[Southsider2k12]

http://www.nwitimes.com/news/state-and-reg...1ca8dd2e96.html

Indiana officials say $205M in local taxes mishandled

By TOM LoBIANCO Associated Press | Posted: Thursday, April 5, 2012 9:40 am | No Comments Posted

INDIANAPOLIS | The head of Indiana's Department of Revenue is resigning after state officials found that $205 million in local option income tax money owed to counties wasn't distributed.

State budget director Adam Horst on Thursday blamed the problem on a programming error.

The problem with distribution of the local income tax money comes months after the state found $320 million in corporate taxes that were collected over four years but not transferred to the state's general fund.

The revenue department says the mishandled money will be distributed with interest to the 91 of Indiana's 92 counties that have local income taxes. An outside audit will be conducted of the agency's procedures.

Department of Revenue commissioner John Eckart will step down after seven years leading the agency.

Read more: http://www.nwitimes.com/news/state-and-reg...l#ixzz1rBBE5qty

[eric.hanke]

http://www.nwitimes.com/news/state-and-reg...1ca8dd2e96.html

"Leading" or "misleading" the agency?

[Southsider2k12]

"Leading" or "misleading" the agency?

Leading himself to the unemployment line seems to be the most accurate.

[Ang]

As long as he understands that unemployment benefits don't mean "I'm not working right now" but means literally unemployed....

I was unemployed and collecting benefits. I was hired in December by H&R Block to work the tax season, which started in January. But, because I was hired in December, my benefits were stopped. I inquired why and was told that I was employed by H&R Block. I said, "Yeah, but I don't start working until January. I'm not working right now." Her reply was, "Well Ms. Peters, it's not called 'I'm not working right now benfits', it's called 'unemployment' benefits, and you are employed."

Can you say "B!t@h"?

Thank you Governor Daniels for the unemployment reform. I almost lost my house because of it.....

[Southsider2k12]

http://www.journalgazette.net/article/2012...979/1147/EDIT07

Confidence tested by state errors

“What other dollars might lie in the dusty corners of state government?” State Rep. Scott Pelath asked last December, after state officials announced they had found $320 million in misplaced revenue.

Another $206 million, it turns out.

The Michigan City Democrat’s call for an independent audit last year looks in hindsight to be a good move. It’s even more important now to restore confidence in the administration’s bookkeeping and to ensure future policy decisions are based on a clear picture of the state’s financial condition.

Republican legislative leaders acknowledged as much in calling for an independent audit after the second major accounting error was disclosed. Their refusal to do so last year left them operating without vital information.

“Every session I’ve been down there, we’ve been told there’s no money,” said Rep. Phil GiaQuinta, D-Fort Wayne. “It does shake your confidence in what they are saying. They are supposed to be the money experts.”

The Department of Revenue commissioner, John Eckart, will resign when tax season is over; two other top officials left immediately.

Some Democratic officials were calling for State Budget Director Adam Horst’s resignation, but Gov. Mitch Daniels, vacationing in Israel, said Horst should receive a commendation, apparently for revealing the errors.

With accounting errors now exceeding a half-billion dollars, it’s tough to see any heroes in the Statehouse fiscal operation. The latest error apparently comes from a programming mistake involving local option income tax revenues.

The mistake uncovered in December gave lawmakers additional money to put toward full-day kindergarten, to compensate victims of the Indiana State Fair stage collapse and to return to taxpayers as a credit on 2013 income tax filings. But the error revealed last week is money that should have been distributed to local government – more than $10 million in Allen County’s case. For all of northeast Indiana, the amount exceeded $22 million. That’s $22 million local communities could have used beginning in January 2011 for public safety or to improve streets and roads. In communities still hurting from the recession, the extra dollars would have gone a long way to bolster local spending.

Statewide, the $206 million also symbolizes undeserved grief heaped on local government officials. The Department of Revenue’s error wrongly made them out to be poor fiscal managers when, in fact, they were often on target in estimating revenues to be distributed by the state. The painful cuts they were forced to make were the flip side of an overly optimistic budget picture presented by the state.

Fort Wayne City Controller Pat Roller said the aim is always to put forth the best budget possible, based on the best information. The state’s error had serious repercussions locally.

“It impacts our infrastructure budget – paving streets and roads. We didn’t replace any of our police cars,” she said. “Those are difficult decisions.”

Roller said she’s looking forward to distribution numbers she can rely on when creating a budget.

“This is three times now,” she said. “I can understand once, even twice – but the third time? This wouldn’t happen with the city of Fort Wayne’s accounts. We know where all of our money is.”

The governor has boasted of the administration’s financial acumen, but the disclosure of a second large accounting error sorely tests those claims. The upcoming audit should be conducted with an aim of complete thoroughness. Public confidence depends on it.

[Southsider2k12]

http://hosted.ap.org/dynamic/stories/I/IN_...EMPLATE=DEFAULT

State finds little accounting for $526 million in Indiana tax errors; more could be found

By TOM LoBIANCO
Associated Press

INDIANAPOLIS (AP) -- It turns out all the Indiana Department of Revenue really needed was an IT audit.

Of course, to the layman, the fact that such a thing exists is probably a surprise, let alone that it would have caught $526 million worth of tax errors that resulted in layoffs, pay cuts and other strains associated with the massive budget cuts made over the last four years.

While the $526 million figure is a simple, if massive number, on the surface, underneath that massive amount of money are hundreds of thousands of individual financial transactions and decades of statutes and politics.

The $320 million error found in December was discovered through one of 28 tax "streams" that carry the sales, income, corporate and other taxes into the state. The $206 million mistake that the state discovered earlier this month was money supposed to be sent out to the counties. In both problems, computer programming is being blamed, specifically errors in the state's tax return processing system.

