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A Review of the Offices of the Comptroller General and the State Treasurer
November 1997

SUMMARY (PDF)

Members of the General Assembly requested that the Legislative Audit Council conduct an audit of the Office of the Comptroller General and the Office of the State Treasurer. We reviewed the function and organizational structure of the two offices and considered the advantages and disadvantages of combining them. We also reviewed operations to identify areas of duplication and inefficiency and to determine whether specific management practices were in accord with statutory and other requirements.

We found that combining the two offices would likely result in minimal savings and could have an adverse affect on the state's system of financial checks and balances. While we did not identify major operational problems in either agency, we have made recommendations to improve efficiency and cost effectiveness in the state's financial management and in the two offices' internal operations. Our findings are summarized below.

Organizational Structure and Duplication Issues
We reviewed the offices of the comptroller general and the state treasurer to determine the advantages, disadvantages, and potential savings to the state if they were combined. We found:

  • Having two agencies for the comptroller and treasurer functions is the practice in most other states. Forty-five states in addition to South Carolina have separate treasurer and comptroller offices. Only three states have combined comptroller and treasurer functions within a single agency.
  • Savings from merging the operations of the two agencies would probably not be significant. We reviewed three areas of similar function in the two offices--executive management, administration, and data processing--to determine whether substantial staff reductions and savings would result from combination. Significant reductions would not be likely because the staff in each agency is relatively small, they already share some resources, and each office provides unique services to external entities.
  • Merger could impact the state's system of financial checks and balances. As provided by state law, the current organizational structure requires that each office maintain its own financial records to provide a check of the other office.

We reviewed specific functions of the two offices to determine whether there is unnecessary duplication.

  • Both the Office of the State Treasurer and the Office of the Comptroller General collect and compile information on capital leases for financial reporting purposes. It would be more efficient for the comptroller general's office to assume this responsibility.
  • Both the comptroller general's and state treasurer's offices disburse funds to local governments. However, they disburse funds for different programs and purposes, and we found no evidence of duplication.
  • Separate communication between the comptroller general's office and the treasurer's office and bond rating firms results in minimal duplication.

Statewide Issues
The comptroller general's and treasurer's offices have responsibilities for statewide financial management. Our review resulted in some recommendations with statewide applicability.

  • The treasurer's office may not be earning maximum interest rates on its certificates of deposit. Current methods of purchasing CDs do not take into account the state's position as a large investor and do not recognize that higher interest rates may be available from banks in other states. For each tenth of a percentage point that South Carolina does not earn on $130 million in CDs, the state loses $130,000 annually.
  • The Budget and Control Board's policies for procuring the services of bond attorneys may unnecessarily restrict the flexibility of state agencies. Also, we could not find justification for dividing the authority to approve the procurement of these services between the attorney general's office and the Budget and Control Board.
  • The state may not be recovering from private companies the full cost of processing employee payroll deductions. Also, the comptroller general's office has made deductions for some organizations that do not meet the minimum employee participation level required by law.

Internal Operations
We also made recommendations to the two agencies to improve internal operations.

  • Although travel expenditures by both offices were generally found to be in compliance with regulations, there were some instances in which lodging costs could be considered excessive. We recommend that the General Assembly consider setting a limit on the amount of lodging reimbursement for both in-state and out-of-state travel.
  • A number of statewide elected officials may be driving state cars that are not cost effective.
  • The treasurer's office has taken steps to include all anticipated revenues and expenditures in its budget requests. However, more detail is needed to provide adequate information to members of the General Assembly.