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Audit Report 2014-10 Parks and Recreation - Immokalee Sports Complex - Follow-Up Cash Review
InternalAuditDepartment AuditReport2014-10 ParksandRecreationDepartment ImmokaleeSports Complex(IMSC) Follow-upCashReview DwightE.Brock ClerkoftheCircuitCourt 3299TamiamiTrailEast Suite#402 Naples,FL34112-5746 www.collierclerk.com Issued:June18,2014 1 Preparedby:MeganGaillard,SeniorInternalAuditor ReportDistribution:BoardofCountyCommissioners LeoOchs,Jr.,CountyManager MarkIsackson,Director,CorporateFinancial&ManagementServices SteveCarnell,PublicServicesAdministrator BarryWilliams,Director,ParksandRecreation AnnieAlvarez,RegionalManager,ParksandRecreation IlonkaWashburn,OperationsManager,ParksandRecreation DerrickDimas,ParksProgramSupervisor,IMSC,ParksandRecreation JeffKlatzkow,CountyAttorney Cc:DwightE.Brock,ClerkoftheCircuitCourt CrystalK.Kinzel,DirectorofFinance&Accounting JamesD.Molenaar,InternalAuditManager TABLEOFCONTENTS SUMMARY..................................................................................................................................2 OBJECTIVES...............................................................................................................................2 SCOPE..........................................................................................................................................2 BACKGROUND..........................................................................................................................2 STATUSOFORIGINALAUDITOBSERVATIONS................................................................3 ADDITIONALOBSERVATIONS,RECOMMENDATIONS,&MANAGEMENT RESPONSES................................................................................................................................4 CONCLUSION.............................................................................................................................6 ADDITIONALMANAGEMENTCOMMENTS........................................................................6 EXHIBITA–NOSALETRANSACTIONREVIEW................................................................7 EXHIBITB–AUDITREPORT2012-8......................................................................................9 Thefilesanddraftversionsofauditreportsremainconfidentialandprotectedfrompublicrecordsrequests duringanactiveauditunder Nicolaiv.Baldwin(Aug.28,1998DCAofFL,5 th District)andFlorida Statute119.0713.Work-paperssupportingtheobservationsnotedwithinthisreportwillbecomepublic recordandcanbemadeavailableuponrequestoncethefinalauditreporthasbeenissued. 2 TheDraftAuditReportwasinitiallyreviewedwiththeParksandRecreationDepartmentonJune3,2014andwas releasedtotheDepartmentformanagementresponseonJune4,2014.CountyManagementprovidedCounty ManagementResponsesonJune13,2014. Summary Basedonfollow-upauditwork,InternalAuditisclosingsixoftheoriginalsevenImmokaleeSportsComplex (IMSC)auditobservations(86%).Thereviewindicatestheseconcernshavebeenaddressedandcorrectivechanges havebeenimplementedbytheParksandRecreationDepartment.Oneauditobservationremainspartiallyopen (14%)forIMSCandthreeadditionalconcernshavebeenidentifiedduringthefollow-upcashreview. TheDepartmenthasimprovedincontrollingthecashhandlingprocessfortheImmokaleeSportsComplex.The Departmentshouldensurethepropercontrols,policies,andproceduresareinplacetolimitriskanderror. Objectives InternalAuditperformedafollow-upreviewoftheIMSCchangedrawerandrelatedcashhandlingprocesses.The objectiveofthereviewwastodeterminewhethercorrectiveactionsweresufficienttoaddressInternalAudit findingsfromAuditReport2012-8(ReferenceExhibitB-AuditReport2012-8ParksandRecreationDepartment– ImmokaleeSportsComplexCashCounts ). Scope Thereviewconsistedof,butwasnotlimitedto,thefollowingtasks: ReviewofFloridaStatuteChapter219CountyPublicMoney,HandlingbyStateandCounty; ReviewoftheClerk’sFinanceDepartment’sAccountingProceduresManual(includingpoliciesand procedures); ReviewofapplicableParksandRecreationPoliciesandProceduresManual; ReviewofthemostrecentCertificateandRequestofImprestFundupdateforms; ReviewofCLASSPointofSalereports; ComparisonofthemostrecentinformationprovidedbyClerk’sFinancetotheinformationgatheredduring