An Audit Report on the Expenditure of State Asset Forfeiture Funds at the Dallas County District Attorney's Office

October 2015

Report Number 16-007

Overall Conclusion

The Dallas County District Attorney's Office (District Attorney's Office) had significant weaknesses in its processes for the expenditure of state asset forfeiture funds. Based on expenditure data provided to auditors, the District Attorney's Office spent from its State Asset Forfeiture Fund a total of $1,250,829 in fiscal years 2013 and 2014.

Auditors identified expenditures for which the District Attorney's Office used state asset forfeiture funds that, in auditors' opinion, did not comply with state requirements. Specifically, of the 306 expenditures tested for fiscal years 2013 and 2014, 30 expenditures (10 percent) totaling $105,722 included transactions totaling $80,048 that, in auditors' opinion, did not comply with Texas Code of Criminal Procedure, Chapter 59 (Chapter 59). Those unallowable expenditures included:

- A $47,500 legal settlement in fiscal year 2014. The settlement was related to a claim against Dallas County and the former district attorney.

- Outside counsel fees totaling $16,525 related to a contempt matter in which the former district attorney was a defendant. The District Attorney's Office was not allowed, in auditors' opinion, to use state asset forfeiture funds to pay those fees.

- Travel-related expenditures totaling $11,647. Those expenditures included hotel rates and per diems in excess of allowable rates, and some were missing receipts.

- Donations and other expenditures totaling $4,376 that did not meet the provisions set forth by Chapter 59 regarding donations and expenditures for the official purpose of the District Attorney’s Office.

In addition, auditors identified 56 expenditures (18 percent of the 306 tested) totaling $90,381 that included transactions totaling $71,049 that did not have adequate documentation to allow a determination about allowability.

The District Attorney's Office did not ensure that expenditures of state asset forfeiture funds were adequately documented, approved, and monitored. Specifically, the District Attorney's Office:

- Did not adequately document and record expenditures made with state asset forfeiture funds or perform adequate competitive purchasing procedures.

- Did not have current, documented policies and procedures for requesting, reviewing, and approving expenditures made with state asset forfeiture funds.

- Did not adequately monitor its equipment purchases and maintenance to ensure that assets purchased using state asset forfeiture funds were safeguarded.

- Did not adequately document and follow up on anticipated reimbursements for expenditures of state asset forfeiture funds.

In addition, while the District Attorney's Office submitted a budget for fiscal years 2013 and 2014, it should improve its budgeting process by providing more detailed budget information that includes clearly defined budget categories.

Chapter 59 permits the expenditure of state asset forfeiture funds solely for the official purpose of the District Attorney's Office (see Appendix 2 for more information about Chapter 59). There are a few types of purchases for which the use of state asset forfeiture funds is expressly prohibited. In addition, the Texas Local Government Code requires competitive procurement procedures for purchases. Auditors identified several provisions of Chapter 59 that could be strengthened to increase accountability and transparency for the use of state asset forfeiture funds.

The U.S. Department of Justice reviewed the District Attorney's Office's controls over and expenditures of federal asset forfeiture funds. In its report issued in May 2015, the U.S. Department of Justice identified internal control deficiencies and unallowable expenditures. Until those issues are addressed, the District Attorney's Office is under a "Do-Not-Spend requirement" for federal asset forfeiture funds.

Auditors communicated other, less significant issues related to state asset forfeiture budgets, monthly bank reconciliations, and revenue processes separately in writing to the District Attorney's Office.

It should be noted that, during the course of this audit, the State Auditor's Office received a complaint regarding potential fraud relating to revenue deposits at the District Attorney's Office. The State Auditor’s Office has requested additional information from the Dallas County Treasurer's Office and the Dallas County Auditor's Office to review the complaint.

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