A state audit released Friday found flaws with how the Maryland Department of Assessments and Taxation reviews forfeited out-of-state corporate charters and homestead tax credit applications.

The department will revise its automated auditing computer programs to improve its tracking of out-of-state companies that do business in Maryland. About 500 corporations were not adequately pursued by the department and could potentially owe $220,900 in filing fees and penalties, the audit found.

The audit by the Department of Legislative Services also found that the department could not verify that the Homestead Tax Credit was not given to ineligible homeowners, who must have lived in the property for a full tax year to receive it.

The audit recommended that supervisors in Assessments and Taxation must check the work of clerical staff who process applications for the tax credit. Since the tax credit's inception in 2007, the department had received more than 460,000 applications.