State Board of Accounts chief Bruce Hartman, who conducted an initial review for lawmakers, says his agency is only required to conduct a sweeping financial audit and reviews triggered by allegations of waste and fraud. It isn't required to conduct IT audits, which would have caught this $526 million in errors.

The complex issue has launched an intense political battle over who should get to pry, and where.

Gov. Mitch Daniels originally said his administration would handle the financial review alone. The Legislature's Republican leaders later insisted on having their say in how the audit is done. Democrats have called for an expansive independent audit that would look beyond computer programming errors.

"Is there anything we are looking at today that would go beyond programming to operational checks and controls?" asked Sen. Karen Tallian, D-Portage, during a State Budget Committee hearing Friday at which lawmakers discussed the problems.

Hartman responded by ticking off a Bubba-Gump Shrimp-style list of reviews designed to catch errors before they grow into hundreds of millions of dollars and start costing people their jobs:

"There are a number of types of audits," he said. "There are financial audits, there are compliance audit, there are internal audits done by staff of the agency, there's IT audits and there are efficiency or operational audits."

And then there's the trigger, the point at which inside an audit things get examined more closely. The industry term is "materiality." Broadly, for Indiana, the "materiality" trigger is $70 million. Things below that level don't get a separate vetting because there just isn't enough time or resources to check every single blip, Hartman said.

Error is built into the equation.

Indeed, the state's local income tax process itself has error built into its equation. The state hands out money to counties based on last year's collections, and the two are constantly adjusting who owes who what.

John Mikesell, a professor of public budgeting at Indiana University, noted that the transfers between other states and their localities are routine and almost never perfect.

"Correct allocations between state and local components and between localities has been a problem in other states in the past, but the Indiana error sets a record for size of the mistake," Mikesell wrote in an email to The Associated Press.

A deputy director for the Federation of Tax Administrators has called Indiana's $320 million error "eye-catching," noting that states routinely have errors in their collections, but nothing quite of that magnitude.

The problem in this case, says State Budget Director Adam Horst, is that the traditional tools for catching mistakes would not necessarily have worked. For instance, changing the "materiality" trigger would not have worked because the numbers being generated for the reports themselves were wrong, he said.

"That materiality threshold would not have changed their finding," he said. "If you don't find it in the first place, whatever that number is - whether it's 70 million, or 20 million or 10 million - is somewhat irrelevant."

Horst, however, has noted routinely throughout each budget debacle that the state's internal safeguards did eventually kick in.

The person who started unraveling this whole thing upon discovering one small, but tangible error last November? An unnamed internal auditor.

Still, it took three years before investigators found the first thread of this massive problem, and it took another few weeks after the initial discovery to determine there was a $320 million problem. That $320 million problem, in turn, led state workers to discover the first traces of the $206 million error announced earlier this month.

The problems aren't likely to stop here. Horst says there are "indications" of more errors. But he doesn't want to jump the gun with any announcements before his internal "reconciliation" review is completed.

---

Tom LoBianco can be reached at http://www.twitter.com/tomlobianco

[Southsider2k12]

http://www.courierpress.com/news/2012/jun/...-million-mista/

TERRE HAUTE, Ind. — Indiana's state budget leaders on Monday are expected to take another step toward finding what caused more than $500 million in tax revenue errors but a final answer is still a long way off.

Members of the State Budget Committee plan during a meeting in Vincennes to sign off on a company that will begin outlining an external audit for the state's Department of Revenue.

The review follows the disclosure in December that $320 million in corporate tax money that had been collected over several years hadn't been properly deposited in the state's general fund. State officials then announced in April that $205 million in local income tax revenue had been mishandled and not distributed over the previous 14 months Indiana counties.

An initial review of the first error by the State Board of Accounts showed that the state lacked the auditing capabilities to have discovered the problem on its own. Since then, Republican legislators agreed to an external audit.

That agreement marked something of a vindication for Democrats, who tried twice during a December budget committee meeting to authorize an external audit but were voted down both times, 3-2.

The start of the actual audit could still be up to six weeks away after the company being hired Monday establishes the review's scope.

Democratic gubernatorial candidate John Gregg has called on the state to speed up the process. But leaders of the budget committee say they are moving as fast as they can.

"This audit is a major undertaking, and one that must be done right," said Republican Rep. Jeff Espich, the committee's chairman. "Time is of the essence, but there is no benefit — only pitfalls — to rushing unnecessarily."

State budget director Adam Horst, an appointee of Republican Gov. Mitch Daniels, cautioned at the committee's April meeting that more errors will likely be uncovered but said he wasn't ready to disclose them.

The budget committee, made up of two Republican and two Democratic legislators and Horst, is meeting at Vincennes University.

[Southsider2k12]

http://www.wane.com/dpp/news/indiana/india...m-in-tax-errors

Indiana panel gets audit after $526M in tax errors

Updated: Monday, 17 Dec 2012, 1:33 PM EST
Published : Monday, 17 Dec 2012, 1:33 PM EST

TOM LoBIANCO, Associated Press


INDIANAPOLIS (AP) -- Indiana's budget leaders are getting a detailed review of how the state mishandled $526 million in tax collection.

Members of the State Budget Committee are scheduled to review international accounting firm Deloitte's detailed investigation of Indiana's revenue department Monday afternoon.

Deloitte's audit results come roughly a year after Gov. Mitch Daniels disclosed the first major error -- the misplacing of $320 million in corporate tax collections. The found money was used to pad the state's coffers and pay for a year of full-day kindergarten.

The panel also received an update on how the "fiscal cliff" could send the state and the nation into a recession, but the state's economic consultant said he expects Washington leaders to cut a deal avoiding that.