Iowa Commerce Department Audit Unearths Financial Reporting, Segregation of Duties Issues

DES MOINES — Auditor of State Rob Sand unveiled a new report detailing the findings from the annual audit of the Iowa Department of Commerce for the fiscal year ending June 30, 2022. The Iowa Department of Commerce is tasked with overseeing various regulatory, service and licensing functions related to business and commerce across the state. The Commerce Department is further divided into specialized departments, which includes the Professional Licensing Bureau. The licensure of banks, credit unions, utilities, insurance and alcoholic beverage sale is also overseen by the Department Sand's report outlined six significant findings across these divisions, highlighting concerns regarding financial reporting accuracy, segregation of duties and compliance with statutory requirements. Among the recommendations, Sand urged the divisions to enhance controls over financial reporting and receipts, ensure compliance with specific chapters of Iowa's legal code related to targeted small businesses and board member composition. Sand also recommended implementing procedures to rectify identified deficiencies. Two findings from the previous year were reiterated: First, a financial reporting error in the insurance division. According to the audit, the division failed to report receivables (money owed to them) and related deferred inflows, totaling $966,569. This find came alongside a lease liability and related right to use lease asset, amounting to $2,633,594. These errors led to inaccuracies in the financial statements, specifically in the Annual Comprehensive Financial Report (ACFR). The second finding was a segregation of duties issue in the utilities division. In this division, Sand reported a lack of proper segregation of duties. Specifically, one individual had control over the collection, deposit preparation and reconciliation of receivable records without adequate compensating controls. This could potentially lead to unauthorized or unsupported transactions and the risk of misappropriation. Acknowledging the cooperation received during the audit process, Sand extended gratitude to the officials and employees of the Iowa Department of Commerce. The report is now available for public review on the Auditor of State's website. In response to the report's recommendations, the divisions provided detailed responses, with Sand accepting certain explanations while emphasizing the need for continued vigilance and improvement in internal controls and compliance measures. Feed your curiosity! Subscribe to the free newsletter and indulge in all that's local. Your friends will be impressed.