State audit: Utah may be losing out on alcohol tax revenue

State audit: Utah may be losing out on alcohol tax revenue

(Shutterstock)


Save Story
Leer en español

Estimated read time: 2-3 minutes

This archived news story is available only for your personal, non-commercial use. Information in the story may be outdated or superseded by additional information. Reading or replaying the story in its archived form does not constitute a republication of the story.

SALT LAKE CITY — The Utah Department of Alcoholic Beverage Control's failure to check the accuracy of sales reports from some liquor outlets could result in the loss of tax revenue to the state, a new audit shows.

A state financial audit released Tuesday says the agency does not monitor monthly reports submitted by breweries, distilleries and winery package agencies that are used to calculate the tax on their income.

Not verifying the reports might give them an incentive to underreport their sales, which could create a "substantial" loss of funds earmarked for public safety and the school lunch program, according to the audit.

The finding was among several flawed accounting and management practices the state auditor's office identified in its annual financial review of DABC. Others include:

• Inadequate separation of duties and lack of secondary reviews for various accounting procedures.

• Limited business experience outside the department, making it difficult to put best practices in place.


A state financial audit released Tuesday says the agency does not monitor monthly reports submitted by breweries, distilleries and winery package agencies that are used to calculate the tax on their income.

–State Financial Audit


• No polices or procedures for picking orders in the warehouse for shipment to state liquor outlets potentially leading to inventory inaccuracies.

Sal Petilos, DABC executive director, said the department is reviewing its internal control to make sure finances are being handled correctly. The department is working on recommendations from past audits as well, he said, adding that some can be implemented immediately while others take time.

The audit did not say how much potential tax revenue Utah could lose as a result of not scrutinizing sales reports from package agencies, which contract with DABC to sell alcohol on premises, often in rural areas, not owned or leased by the state. The state collects a portion of their revenue as alcohol tax.

Auditors also noted that the department is not enforcing a rule that package agencies submit their reports by the fifth of each month.

"I think that's something that we really need to look at," Petilos said.

DABC intends to conduct one unannounced audit of package agencies a year as well as announced audits.

Petilos said he did not know how much the alcohol tax figures into annual DABC revenue, which last year totaled $87.8 million.

State Auditor John Dougall suggested DABC hire consultants in the retail industry to help improve its management and accounting practices.

Petilos said the agency, which had its budget cut $500,000 by the Legislature, can't afford to hire consultants or send all of his staff to training, though it has sent some to various conferences.

Related stories

Most recent Utah stories

Related topics

UtahPolitics
Dennis Romboy

    STAY IN THE KNOW

    Get informative articles and interesting stories delivered to your inbox weekly. Subscribe to the KSL.com Trending 5.
    By subscribing, you acknowledge and agree to KSL.com's Terms of Use and Privacy Policy.

    KSL Weather Forecast