fieldwork; Completionofunannouncedcashcountsofthechangedrawers(ImprestFunds)onMarch13,2013and May27,2014;and Interviewsofcustodianandsub-custodians:inquiringaboutandobservingtheproceduresusedtoaccount forandsafeguardtheirrespectivefunds. Background AtaregularmeetingheldonFebruary26,2013,theBoardofCountyCommissioners(BCC)unanimously requestedtheClerk’sOfficevalidatecorrectiveactions(i.e.controls)fortheImmokaleeSportsComplex(IMSC). InternalAuditcompletedafollow-upforAuditReport2012-8ParksandRecreationDepartment–Immokalee SportsComplexCashCounts(March2013andMay2014)todetermineiftheoriginalauditobservationswere corrected. Foradditionalcashhandlingbackground,information,andpreviousobservations(ReferenceExhibitB-Immokalee SportsComplex:CashCountsAuditReport2012-8 ). 3 StatusofOriginalAuditObservations Thebelowtablessummarizetheoriginalauditobservationsnotingthestatusatthecompletionofthefollow-upcash review.TheoriginalauditreportcanbeviewedontheClerk’swebsiteat www.collierclerk.com underClerktothe Board–InternalAudit–PublishedReports;AuditReport2012-8ParksandRecreationDepartment–Immokalee SportsComplex–CashCounts:2011FiscalYearEndand2012Follow-Up. DescriptionofOriginal Observation StatusFollow-UpAuditComments 1TheAnnualConfirmationwasnot returnedtoFinancebytheduedate andhasnotbeenreturnedonayearly basis. ClosedAnnualconfirmationswerereturnedtoClerk’sFinancefor FY2012andFY2013.Bothannualconfirmationswere returnedlatebasedonextenuatingcircumstancesandwere notconsideredanexception.Nofurtherreviewdeemed necessary. 2CertificateandRequestofImprest Fundformshavenotbeenupdated andprovidedtoFinanceaschanges occurred. Partially Open InformationprovidedtoFinancebytheParksand RecreationDepartmentwasaccurateanduptodateatthe timeoftheunannouncedcashcountinMarch2013,but wasinaccurateatthetimeoftheMay2014unannounced cashcount. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatoneImprestFundsFormwasnotupdatedtimely.The Departmentwillredoubleeffortstocompleteandsubmitformsinatimelymanner.” DescriptionofOriginalOther Observation StatusFollow-UpAuditComments 1ParksandRecreationstaffwere unabletolocateamanualcash register. Closed Thereisnolongeramanualcashregisteratthelocation. Documentationtoremovethemanualcashregisterfromthe assetrecordswasprovidedtoClerk’sFinanceinAugust 2012. 2LockerFeeRevenuehasbeen recordedasPoolPassRevenueand currentlyisnotbeingmonitored. Closed Alockerfeebuttonwascreatedtoproperlyrecordlocker revenue. 3Manualkeysareusedtooverride automatedcashregistercontrols. Closed Cutkeys/manualkeyshavebeensecuredinthesafeand arenotbeingused.“NoSale”transactionshavebeenused toproperlydocumentnon-cashtransactions. 4Depositshavenotbeenmadein accordancewithParksandRecreation PolicyAF0004. Closed Threemonths(Oct.2013,Nov.2013,andDec.2013)were selectedfortestingat100%foralldeposits.Threedeposits wereonedaylate(1.26%ofthepopulation).Depositsfor theIMSCappeartohavebeencompletedwithintwo businessdays98.74%ofthetime.Theoriginalfindingis consideredclosed;nofurtherreviewdeemednecessary. 5ItdoesnotappearCashControlLogs arebeingused. Closed Cashcontrollogshavebeenimplementedandwere observedatthetimeoftheunannouncedcashcount. CountyManagementResponse : “TheParksandRecreationDepartmentappreciatesInternalAudit’sacknowledgementofimprovedcontrolsin safeguardingCountyfunds.” 4 AdditionalObservations 1)Originaldocumentationwasalteredandcorrectionsnotproperlynotated(March2013). Itappearsemployeesand/orsupervisorshaveusedcorrectiontapeand/orfluid(White-Out)tomakecorrectionson originaldocumentation,suchas,deposittrackinglogs.Whencorrectiontapeand/orfluidareusedonadocument,it makesitimpossibletodeterminewhatunderlyinginformationwaschangedandcompromisestheintegrityofthe document. Correctionsshouldbecrossedoutandcorrectedwithoutusingcorrectiontapeand/orfluid.Whencorrectionsare made,theemployeeand/orsupervisorshouldproperlyinitialallchanges. Whenoriginaldocumentationisaltered,theintegrityofthedocumentationandaudittrail(Note:anaudittrailisa recordofchangesand/oractionsthathaveoccurred)iscompromised.Unauthorizedalterationscircumventthe controlsinplacethatensuretheaccuracyandlegitimacyofthedepositlogsandcashrecords.Thisexposesthe Countytoincreasedriskandpotentialfraud. Recommendations: Correctiontapeand/orfluidshouldnotbeusedonoriginaldocumentation. Allchangestorecordsshouldbeproperlyapprovedandcontaintheemployee’sinitials. Aclearaudittrailshouldbeinplacetorecordchangesandactions. