BMV audit finds lack of centralized oversight caused fee errors, other problems

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Published: Tuesday, 12 May 2015 17:46

INDIANAPOLIS – An external audit of the Indiana Bureau of Motor Vehicles blames a lack of “centralized authority or oversight” for recent problems that have forced the agency to refund millions of dollars to Hoosiers.

In a 40-page report, the auditing group BKD listed eight key areas in which the BMV administration has been lacking. Most of the issues focused on ineffective or outdated technology used to manage BMV information.

BMV Commissioner Kent Abernathy said the audit “provides areas of focus helping us put together an aggressive and transformational agenda focusing on legislative, operations and systems adjustments.”

And he said the work is underway.

But even Democrats – who’ve been calling for investigations into BMV activities since it was discovered that the bureau had been knowingly overcharging customers since 2011 – say they were surprised by the extent of the issues.

“While it is no secret that there are many problems with this particular agency, it’s still astonishing to see so much documented evidence that proves the BMV is a mess,” said Rep. Dan Forestal, D-Indianapolis, in a statement. He spent much of his time during the 2015 legislative session speaking out against the BMV.

The audit found the BMV used an “ambiguous and very complex” code to administer roughly 1,200 fees and taxes to customers.

BKD said the vagueness has resulted in some fees having multiple definitions, which means customers could be charged more than once for only one transaction or offense.

“It’s all there,” Forestal said. “The agency charges too many fees that are too hard to track.”

The audit also said the BMV should review the work of those in leadership positions to ensure their effectiveness in training employees. The audit also suggested reviewing the bureau’s chain of command.

Gov. Mike Pence appointed Abernathy to lead the agency in February, replacing Don Semis, who had been working on the fee issues for a year.

“Necessary internal improvements have begun, which include the hiring of a chief of staff, adding a new chief information officer and the formation of a Central Office Internal Audit Team,” Abernathy said in a statement.

The report also said the BMV does not have a centralized authority to ensure the bureau complies with its legislative duties. BKD recommended creating a Project Management Office to ensure the bureau follows its legislative rules and regulations.

The audit said the BMV does not have any formalized policies and procedures meant to regulate changes to hardware, software and other technologies. In December 2014, BKD said system build processes were “less than adequately controlled.”

Also, the BMV’s information management system, STARS, “does not meet the requirements of end users and operational leaders,” the report said. BKD said as a result, the processing of BMV information has become “manually intensive.” The audit recommends a review of the STARS system to determine if the bureau should upgrade to a more efficient system.

Additionally, the report said the BMV does not have standardized procedures for project management and change management policies within the bureau. BKD said this lack of procedures means the office is not adequately prepared to make updates to bureau technology.

It found “errors and inconsistencies” in reporting on fees, taxes, fund names, fund allocations and effective/end dates.

Finally, an independent audit of the BMV has not been conducted for more than five years. BKD said such an audit is imperative to objectively assessing the effectiveness of the bureau.

Forestal said “it’s a shame” the report was not released during the legislative session when the General Assembly could review its content more carefully. But, he said the report’s findings shouldn’t be dismissed just because the session is over.

“Obviously, we need to do more with this report than simply admire its cover and its heft,” Forestal said. “We need to implement everything included in it, especially the reforms that address the bureaucratic inadequacies that have been too typical the past several years.”

Forestal offered two next steps to take in the BMV reorganization process. First, he said independent audits of the bureau should begin immediately. Second, Forestal called for a review of the BMV’s “labyrinth fee structure.”

“That means deciding what fees are no longer needed and, more importantly, the processes used to enact these fees,” Forestal said. And he said lawmakers should have the power to restructure these fees, not the BMV Commission.

“For their sakes, as well as the sake of the taxpayers of Indiana,” Forestal said, “the time has come for the foxes to stop guarding the henhouse.”

Abernathy said the necessary changes will be made.

“With the assessment complete, we have a benchmark of where we are and how we will move forward,” he said. “It’s time to proactively change the way we do business and make the Indiana BMV the most efficient and trustworthy motor vehicle agency in the country.”

Article writer Olivia Covington is a reporter for TheStatehouseFile.com, a news website powered by Franklin College journalism students.