Summary
| Report Number: | 2010-049 |
|---|---|
| Report Title: | Department of Financial Services - Public Deposits Program - Operational Audit |
| Report Period: | 01/2008 - 12/2008 and Selected Actions Through May 21, 2009 |
| Release Date: | 11/19/2009 |
This operational audit of the Department of Financial Services (Department) focused on the operations of the Public Deposits Program administered by the Bureau of Collateral Management (Bureau) during the period January 2008 through December 2008, and selected actions through May 21, 2009. The Department has implemented rules, policies, and procedures to carry out the requirements and otherwise operate the Public Deposits Program. Our review disclosed that, generally, such policies and procedures were effective in protecting the public deposits of government entities; however, some areas were in need of improvement, as noted in the following findings.
Oversight of the Public Deposits Program
Finding No. 1: The Qualified Public Depository Oversight Board created pursuant to Section 280.071, Florida Statutes, has been inactive since holding an initial meeting in December 2001.
Qualified Public Depository Collateral Pledging Levels
Finding No. 2: Department rules did not enumerate the circumstances under which collateral pledging levels can differ from those computed under law and existing rule.
Finding No. 3: The supervisory review and approval of Bureau financial analyses of the financial condition of selected Qualified Public Depositories (QPDs), and any resulting changes in collateral pledging levels, was not always documented.
Finding No. 4: The Bureau had not established written policies and procedures describing the types and timing of actions necessary to respond to a QPD receiving the lowest quarterly financial condition ranking.
Finding No. 5: The Bureau allowed some QPDs with the lowest quarterly financial condition rankings lengthy periods to meet the required increased collateral pledging levels.
Collateral Administration
Finding No. 6: Bureau staff responsible for resolving custodial collateral reconciling items were also responsible for processing collateral transactions, resulting in conditions under which errors may occur and be concealed from timely detection. Additionally, custodial collateral reconciliations did not include Federal Home Loan Bank letters of credit and the resolution of reconciling items was not always timely.
Finding No. 7: Bureau procedures for pricing collateral needed improvement as not all collateral was priced in a timely manner.
Program Reporting
Finding No. 8: The Bureau did not conduct a comparison of public deposit information reported by QPDs and public depositors for all those QPDs ranked in the lowest financial condition ranking category, based on established financial condition criteria of record on September 30.
Information Technology
Finding No. 9: Effective security controls include access controls that ensure that users have only the access privileges needed to perform their duties and users are restricted from performing incompatible functions. Our audit disclosed deficiencies in certain security controls.
Finding No. 10: We noted certain other deficiencies in the Bureau's security controls related to the Collateral Administration Program, the details of which have been disclosed to Department management.
Management's response is included as Exhibit A.