(The Center Square) — The Louisiana Department of Justice did not ensure proceeds for the Legal Support Fund were classified timely in the state's accounting records, according to an audit disputed by the department.
Louisiana Legislative Auditor Mike Waguespack issued a procedural report last week that evaluated certain financial controls at the Department of Justice, as well as compliance with laws and regulations and accountability for public funds between July 1, 2020 to June 30, 2022.
Auditors found the department did not have adequate controls in place to ensure that proceeds received were classified timely to the Legal Support Fund in the state's accounting records or to ensure timely notification of those deposits to the state treasurer, Joint Legislative Committee on the Budget, and Commissioner of Administration, as required by law.
“In our test of four deposits into the fund during the period of July 1, 2020, through June 30, 2022, totaling $41,913,948, three (75%) of these deposits were classified into the fund within the state's accounting system between 27 and 122 days after the DOJ had knowledge of the deposit being received,” auditors wrote.
State law requires notification to the state treasurer, Joint Legislative Committee on the Budget and commissioner of administration “immediately upon receipt of any proceeds received,” but auditors found notifications for all four reviewed occurred “between 33 and 180 days after the DOJ first had knowledge of the deposit received.”
Attorney General Jeff Landry disputed the finding in a letter to Waguespack on Aug. 7 and suggested recommendations from the LLA to implement a formal process won't fix the issue. The department also pointed to a memorandum from the Office of State Reporting and Budget officials interpreted to require classifications by June 30, with notification to follow. Auditors did not concur with that interpretation.
“Complex litigation, multidistrict litigation, and litigation involving outside counsel complicates and delays final classification,” Landry wrote. “Even if the Department were to implement formal procedures to consult with involved attorneys would aid in the evaluation of deposits received, these procedures would not lead to ‘timely' classification.”
Another finding centered on a failure to remit going-out-of-business escrow fund deposits to the unclaimed property division.
“As of June 30, 2022, there were $65,167 of deposits within the GOB Escrow Fund that were held within the fund for more than one year, and as such, should have been remitted to Unclaimed Property,” the report read.
Auditors pointed to state law that requires the department to remit deposits within a year and noted the department remitted $16,667 in deposits on June 6, 2023, following auditors' inquiries.
“The DOJ further represented that for older deposits, including those unidentifiable deposits held prior to fiscal year 2010 totaling $12,125 which are a part of the $65,167 balance … the DOJ is in the process of performing research to identify the minimum criteria necessary to remit the funds to the Unclaimed Property Division,” the report read.
“While in the process of remitting remaining funds to the Unclaimed Property Division, the Department will revise its policies and procedures for reviewing deposits within the GOB escrow fund to ensure compliance with state law,” Landry wrote.