UPDATE: Audit finds BMV lacked oversight, had ambiguous fees

The Indiana Bureau of Motor Vehicles lacks oversight, uses a complex fee schedule that leads to inconsistent charges for the same transactions and may have overcharged motorists more than previously disclosed, according to an independent audit released Monday.

The 38-page report by the accounting firm BKD LLP said that during the audit 16 new overcharges were discovered that could mean refunds for drivers. BMV spokesman Josh Gillespie said the agency won't know the amount of the overcharges or how many drivers were affected until late June.

Those come in the wake of BMV officials acknowledging the agency has overcharged motorists by more than $60 million since 2013. The most recent acknowledgement came in February when Gov. Mike Pence announced he was seeking legislation to streamline the agency's fee structures because it had overcharged drivers $2 million in six years.

The BMV admitted last September it has overcharged state residents $29 million in refunds and a year earlier settled a class-action lawsuit that accused the BMV of overcharging customers $30 million. The audit also found 10 additional undercharges to motorists. Gillespie said the BMV will not attempt to recover the undercharges.

Irwin Levin, the attorney who led that class-action lawsuit and has another lawsuit pending against the BMV, said the public should be outraged at how incompetently the agency has been run.

"I'm pleased that because of our lawsuit, they were put into a corner and had to have someone do an outside investigation," Levin said.

Kent Abernathy, who took over as BMV commissioner three months ago, said internal improvements already have begun, including the hiring of a chief of staff and a new chief information officer and the formation of a central internal audit team.

"The assessment provides areas of focus helping us put together an aggressive and transformational agenda focusing on legislative, operations and systems adjustments," Abernathy said in a prepared statement.

The report said the BMV is responsible for administering 1,200 unique fees and taxes and that fees did not always match the names in the code, requiring judgment and creating a risk of error by workers. The report recommended that the BMV not only work with the Legislature to review, reduce and simplify the code structure, but also demonstrate a commitment to establish a workforce capable of supporting the agency's mission.

BKD also recommended that agency management evaluate the effectiveness and proficiency of key leadership positions and "act as necessary to address shortcomings."

"The current culture operates in a reactive mode versus proactively monitoring for instances of noncompliance or control failures," the report found. "Without an internal audit function, there is limited assurance as to the adequacy and effectiveness of management's internal control system and related processes."

The report said that while the branch operations were independently audited on a consistent basis, the central office had not been subject to an internal audit for a number of years.

BKD also found problems that allow "transactional errors to occur." For example, the report said the BMV has different fees for a "plate swap" and a "plate transfer" transaction, but doesn't clearly define when each applies. It also doesn't say when a registration should be treated as a new registration.

Levin said he believes a court should oversee all the refunds, saying the BMV can't be trusted to pay back all the money it overcharged motorists. He has a second case pending against the BMV that alleges the agency drivers possibly as much as $38 million in excessive charges for a number of fees and services. Marion County Superior Court Judge John Hanley is scheduled to hear a motion on May 18 by the BMV, which is seeking to have the lawsuit dismissed.