Audit says state court system did not follow laws, regulations
An audit of the Alabama Administrative Office of Courts (AOC) found the agency failed to follow some state laws and regulations to document and safeguard the use of public funds.
The Alabama Department of Examiners of Public Accounts reported 17 instances of noncompliance in a report released on Friday. The audit covered the AOC’s operations from Oct. 1, 2017 through Sept. 30, 2022.
In response to questions about the audit, a spokesman for the AOC said, “The Examiner’s report found no instance of missing funds or misappropriation; however, the AOC will continue to ensure accountability and improve our reporting procedures.”
Several of the examiners’ findings concerned the Alabama Judicial College, which was created by the Alabama Supreme Court in 1978 as an affiliate of the AOC to provide continuing education for judges and other court employees.
The Judicial College Education Fund, set up as a non-profit corporation, pays for the education programs. The audit found that the fund was used for non-educational purposes generally not allowed with public dollars. That included money spent on alcohol, entertainment, gift cards, door prizes, trophies and plaques, and other items, the report said.
The report also cited the AOC for not disclosing to examiners the existence of the Judicial College Education Fund.
Scott Hoyem, public information officer for the AOC, responded to questions from AL.com by email.
Hoyem said the Judicial College Fund has historically not been included in the AOC’s disclosures for audits because it has operated as a nonprofit for 43 years and been considered a separate entity.
“There have been approximately 13 audits since 1978, under 10 Chief Justices and 12 Administrative Directors, where the issue has not arisen,” Hoyem wrote.
As for the expenditures from the Judicial College Fund on non-education items such as alcohol and entertainment, Hoyem said they reflect activity at educational conferences.
“The referenced items related to Conferences have historically been considered as Conference activities which were paid by participants through registration fees and were billed to the Alabama Judicial College,” Hoyem wrote. “Alcohol purchases were historically paid by the employee associations holding a particular conference through a reimbursement to the Alabama Judicial College. The purchase of alcohol is no longer allowed.”
Most of the Judicial College Education Fund’s money came from conference registration fees, $2.9 million out of a total of $3.3 million over the five years. Total spending from the fund over that period was $3.2 million.
In addition to the findings related to the Judicial College, the audit report said the AOC failed to comply with a requirement to report to the state auditor purchases of non-consumable personal property worth $500 or more, which would include property such as equipment and furniture. The state auditor keeps track of that property owned by state agencies. The AOC failed to report 171 items that had a total cost of $616,418, the examiners found.
“As a result of not having adequate controls in place, the Administrative Office of Courts does not have an accurate listing of its nonconsumable personal property and is subject to potential loss due to fraud or theft,” the report says.
The AOC contended that it provided the required documentation.
“With regard to property, the AOC provided the examiners with the property numbers that we reported to the State Auditor’s office of the 171 items,” Hoyem wrote. “We believe the discrepancies noted in the exit interview have been resolved and should not have been included in the final report.”
The exit interview was held on Jan. 23 and included Administrative Director of Courts Rich Hobson and other AOC officials, as well as representatives from the Department of Examiners of Public Accounts.
The law requires state agencies to submit contracts paid with public funds to the Legislature’s contract review committee, which goes over contracts at monthly public meetings. Lawmakers can ask questions and draw attention to contracts and put them on hold temporarily.
The report said the AOC failed to submit 65 contracts worth a total of $4.3 million to the contract review committee.
Hoyem said the 65 contracts were all from 2018. Hobson became director of the AOC in 2019.
“These contracts have been submitted to contract review for approval each year since at least 1991 and 2018 is the only known exception,” Hoyem wrote. “These contracts have been submitted for approval each year of the current administration that began in 2019.”