Summary
| Report Number: | 2010-013 |
|---|---|
| Report Title: | Department of Revenue - Administration of Ad Valorem Tax Program - Performance Audit |
| Report Period: | For 2007 and 2008 Calendar Years |
| Release Date: | 09/11/2009 |
The results of our performance audit of the administration of the Ad Valorem Tax Program of the Department of Revenue (DOR).
Finding No. 1: DOR still has not developed uniform market area guidelines that would establish criteria for the identification of market areas by the county property appraisers.
Finding No. 2: Although the DOR's Field Manual has references to the Uniform Standards for Professional Appraisal Practice (USPAP), and DOR and other State agencies require compliance with USPAP by contracted appraisers, compliance with USPAP is not mandated for DOR appraisers.
Finding No. 3: DOR has not fully implemented the International Association of Assessing Officers statistical standards concerning the COD applicable to in-depth studies.
Finding No. 4: Problems with DOR's sampling plan caused some in-depth studies to have an inadequate number of samples in certain strata, and the lack of samples made it difficult for DOR to accurately calculate statistical measures for those strata and the overall level of assessment for those counties.
Finding No. 5: The methods used by DOR to evaluate the representativeness of the samples in its sales qualification studies could be improved to ensure independent and accurate results.
Finding No. 6: Appraisal reports and related DOR records were not always adequate to ensure that value estimates for subject properties were reliable and reasonably supported. As a result, to the extent the assessment levels published by DOR for the counties included in our review were based upon appraisal ratio studies, such assessment levels may not be accurate. Additionally, a more thorough verification of the counties' appraisal sample property characteristics is needed.
Finding No. 7: DOR did not ensure that property descriptions by county property appraisers were adequate for changes made so that appropriate changes in the population could be verified. Also, we found no evidence to support verification by DOR appraisers that affected populations identified by county property appraisers were complete. Finally, we noted instances in which DOR changed its appraisals based on 'superior' sales data provided by the county property appraiser; however, it was not obvious to us why the property appraisers' sales were considered superior and there was no explanation or documentation in DOR's records to support the supposed superiority.
Finding No. 8: DOR's policy of allowing 15 percent across-the-board adjustment for the 8th criterion (net proceeds of sale after deduction of fees and costs) has no documented basis, and an incorrect adjustment could have a significant fiscal impact on school funding and local government revenues.
Management's written response to the audit findings is included in the audit report as Exhibit A.