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatcorrectiontapeorfluidwasusedin2013.TheDepartment hasconfirmedwithInternalAuditthatthispracticewasnotobservedatthislocationduringthefollowupin May2014,norhasitbeenobservedduringrecentmanagementsitevisits.TheDepartmentwillcontinuetotrain employeesonthepropermethodformakingcorrectionstodocumentsandwillmonitorforcomplianceduring routinesitevisits.” 2)Inadequatecontroloverthe“NoSale”featureforaccess(October2012–March2014). ParksandRecreationPolicyandProceduresManualNumberAF0001“CashHandlingandRegisterOperation” procedure#8requiresthe“NoSale”button(notacutkey/manualkey)tobeusedforopeningandclosingthecash registeratthestartandendofeachshift. DuringInternalAudit’sreviewof“NoSale”transactionsfromOctober1,2012throughMarch11,2014(Reference ExhibitA),therewere55of527days(approximately10.4%)without“NoSale”entriesortransactionsthatdidnot haveanentryforopeningandclosingasrequiredbythepolicy.Policiesandproceduresshouldbeconsistentand accuratelyreflectoperationstoensureaproperaudittrail.Whenentriesarenotproperlyrecordedand/or documented,theintegrityoftheaudittrailiscompromised. AstheDepartmentprovidedadditionaltrainingtoParksandRecreationstaff,thetotalnumberof“NoSale” exceptionsdecreasedeachmonth.ThemajorityoftheexceptionswereinFY2013. “NoSale”transactionsshouldbemonitoredandtrainingprovidedwhenemployeesarenotproperlyfollowingthe policiesandprocedures.Bynotcontrolling“NoSale”transactions,theCountyisexposedtofraudandtheft. Recommendations: “NoSale”transactionsshouldbeproperlyreviewedandmonitored. AdditionaltrainingshouldbeprovidedtoParksandRecreationemployeestoensureeachemployeeunderstands thepoliciesandproceduresforcashhandlingincluding“NoSale”transactions. Aclearaudittrailwithconsistentproceduresshouldbeinplace. 5 CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatitspolicyonNoSaletransactionswasnotfollowedstrictly. TheDepartmentappreciatestheacknowledgementthatperformanceinthisareahasimprovedovertime.The DepartmentwillcontinuetotrainemployeesontheproperuseanddocumentationofNoSaletransactionsandwill reviewandmonitorthesameforcompliance.” 3)Revenuehasbeenallocatedtoincorrectcostcenters(March2014). TheCLASSPointofSale(POS)ItemListingreport(InformationasofMarch11,2014)wasreviewedforrevenue allocation.EachitemwastracedtotheGeneralLedger(G/L)Accounttodetermineiftherevenuewasbeing appropriatelyallocated. Thereweretwoitemsthatwereallocatedtothewrongcostcenter(CostCenter156343ImmokaleeCommunity Parkinsteadof156349ImmokaleeSportsComplex). CareshouldbetakenwhenenteringitemsintotheCLASSPOSsystemtoensuretherevenuesareproperlyrecorded byfundandcostcenter.Whenallocationsarecompletedtothewrongcostcenter,thefinancialinformationmaybe inaccurate. Recommendations: Revenuesshouldbeallocatedtotheappropriatefund/costcenter. CountystaffshouldreviewandcorrectallParksandRecreationlocationsforsalesallocationstoensureproper routing. Countystaffshouldcompleteadjustingentriesforrevenueallocatedtothewrongfund/costcenter. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthattwopoint-of-saleitemswereallocatedtothewrongcost centers.Thefiscalimpactofthismisallocationwas$0inFY13and$0inFY14.Nonetheless,theDepartment recognizestheopportunityforerrorpresentedwhenoutdatedorincorrectinformationremainsinthedatabase.A thoroughreviewandupdateofthePointofSaleinventoryinthedatabasewillbecompletedastimepermitsand conductedperiodicallythereafter.” 