State of Utah

DEPARTMENT OF ALCOHOLIC BEVERAGE CONTROL

1625 South 900 West
GARY R. HERBERT P.O. Box 30408
Governor Salt Lake City, Utah 84130-0408
(801) 977-6800 Telephone
SPENCER J. COX
(801) 977-6888 FAX
Lieutenant Governor
abc.utah.gov

August 6, 2018

Re: Response to questions regarding recommendations in April 2018 DABC Audit

The Utah Department of Alcoholic Beverage Control welcomes and agrees with the findings and
recommendations of State Auditor John Dougall.
DABC has instituted or is in the process of completion of all of the auditor’s recommendations and
in several instances has gone beyond what was recommended.
The following will explain, point by point, the steps taken by DABC.

Finding 1

The DABC had previously reconciled AX to FINET on an annual basis. With the switchover to
AX by DABC in 2016, several differences were noted in AX reports and FINET reports. The
auditor recommended DABC reconcile on a quarterly basis. DABC has decided to reconcile AX
with FINET on a monthly basis to ensure more accurate reconciliation between DABC and the
Department of Finance accounting system.

Finding 2

Of 75 inventory items sampled, 9 items did not match the exact percentage of markup as set forth
in Utah Statutes. The items were entered into a date entry system that is very sensitive in retail
pricing and monitors every item handled by DABC. To avoid these errors, DABC is now
generating a report every day on prices and flags items that have an incorrect markup percentage.
These daily reports are checked by two DABC personnel.

Finding 3

DABC policy 08-02 has been reviewed to reflect the recommendations of the State Auditor and
that is currently in place. In addition, DABC decided to take it a step further and review all 16
policies that relate to purchasing. With that review, changes are being made to bring the policies up
to date with our current operating systems.
Finding 4

This is a cleanup and the DABC agrees with the recommendations. An additional person has been
hired in the financial division of DABC to assist with the preparation of the financial figure for the
2018 Annual Report which is expected be complete by late September.

Finding 5

The DABC has hired an additional staff member to help with separation of duties of cash
receipting and cash disbursing duties to include bank reconciliations. This staff member has been
employed for several months now.

Finding 6

A process was established before the June 1st deadline. Under this process, these are the steps
taken: when an employee leaves DABC, access to AX and other DABC programs is immediately
disabled. Furthermore, when an employee does not log on to the AX system for 90 days, access is
disabled. An audit process has been set up to automatically review, every 6 months, a list of
people with access and security permission and those who have been disabled.

Finding 7

Is on track to be completed before October 1, 2018. There are 200 Dyanamics AX users and all
but 15 are currently finalized with security privileges. That is a 92.5% completion rate and should
be finished soon.

Finding 8

8 and 6 are similar and go hand-in-hand. The work already completed on Finding 7 has helped us
in implementing recommendations 6 & 8. DABC has been working in collaboration with the
Department of Technology Services since before the audit was presented to generate security
configurations that create definitive roles, duties and privileges of those with need to access AX
data. A contract is currently in place with a consultant firm to assist in development of user
activity reviews and increased system security and performance.

The DABC welcomes the assistance of the Utah State Auditor’s Office in reviewing our
procedures and policies. As an organization with more than 600 employees generating more than
$450-million in annual sales, additional oversight is a positive contribution to our effectiveness
and our systems security. We work hand-in-hand with the State Auditor John Dougall to ensure
the citizens of Utah are well represented by the employees of DABC.

If you need further information, please contact me.

Terry Wood
Director of Communications and Public Information
Department of Alcoholic Beverage Control 801-977-6838 desk 801-386-3183 cell