Report 2005-123 Highlights - January 2007

Department of Corporations:

It Needs Stronger Oversight of Its Operations and More Efficient Processing of License Applications and Complaints


Our review of the Department of Corporations' (Corporations) operations revealed the following:

  • Corporations' current fee structure results in certain licensees subsidizing the administrative costs for others. For example, revenues from securities fees have exceeded the related service costs by $22.2 million over the last seven years.
  • Corporations has taken important steps in strategic planning for its operations, however, these efforts are undercut by inaccurate statistical information about its actual performance as reported in its monthly and quarterly performance reports.
  • Corporations does not always process applications within the time limits set by state law. In fact, for applications submitted between January 2004 and May 2006, the average processing time exceeded the time allowed by law for many of the application types we reviewed.
  • Although there is no legal requirement dictating the length of time Corporations has to resolve complaints, we found examples of unneccessary delays in a sample of complaints we reviewed.
  • Corporations has three primary information systems for capturing complaint related data; however, none of them are reliable for determining the number, type, and status of its complaints because the systems contain too many blank fields, duplicate records, and errors.
  • Corporations did not conduct required examinations of at least 170 licensed escrow offices and 899 licensed finance lenders within its four-year goal.

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