The state Liquor Control Board overstated its store fixtures, equipment and other assets in financial documents by more than $1 million because the agency does not regularly take a physical inventory, according to an annual audit by the state auditor general.
Without implementing procedures for periodically counting items, errors in financial statements will occur and go undetected in audits, the report said.
The audit, quietly released in March while state lawmakers were buzzing about the idea of privatization, looked at the fiscal year that ended in June.
As the state Senate considers legislation that would privatize the sale of wines and spirits, the LCB’s finances, value and management have come under intense scrutiny. LCB sales and tax revenue for the 2011-12 fiscal year reached nearly $2.1 billion, a 5.5 percent increase over the previous year.
Kevin Shivers, state director of the National Federation of Independent Businesses, said such accounting “missteps” in the private sector would have consequences, such as management being fired or the company being liquidated.
The audit found that in a random sample of 10 items from the LCB’s list of assets, six items valued at $1.047 million were no longer being used or were described vaguely and could not be identified by LCB officials or a store manager.
The list of assets includes items such as store shelving and signs, cash registers and warehouse machinery. It does not include wine and spirits inventory.
Stacy Kriedeman, spokeswoman for the LCB, denies its assets were overstated. She said the audit’s sample looked at fully depreciated items, or older items that were beyond their useful life.
Taking such items off the balance sheet “is an issue for many retail companies,” she said. “In all likelihood, they were replaced and disposed of but were not removed from the ledger.”
The LCB’s buildings, equipment, store improvements and other, intangible assets were valued at about $117 million last year with a depreciated value of $52.8 million, the audit showed.