Analysis of Internal Audit Report of Texas Department of Motor Vehicles

This presentation provides an analysis of the internal audit report of Texas Department of Motor Vehicles. It covers the responsibilities, staffing, number of audit reports issued annually, key charter requirements, audit findings, recommendations, and acceptance of recommendations. The presentation also includes 10 findings related to compliance, inventory, fraud, waste, and abuse risk, payment card industry compliance, social media, and regional service centers.

Texas Department of Motor Vehicles
Analysis of Internal Audit Report

Responsibilities, Staffing and Number of Audit Reports
issues annually:
Responsibilities:
Promotion of safe driving practices among the owners of
motor vehicles in Texas.
Requiring owners and operators for discharging their
financial responsibility to others for damage done to
others’ property and lives.
Ensuring adherence to the driving rules, established by
the department.

Staffing and Number of Audit Reports issues annually
Staffing:
The Texas Department of Motor Vehicles (TxDMV) is
authorized to staff 779 full time equivalent positions in
Fiscal Years (FY) 2018 and 2019.
Audit Reports:
Each year the Texas Department of Motor vehicles,
publishes an yearly annual audit report and an internal
follow up report, after publishing the former.

Key Charter Requirements as per IIA:
As per IIA, the Audit Charter of (TxDMV) contains the following
contents:
Mission: Contains purpose of the internal audit activity.
Objectives: Provisions and nature of assurance activities.
Role and Scope of work: Role of internal audit.
Independence: How independence is maintained.
Access: Unrestricted access to records.
Reporting: Proper reporting to appropriate authorities.
Responsibilities: Responsibility for fraud investigations and overall findings.
Planning: Addressing the different aspects of plans and its execution.
Quality: Making arrangements for quality development.

Analysis of Audit report of Texas Department of Motor
Vehicles:
The concerned report is a compliance report with the Texas
Government Code, Section 2102.015, which deals with posting
of internal audit report , annual report and other information on
the internet.
Key Audit findings:
IAD had identified areas of improvement related to reviewing of
audits, development of audit plan of the Motor Carrier Division
(MCD).
The TxDMV complies with the the Payment Card Industry (PCI)
Security Standards Council for the safeguard of card information.

Recommendations:
 IAD had provided six recommendations for reviewing audits, developing an
audit plan and creation of an electronic process for conducting and storing
audit recommendation for the Motor Carrier Division (MCD).
 The IAD found opportunities for TxDMV for strengthening processes for
protecting customers personal information from inappropriate uses.
 The IAD issued seven recommendations for improving audit in case of
Payment Card Industry (PCI) Compliance with Credit Card Information
Storage.
 All the recommendations issued by IAD were accepted by TxDMV.

Acceptance of recommendations and of
recommendations which address the
causes:Areas of
recommendation:
Number of
recommendation:
Percentage addressing
the causes:
Reviewing of audits,
development of audit
plans and creation of an
electronic process for
conducting and storing
audit information
A total of 6
recommendations have
been provided by the
internal audit committee.
The TxDMV is vigorously
working on audit
recommendations issued
in the report. The TxDMV
expects implementing all
recommendations by
December 2017. No
expected percentage
report has been provided
by the company’s internal
system in this regard.
Improvement of audit in
case of Payment Card
Industry (PCI) Compliance
with Credit Card
Information Storage.
A total of 7
recommendations have
been provided by the
internal audit committee.
The TxDMV is actively
working on addressing the
recommendations issued
in this audit. The TxDMV
anticipates that all audit
recommendations will be

Number of audit reports published:
The Texas Department of Motor Vehicles had finalised a total of 5
audits and two advisory services for the fiscal year 2017. These
audits were a result of either a carry forward of the internal audit
department’s 2016 fiscal year audit plan. The TxDMV Board
approved the Fiscal Year 2017 Annual Internal Audit Report on
October 19, 2017. Thus, a single annual audit report was thereby
issued by the TxDMV for the fiscal year 2017.

