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Military Department State of Alabama Department of Examiners of Public Report on the Military Department State of Alabama Montgomery, Alabama October 1, 2014 through September 30, 2019 Filed: June 19, 2020 Department of Examiners of Public Accounts 401 Adams Avenue, Suite 280 Montgomery, Alabama 36104-4338 P.O. Box 302251 Montgomery, Alabama 36130-2251 Website: www.examiners.alabama.gov Rachel Laurie Riddle , Chief Examiner 20-403 State of Alabama Department of Examiners of Public Accounts P.O. Box 302251, Montgomery, AL 36130-2251 401 Adams A venue, Suite 280 Montgomery, Alabama 36104-4338 Rachel Laurie Riddle Telephone (334) 242-9200 Chief Examiner FAX (334) 242-1775 Honorable Rachel Laurie Riddle Chief Examiner of Public Accounts Montgomery, Alabama 36130 Dear Madam: An examination was conducted on the Military Department, Montgomery, Alabama, for the period October 1, 2014 through September 30, 2019, by Examiners Kirk A. Moore, William J. Carter, and Sheri A. McMullen. I, Kirk A. Moore, served as Examiner-in-Charge on the engagement, and under the authority of the Code ofAlabama 1975, Section 41-5A-19, I hereby swear to and submit this report to you on the results and finding of the examination. Respectfully submitted, Kirk A. Moore Examiner of Public Accounts rb 20-403 Table of Contents Page Summary A Contains items pertaining to state legal compliance. Comments C Contains information pertaining to agency operations and other matters. Schedule of State Legal Compliance and Other Findings E Contains detailed information about findings pertaining to state legal compliance and other findings. Exhibit #1 Schedule of Cash Receipts, Disbursements and Balances 1 Exhibit #2 Armory Commission Members and Military Department Officials – a listing of the Commission Members and Officials. 2 ___________________________________________ Military Department State of Alabama Department of Examiners of Public Accounts SUMMARY Military Department October 1, 2014 through September 30, 2019 The Military Department (the “Department”) is responsible for the organization, maintenance, support, upkeep, administration, armament, training and discipline of the Alabama National Guard. The Department operates under the authority of the Code of Alabama 1975, Sections 31-1-1 through 31-3-7 and Article XV, Sections 271 through 278 of the Constitution of Alabama 1901. The Armory Commission (the “Commission”) is the corporate arm of the Military Department and operates under the authority of the Code of Alabama 1975, Sections 31-4-1 through 31-4-19. This report presents the results of an examination of the Department and the Commission and a review of compliance by the Department and Commission with applicable laws and regulations of the State of Alabama. This examination was conducted in accordance with the requirements of the Department of Examiners of Public Accounts under the authority of the Code of Alabama 1975, Section 41-5A-12. Our examination was performed to determine whether the public officers, agents, and employees of the Department and Commission properly and lawfully accounted for all money and other public assets or resources received, disbursed, or in the custody of the Department and Commission. Our examination included determining compliance by the Department and Commission with state laws and regulations that pertain to financial transactions; personnel; safeguarding of state-owned assets, property, and resources; information dissemination, processing, and retention; and official actions, rulemaking procedures, and meetings. As a part of our examination, we also reviewed internal control policies and procedures relating to the areas listed above. Our examination did not encompass managerial and operational matters, such as whether the Department and Commission accomplished its mission or its regulatory, enforcement, investigative, or other oversight activities in an efficient, fair, timely, or legal manner. 20-403 A Findings are numbered and reported by the examination period in which the finding originally occurred. The following instance of noncompliance with State laws and regulations and other matters was found during the examination as shown on the Schedule of State Legal Compliance and Other Findings and it is summarized below. UNRESOLVED PRIOR FINDING • 2009-01 relates to the Department not adequately monitoring the operation of the bank accounts to ensure they were being maintained in accordance with established guidelines. Major General Sheryl E. Gordon, the Adjutant General, was invited to an exit conference held on June 4, 2020. Individuals in attendance were Major General Gordon, Brigadier General Jeff Newton, Colonel Johnny R. Bass, Colonel Mark Weeks, Nakia Tetter, Burt Rowell, along with James Hall, Brad Grier, and Kirk Moore from the Department of Examiners of Public Accounts. 