August 18, 2020

How to prevent painful audits

On Jan. 9, 2018, the Mississippi State Auditor released a scathing audit of the Mississippi Board of Cosmetology. The executive director who had presided over what the audit called a “dereliction of duty in regards to the cosmetology profession” had since retired. A new executive director had begun “implementing policies and procedures to correct the issues raised in this report.” What had happened during fiscal year 2016, however, was eye-opening.

Auditors discovered the following:

  • The board did not deposit any license or fee revenue from about October 2016 until about June 2017.
  • The value of undeposited cash receipts exceeded $368,000.
  • Cash, money orders and checks were found stuffed in drawers and filing cabinets.
  • Receipts were not logged or accounted for when received.
  • Cash appeared to be missing from several receipts.
  • Receipt log books were lost or destroyed.
  • No internal controls existed for cash receipts: Amounts were not logged, and no audit trail was maintained.
  • Temporary employees were hired to help count cash receipts, and they often were left without supervision or controls.

Given the financial disorganization within the agency, it was no surprise that the audit noted a “severe backlog” of licenses that had not yet been issued. In some cases, in fact, biennial licenses were sent to licensees 12 months after they had paid license fees.

Many of the challenges the cosmetology board experienced four years ago could have been eliminated by the effective use of a licensing software system such as GL Suite, which automates the processing of licenses, renewals and other tasks done routinely by regulatory professionals. The efficiency gained through effective software automation – especially involving data entry – might have eliminated Mississippi’s need to hire temporary employees to process applications in the first place.

GL Suite is designed to help licensing agencies manage fees and other financial resources. Through GL Suite, agencies can set and collect fees for all services they offer. The application creates invoices for all monetary events that occur within the database, and it can be configured to generate invoices automatically as part of the application and renewal process. Invoices are linked automatically to the licenses or employers to which they are related. The system creates an easily followed audit trail that makes errors easy to spot and correct while discouraging misbehavior by unscrupulous staff.

To enhance efficiency, GL Suite contains a Quick Pay feature that allows payments to be processed from the system. Users can enter payment information for numerous licenses, exams and other services from a single screen. GL Suite can even accommodate partial or split payments.

GL Suite helps agencies balance the books with powerful reporting capability. Running daily deposit summaries and month-end summaries is simple.

The system alleviates the need to keep a separate log book, which can be lost or destroyed, as happened in Mississippi. When paired with public websites, in fact, GL Suite can allow licensees to submit and pay for renewals online, eliminating work for staff and piles of checks and cash that can end up in file cabinets and drawers.

Key GL Suite payment processing features include:

  • Financial management, including fee collection, invoicing and tracking.
  • Agencies can set fee amounts and fee increases and decide which records to apply them to.
  • Invoice creation for all monetary events.
  • Unique validation numbers can be created for each payment or batch of payments.
  • Financial reports such as daily deposit summary and month-end summary.
  • QuickPay feature allows users to enter payment information for many licenses and exams from one screen.

Image from Mississippi State Auditor

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