6 Conclusion Basedonfollow-upauditwork,InternalAuditisclosingsixoftheoriginalsevenImmokaleeSportsComplexaudit observations(86%).Thereviewindicatestheseconcernshavebeenaddressedandcorrectivechangeshavebeen implementedbytheParksandRecreationDepartment.Oneauditobservationremainspartiallyopen(14%)for IMSCandthreeadditionalconcernshavebeenidentifiedduringthefollow-upcashreview. TheParksandRecreationDepartmentshouldhavewrittenpoliciesandproceduresregardingsystemscontrolsand properlytrainemployeestoensureproperunderstandingandcompliance.Whenemployeesdonotcomplywiththe policiesandprocedures,thisincreasestheriskoflossoffundsanddisruptionstooperations. TheParksandRecreationImmokaleeSportsComplexFollow-upCashReviewindicatestherecontinuetobeareas ofconcernandexposuretorisk.TheDepartmenthasimprovedincontrollingcashhandling;however,additional trainingandmonitoringarenecessary.TheDepartmentshouldensurethepropercontrols,policies,andprocedures areinplacetolimitriskanderror. Auditsdonotrelievemanagementoftheirresponsibilities.ItistheresponsibilityofCountyManagementto understandandimplementtheproperproceduralcontrolsinordertoreduceandlimittheriskoffraud,error,and misappropriationofCountyassets.InternalAuditmayrecommendimprovementsinauditreports,butultimatelyit isthedutyanddecisionofCountyManagementtoformulateprocessesandcontrolsthatensurecompliancewith FederalRegulations,FloridaStatutes,CountyOrdinance,andCountyPolicies. Recommendations: Thedirectororanindependentemployee(notacustodian,sub-custodian,orcashierofthefund)should continuetoperformperiodiccashcountsofthedepartment’simprestfundsonanon-routinebasistoensurethat thecustodian,sub-custodians,and/orcashiersarecomplyingwiththeCounty’spoliciesandproceduresand adequatedocumentationexistsforauditpurposes. Additionally,InternalAuditwillcontinuetoperformunannouncedcashcounts. Trainingshouldcontinuetobeprovidedtoallcustodians,sub-custodians,andcashierstoensurethey understandthepolicies,procedures,andformsgoverningthechangedrawer. Additionaltrainingshouldbeprovidedtoallcustodians,sub-custodians,andcashierstoensuretheyunderstand howtoprintCLASSreportsandoperatethePOSsystem. Changemachineshouldbesecuredtoensurecashisnotplacedinmachinewithoutbeingdepositedand/or removethemachineifitisnotneededforoperations. AdditionalCountyManagementComments: “TheParksandRecreationDepartmentappreciatestheopportunitytoimprovecontrolsthroughtheauditand followupprocess.TheDepartmentwillcontinuetoupdatePoliciesandProceduresasnecessarytoimprove controls,trainemployeesonPoliciesandProcedures,andmonitorforcompliance.” InternalAuditComments : InternalAuditwouldliketoacknowledgethecooperationandassistancefromCountystaffforaddressingand implementingadditionalcontrolsbasedonInternalAuditrecommendations.Theassistanceandresponsesprovided bytheParksandRecreationDepartmentgreatlyassistedintheauditprocess. 7 8 9 10 InternalAuditDepartment AuditReport2012–8 Parks&RecreationDepartment ImmokaleeSportsComplex CashCounts:2011FiscalYearEnd and2012Follow-Up October2012 DwightE.Brock ClerkoftheCircuitCourt 3299TamiamiTrailEast Suite#402 Naples,FL34112-5746 www.collierclerk.com 11 Preparedby:MeganGaillard,InternalAuditor ReportDistribution:BoardofCountyCommissioners LeoOchs,Jr.,CountyManager SteveCarnell,InterimPublicServicesDivisionAdministrator BarryWilliams,ParksandRecreationDirector IlonkaWashburn,OperationsManager,ParksandRecreation AnnieAlvarez,RegionalManager,ParksandRecreation DerrickDimas,InterimSupervisor,ImmokaleeSportsComplex Cc:DwightE.Brock,ClerkoftheCircuitCourt CrystalK.Kinzel,DirectorofFinance&Accounting TABLEOFCONTENTS Background...............................................................................................................................................2 Summary...................................................................................................................................................2 Objective...................................................................................................................................................3 Scope........................................................................................................................................................3 Observations,Recommendations,andResponsesforChangeDrawerFunds.........................................4 OtherObservations,Recommendations,andResponsesforChangeDrawerFunds...............................5 Conclusion................................................................................................................................................9 AdditionalManagementComments.........................................................................................................9 Thefilesanddraftversionsofauditreportsremainconfidentialandprotectedfrompublicrecordsrequestsduringan activeauditunder Nicolaiv.Baldwin(Aug.28,1998DCAofFL,5 th District)andFloridaStatute119.0713. Workpaperssupportingtheobservationsnotedwithinthisreportarepublicrecordandcanbemadeavailableupon requestoncethefinalauditreporthasbeenissued. 