Louisiana auditor says state environmental agency needs more internal controls

Published 12:59 pm Tuesday, January 24, 2023

The Louisiana Department of Environmental Quality’s “ineffective internal audit function” is an ongoing problem that fails to ensure tax dollars are spent as they should be, according to the Louisiana Legislative Auditor.

LLA Mike Waguespack issued a procedural report last week that aimed to “evaluate certain controls DEQ uses to ensure accurate financial reporting, compliance with applicable laws and regulations, and accountability over public funds” for fiscal years 2021 and 2022.

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The results showed that while the DEQ resolved prior issues with its waste tire management program and fuel cards, a 2020 finding regarding its ineffective internal audit function continues to plague the agency.

“For the second consecutive engagement, DEQ did not have an effective internal audit function and did not fully adhere to the Institute of Internal Auditors’ International Standards for the Professional Practice of Internal Auditing (IIA Standards) during fiscal years 2021 and 2022, increasing the risk that DEQ’s internal control processes will not be effective or efficient,” auditors wrote.

“Although DEQ maintains an internal audit section (Audit Services) consisting of one internal auditor, internal audit resources were dedicated to various projects as requested by management, rather than the projects outlined in the annual internal audit plans developed based on Audit Services’ risk assessments.”

Auditors found DEQ Audit Services issued three reports in 2021 that covered three of seven internal audit risk areas identified in a 2021 plan, but has not issued any other audit reports since May 14, 2021.

The LLA also noted another deficiency: “DEQ Audit Services does not have a Quality Assurance and Improvement Program and has not completed an annual internal assessment as required by IIA Standards.”

State law requires agencies that receive $30 million or more to use an internal audit function and to certify with the department secretary each year that the function conforms to IIA Standards.

“Considering DEQ was appropriated $144 million for fiscal year 2021 and $145 million for fiscal year 2022, an effective internal audit function is important to ensure that DEQ’s assets are safeguarded and management’s policies and procedures are uniformly applied,” according to the report.