Objective

To determine the extent of implementation of the nine recommendations included in our initial audit report, Internal Controls Over Selected Financial Operations (2018-S-66).

About the Program

The Division of Military and Naval Affairs (DMNA) manages New York State’s military forces, which are composed of the New York Army National Guard, the New York Air National Guard, the New York Naval Militia, and the New York Guard. Its mission is to provide fully capable land, air, and naval military forces and facilities executing global missions across unified air and land operations in support of our communities, State, and nation. The DMNA headquarters property manager is responsible for maintaining a real-time database of State weapons inventory and ensuring that it accurately reflects physical inventories at the bases.

Provisions of the New York State Governmental Accountability, Audit and Internal Control Act of 1987 require DMNA to maintain a system of internal control and to promote accountability in government. Under provisions of the Division of the Budget’s Bulletin B-0350, Governmental Internal Control and Internal Audit Requirements, DMNA is among the agencies required to establish and maintain an internal audit function.

Under the terms of a Master Cooperative Agreement (MCA), the federal National Guard Bureau (NGB) reimburses DMNA for costs it incurs for the operation and training of the State Army and Air National Guard, including facilities, equipment, training, personnel, and travel expenses. NGB will reimburse DMNA for up to 5 years after the close of the federal fiscal year in which DMNA paid for covered costs. A provision in the MCA requires that DMNA retain financial and other records that relate to its performance under the MCA.

Employees who use a DMNA credit card must submit a Monthly Account Summary Transmittal report, generally no later than the 20th of the month following the close of the billing cycle, along with supporting documentation for the related purchases.

Under the State Military Law, DMNA makes pension payments to certain former service members who became disabled while performing State service within 3 years prior to applying for a pension. Monthly pension payments depend on factors such as salary and years of service and must reflect Cost of Living Adjustments and other required adjustments.

The objective of our initial audit, issued April 27, 2020, was to determine whether DMNA had adequate controls over selected financial operations to provide reasonable assurance that State assets were appropriately managed and safeguarded. During that audit, we identified numerous weaknesses in DMNA’s internal controls over the areas we tested, perhaps most notably in its handling of reimbursement requests to NGB, which resulted in nearly $1.27 million in lost reimbursements. In addition, DMNA did not maintain an internal audit function, despite the requirement that it do so. We also identified significant weaknesses in DMNA’s controls over accounting for employee credit card purchases, including lack of follow-up on unsubmitted support for purchases that were made up to 2 years prior. There were also weaknesses in the areas of purchasing policies, weapons records, and pension payments. We issued nine recommendations to address these areas.

Key Finding

DMNA has made significant progress in addressing the issues we identified, implementing all nine recommendations from the initial audit report.