20-403 B Department of Examiners of Public Accounts COMMENTS Military Department October 1, 2014 through September 30, 2019 The Military Department (the “Department”) operates under the authority of the Code of Alabama 1975, Sections 31-1-1 through 31-3-7 and Article XV, Sections 271 through 278 of the Constitution of Alabama 1901 and is responsible for the organization, maintenance, support, upkeep, administration, armament, training and discipline of the Alabama National Guard. The Armory Commission (the “Commission”) operates under provisions of the Code of Alabama 1975, Sections 31-4-1 through 31-4-19, and is the corporate arm of the Military Department. The Armory Commission holds title to all lands and facilities of the Alabama National Guard and is responsible for providing buildings, equipment and facilities for housing, instruction, training and administration of all units of the Alabama National Guard. The Armory Commission is comprised of the Governor of Alabama, the Adjutant General of Alabama, the Attorney General of Alabama, the two highest-ranking Army National Guard officers, the highest-ranking Air National Guard officer, and three duly qualified electors of Alabama appointed by the Governor. Members appointed by the Governor serve six-year terms. The head of the Military Department is a commissioned officer of the National Guard of Alabama and is designated as the Adjutant General. That person shall be designated and assigned to duty as the Adjutant General by the Governor and shall serve as Adjutant General at the pleasure of the Governor. The Adjutant General is appointed from among active officers of the federally recognized National Guard and shall have had at least six years of service therein, two years of which must have been in the line and shall have served as a commissioned officer in the active National Guard for not less than four years. The Department operates from the General Fund and the following special revenue funds: • Military-Federal Army Fund (0385) – Federal share of Operations and Maintenance for the Army National Guard. • Military Billeting Fund (0444) – Accounts for transactions associated with the operation and maintenance of quarters for guard personnel at the Alabama National Guard training sites. Guard personnel reimburse the Military Billeting Fund for use of the quarters. 20-403 C • Counterdrug Operations, U. S. Treasury Fund (0935) – Funds received from the U. S. Treasury for the Department’s portion of property confiscated in counter-drug operations. • Counterdrug Operations, U. S. Attorney Fund (0937) – Funds received from the U. S. Attorney’s Office for the Department’s portion of property confiscated in counter-drug operations. • Military-Federal Air Fund (1173) – Federal share of Operations and Maintenance for the Air National Guard. • Military-Federal Capital Projects (1174) – Federal share of major construction projects. Bank accounts are utilized to account for Military Unit Funds (0817) and National Guard Canteen Funds (0818) operated at the Guard Unit level. There are 13 bank accounts for the Military Unit Funds and 6 bank accounts for the National Guard Canteen Funds. All of these bank accounts operate outside the State Treasury. The funds in these checking accounts are not used for the operations of the Military Department or Armory Commission, and therefore, are not included in the Schedule of Cash Receipts, Disbursements and Balances (Exhibit 1). The Department owned nonconsumable personal property consisting of vans, trucks, tractors, office furniture, computers and equipment. Nonconsumable personal property in the custody of the Department was compared with property records maintained by the Property Inventory Division of the State Auditor’s Office. No discrepancies were noted. 20-403 D Schedule of State Legal Compliance and Other Findings E Schedule of State Legal Compliance and Other Findings For the Examination Period Ended September 30, 2019 Ref. No. Finding/Noncompliance 2009-01 Finding: The Military Department maintains Canteen Fund bank accounts and Unit Fund bank accounts. The Department has developed written regulations governing the use of these bank accounts. We reviewed records related to the operation of several of these bank accounts and noted numerous errors. It does not appear that the Department adequately monitored the operation of the bank accounts to ensure they were being maintained in accordance with established guidelines. Errors noted include required reports not being submitted or not being submitted timely; bank statements and related reports not being available for review; and inadequate documentation of the disposition of funds in closed bank accounts. Since all required reports were not submitted, we could not determine
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