10 Findings:
Findings Conditio
n
Cause Criteria Effect Evidenc
e
Data
Analytic
s
Number
&
Percent
age
An Audit
on
Complian
ce of
Audit
Process
with
Texas
Registrati
on Plan
The IAD
identified
areas of
improve
ment
related to
reviewing
audits.
Allowanc
e of
licensed
commerci
al
vehicles
that to
obtain
registrati
on
credentia
ls in one
jurisdictio
n.
Risk
based
methodol
ogy.
The
TxDMV
is
actively
working
on the
recomme
ndations
No
evidence
found
Seven
data
analytical
tools
were
identified
and used.
No such
numbers
found.
TxDMV
Fund
Tables
and
Process &
With the
change,
most of
the
TxDMV
Change
of
method
of finance
from
Risk
based
methodol
ogy.
The
TxDMV
is
actively
working
No
evidence
found
Seven
data
analytical
tools
were
$93.2
million
revenue
had been
deposited

Findings:
Findings Condition
s:
Cause: Criteria: Effect: Data
Analytics
:
Number&
Percenta
ge:
Inventory Increase in
the
amount of
capitalized
and
controlled
assets.
TxDMV
had over
8,300
capitalized
and
control
assets
that had
an initial
cost of
$11.9
million
Risk based
methodolo
gy.
with input
from
TxDMV
and other
sources.
Enquiry
into the
inventory
details of
the
departme
nt.
Seven
data
analytical
tools were
used.
Capitalizat
ion had
costed
$11.9
million.
Fraud,
Waste,
and Abuse
Risk
Increased
water and
abuse
risks.
A risk
assessme
nt has not
been
Risk based
methodolo
gy.
with input
Increased
alertness
in the area
of frauds
Seven
data
analytical
tools were
No such
numbers
found.

Findings:
Findings: Condition
s:
Cause: Criteria: Effect: Data
Analytics
:
Number
&
Percenta
ge:
Payment
Card
Industry
(PCI)
Complianc
e
Customers
’ credit
cards are
accepted
for some
of the
departme
nt’s
transactio
ns
Verificatio
n of the
safeguard
of the
cards.
Risk based
methodolo
gy.
with input
from
TxDMV
and other
sources.
Increased
upon of
focus on
card
protection.
Seven
data
analytical
tools were
used,
about
which no
details
have been
divulged.
No such
numbers
found.
Social
Media
Presence
of risk if
there is
difference
It is used
by both
private
and public
Risk based
methodolo
gy.
with input
Increased
upon of
focus on
social
Seven
data
analytical
tools were
No such
numbers
found.

Findings: (Contd.)
Findings: Condition
s:
Cause: Criteria: Effect: Data
Analytics
:
Number
&
Percenta
ge:
Regional
Service
Centres:
Monitoring
whether
RSCs are
meeting
their
expectatio
ns.
The
Regional
Service
Centres
(RSCs)
plays an
integral
role in
serving
the TxDMV
customers
.
Risk based
methodolo
gy.
with input
from
TxDMV
and other
sources.
Close
watch
over RSCs
performan
ce.
Seven
data
analytical
tools were
used,
about
which no
details
have been
divulged.
No such
numbers
found.

Compliance with Information Distillation and
Audit report crafting:
The audit report has adequately followed all
the provisions of information distillation, by
auditors who have raised questions and have
communicated effectively, leaving no space
for errors of judgment of any kind.
The audit report of the Texas Department of
Motor Vehicles has followed all the important
points of clarity, specificity, reporting more
strategically with use of key words.

References:
TXDMV.GOV - Home. (2018). Retrieved from
https://www.txdmv.gov
Www.sao.texas.gov, (2018). Retrieved from
http://www.sao.texas.gov/Documents/SummaryReports
/SAO%20Information%20Technology%20Common%20
Audit%20Issues.pdf
Johnson, P. L. (2014). U.S. Patent No. 8,781,885.
Washington, DC: U.S. Patent and Trademark Office.
Rahm, D., Fields, B., & Farmer, J. L. (2015).
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