Thursday, May 30, 2019

Auditor General DePasquale Urges Game Commission To Fix Its Finances, Better Monitor Gas & Oil Lease Revenues

On May 30, Auditor General Eugene DePasquale said his new performance audit shows the Game Commission should strengthen its financial oversight and hold gas and oil companies accountable for lease royalty payments.
The audit questioned the Game Commission’s assertion that it cannot factor the Game Fund’s balance – more than $72.8 million as of 2018 – as part of developing its budget or making other financial decisions.
“The Game Commission must take a careful look at how it manages all of its finances,” DePasquale said. “Beyond the nearly $73 million balance in the Game Fund, we found there was an additional $6.5 million in various escrow accounts – which the commission’s financial officer didn’t even have knowledge of the specific accounts, balances, or purposes until my audit.”
The audit report, which covered July 1, 2014 through June 30, 2017, recommends that the commission work with the Governor’s Budget Office to place its seven escrow accounts under control of the Pennsylvania Treasury, where there is more transparency.
DePasquale also said the Game Commission must do a better job tracking the millions of dollars it earns from leasing land to gas and oil producers, noting that the agency does not monitor or verify leasing royalties to ensure it collects all the money it is owed.
“Essentially, the Commission is relying on gas and oil companies to say how much money they owe,” DePasquale said. “I find the lack of fiscal controls to be particularly troubling at a time when oil and gas royalty revenues doubled, rising from $9.3 million in 2015 to $19.2 million in 2017.
“The Commission never levied interest penalties on delinquent payments and did not enforce the submission of annual production reports, which could have provided an extra layer of accountability.”
DePasquale said the Game Commission’s failure to log and promptly deposit royalty checks upon receipt created a risk of loss or potential theft of public funds.
“We found instances where checks were deposited several weeks after they were stamped received, including one which was not deposited for 63 days,” DePasquale said. “In general, the accounting of royalty payments was so poor that my auditors could not determine if the commission was receiving all the money it was due.”
He noted that the commission is doing a better job managing the sale of timber harvested to help maintain the healthy forests on state game lands.
The Commission generated $22.8 million in timber sales from 2015 to 2017 following the provisions in the Forestry Manual and Game and Wildlife Code.
During the audit period, the total number of hunting licenses sold was trending downward. For the three-year audit period, annual license sales averaged $35.4 million.
“Because license sales account for about a third of total Commission revenues, the agency should focus on retaining existing hunters and getting former hunters back into the field,” DePasquale said. “The Commission is making an effort, but seems to be struggling to address a long-term decline in the sport of hunting – much of it apparently driven by changing demographics.”
Auditors noted that the Commission did identify five core goals in its 2015-2020 Strategic Plan, yet it failed to track and compile costs associated with the specific objectives and projects needed to meet those goals.
DePasquale said the audit also showed the Game Commission could potentially reap savings from reevaluating its vehicle fleet.
“Fleet management is an area in which the commission could save some of the $3 million it spends every year in transportation-related costs,” he said, noting that eliminating the fleet of vehicles in his own department helped save $877,000 annually.
DePasquale said hunting remains a key component of Pennsylvania’s economy, generating an estimated $1.6 billion in economic spinoff activity. The sport supports thousands of businesses and related jobs.
Reaction
The Game Commission released this statement in reaction to the Auditor General’s report--
The state Auditor General’s office released findings from its recent audit of the Game Commission. The audit did not reveal the misappropriation of any funds, but identified a number of procedures the Game Commission can strengthen to ensure sound and transparent fiscal management.
The 136-page report on the audit makes a total of 40 recommendations on Game Commission procedures that could be improved.
Because the audit reviewed the Game Commission’s performance from July 1, 2014 to June 30, 2017, some of these recommendations already have been implemented independently, and the Game Commission has agreed to work toward implementing nearly all of the others.
The only recommendation with which the Game Commission disagreed involves the documentation of employee hours related to a requirement in the Game and Wildlife Code.
Section 521 of the code requires $4.25 from each resident or nonresident license sold, and $2 from each antlerless license sold, be used for habitat improvement.
The Game Commission has always complied with this requirement, and routinely sets aside significantly more than the required amount to use for habitat improvement, with the salaries and benefits of some habitat-management employees covered under the set-aside.
The Auditor General’s report recommended those employees’ holiday, sick and annual leave should not count toward the set-aside, but the Game Commission contends these costs are benefits related to the cost of habitat work, and nothing in Section 521 excludes these costs.
Otherwise, the Auditor General’s recommendations will be implemented, if they have not been already.
The Game Commission will ask the state Department of Treasury to monitor escrow accounts used to secure money to offset development-driven impacts on state game lands, and will clearly identify the monetary amounts being held in escrow and reserve when reporting the agency’s year-end revenue and expenditures.
The Game Commission will continue to conduct surveys, marketing campaigns and other initiatives geared toward increasing license sales, will retool its next strategic plan to better associate the plan’s goals with the costs of achieving them and will redouble efforts to explicitly document in meeting minutes whether lands acquired are being purchased through the Game Fund or through other agency resources, including escrow accounts.
Game Commission Executive Director Bryan Burhans said audits like the one that recently was completed always are beneficial. By identifying areas where improvement can be made, the agency can become better as a whole, he said.
“To do our best for Pennsylvania’s wildlife and citizens, we must work as efficiently and effectively as possible,” Burhans said. “Nearly all the recommendations offered by the Auditor General’s office will further improve the Game Commission’s operations and we have started to implement them. I’d like to personally thank Auditor General Eugene DePasquale and his staff for their thorough and professional review of our agency. No matter how big or small, wildlife wins with every improvement we make.”
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