performed timely or were not comprehensive;
  2. SDAT did not monitor certain payments to two contractors or verify that billings were proper prior to payment;
  3. Adequate accountability and control was not established over certain collections, which totaled $23.5 million during fiscal 2012, including a lack of documentation that collections were subsequently deposited; and,
  4. The failure to perform two audits of personal property returns.

SDAT objected to this DLS recommended action stating that three of the issues have already been resolved and that they will perform the audits of personal property returns.

A complete response can be found in SDAT’s response document.

The major trends from the analysis are listed below.

Fiscal 2012 Assessment Values Are within the Acceptable Assessment-to-sales Ratio: The department’s accuracy measures for assessments, while not within the department’s standards, are within acceptable ranges as determined by industry standards.

Timeliness Measures within the Business Property Valuation Program Continue to Decline: Annual appraisals of all taxable property from the Business Property Valuation division continue to not be 100% completed by December 1. The department should comment on its ability to assess personal property returns in a timely fashion going forward.

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