$1.1 million in irregularities uncovered at City’s consolidated tax office
City of El Paso officials received a tip through the employee ethics hotline while auditing the Consolidate Tax Office which resulted in uncovering irregularities.
The irregularities were in accounting for actual expenditures by utilizing the overpayments account for transactions that should have been budgeted as operating costs, according to a statement by the City.
According to the audit, in six different instances certain payments for other items were being deducted from the overpayments accounts prior to the distribution; the majority of these payments should have been included as operating expenses for the Consolidated Tax Office.
The City said there is no evidence of fraud and all evidence shows that the expenses were appropriate operating costs, but were not properly recognized as expenses or disclosed as such.
About $1.1 million of such expenditures have been identified from records reviewed by the City’s Internal Audit. The net impact is that the annual budget has been under-reported, per parcel costs artificially reduced, and reimbursements to taxing entities from the overpayments account subsequently reduced.
What is the Property Tax Overpayment Account?
Any overpayments to the property tax are to be held and accounted for separately until such time as the taxpayer requests a refund or a three-year relinquishment period has lapsed. At the end of that three-year period, all taxing entities receive a distribution of its proportionate share of the lapsed overpayments. Communications and Public Affairs Two Civic Center Plaza El Paso, TX 79901
What corrective action has or is being taken?
• All taxing jurisdictions have been notified of the audit and related problems.
• The Consolidated Tax Office has been placed under direct oversight of the City’s Chief Financial Officer to assure greater coordination and transparency for all transactions. This includes fully integrating the Tax Office financial system into city-wide PeopleSoft ERP system.
• An interim management team has been put in place pending recruitment for a new Tax Collector to replace the recently retired director. That team includes the City’s Treasurer and Lead Auditor who will develop formal policies and procedures to govern all activities going forward.
• The Tax Office Advisory Committee is being reconstituted, which is a requirement of the MOU but not adequately utilized to review operations, annual budget and monitor performance in recent years.
• Reporting requirements to participating entities will be updated and compliance insured.
A “Fiduciary Relationship” exists between the Consolidated Tax Office and the 34 Taxing Entities which it serves. The audit results indicate that the CTO staff failed to meet their fiduciary duty of appropriately safeguarding the property taxes collected on behalf of the 34 Taxing Entities under contract with the Consolidated Tax Office.
Based on the internal audit and its findings, the report has been referred to the El Paso Police Department, Special Investigation Group (SIG) for further review, which is a standard practice in these situations. This situation will be regularly monitored to ensure all corrective actions are taken. City officials are grateful that oversight systems now in place are working. Programs such as the “Ethicsline” continue to assist in protecting the integrity of City government.
Source: City of El Paso