12 TheDraftAuditReport2012-8,datedOctober2012,wasinitiallyreviewedwiththeDepartmentonOctober 11,2012andwasreleasedtotheDepartmentformanagementresponseonDecember4,2012.The ManagementResponsewasprovidedbyBarryWilliams,DirectorofParksandRecreation(notatedin purple)onDecember18,2012. BACKGROUND TheFinanceDirectorrequestedthatInternalAuditperformanauditoftheCounty’sImprestFunds,toincludechange drawerfunds.Therequestwasbasedonconcernsthatthecustodianand/orsub-custodianmaynotbefollowingthe County’spoliciesandproceduresforoperationsofthesefunds.TheFinanceDirectorrequestedafollow-upauditasa resultofterminationofthecustodianofthechangedrawerfund. Imprestfundpoliciesandproceduresdefinetheauthorizedusesoffundsprovidingthestructureforhowdepartments establish,modify,spend,replenish,safeguard,anddiscontinuetheuseofthefundsinaccordancewithFloridaStatute. TheClerkhasestablishedauthoritativeguidelinesforthesafeguardingofcountyresourcesintheFinanceAccounting ProceduresManualeffectiveOctober1,2008. ChangedrawerfundsareusedtomakechangewheremoneyiscollectedduringtransactionsofCountybusiness. SUMMARY Thefollowingauditobservationsforchangedrawerfundsweregeneratedduringthereview: 1.TheAnnualConfirmationwasnotreturnedtoFinancebytheduedateandhasnotbeenreturnedonayearlybasis. 2.CertificateandRequestofImprestFundformshavenotbeenupdatedandprovidedtoFinanceaschangesoccurred. Thefollowingauditotherobservationsweregeneratedduringthereview: 3.ParksandRecreationstaffwereunabletolocateamanualcashregister. 4.LockerFeeRevenuehasbeenrecordedasPoolPassRevenueandcurrentlyisnotbeingmonitored. 5.Manualkeysareusedtooverrideautomatedcashregistercontrols. 6.DepositshavenotbeenmadeinaccordancewithParksandRecreationPolicyAF0004. 7.ItdoesnotappearCashControlLogsarebeingused. ImprestfundpoliciesandproceduresneedtobefollowedtoprovidetheFinanceDepartmentwithaccurateinformation foryear-endreporting,toprovidetheexternalauditorsreliableinformation,andtosafeguardtheCounty’simprest funds. ParksandRecreationPoliciesandProceduresforchangedrawersandcashhandling(partialreview)havenotalways beenadheredtobyParksandRecreationstaff.Staffshouldbeproperlytrainedtoensuretheyunderstandpoliciesand beheldaccountableforcompliance. InternalAuditComment : InternalAuditgratefullyacknowledgesthecooperationandassistancefromParksandRecreationstaff. 13 OBJECTIVE InternalAuditperformedanauditoftheImmokaleeSportsComplexchangedrawerandapartialreviewofrelatedcash handlingprocesses.Theobjectiveoftheauditwastodetermine1)whetherthecashfundsexist,2)whetherinternal controlsoverthecashfundsareadequate,3)whetherimprestfunddataisreliable,and4)whethercustodiansare incompliancewithcountypoliciesandproceduresastheyrelatetotheauditedprocesses. SCOPE Theauditreviewconsistedofvalidatingthecustodiansandimprestfunds,includingbutnotlimitedtothefollowing tasks: ReviewoftheFinanceDepartment’sAccountingProceduresManual(includingpoliciesandprocedures); ReviewofFloridaStatuteChapter219CountyPublicMoney,HandlingbyStateandCounty; ReviewofParksandRecreationPoliciesandProceduresManual(November2011andApril2012updated); ReviewthemostrecentCertificateandRequestofImprestFundupdateforms; ReviewthemostrecentannualconfirmationpriortoFY2011andthereturnedFY2011annualconfirmationform; Comparisonofthemostrecentupdatestotheannualconfirmations; ComparisonofthemostrecentinformationprovidedbyFinancetotheinformationgatheredduringfieldwork; CompletionofunannouncedcashcountsofthechangedrawerImprestFundonAugust23,2011,andafollowup cashcountonMay11,2012;and Interviewcustodiansinquiringaboutandobservingtheproceduresusedtoaccountforandsafeguardtheir respectivefunds. 14 OBSERVATIONSFORCHANGEDRAWERSFUNDS 1)TheAnnualConfirmationwasnotreturnedtoFinancebytheduedateandhasnotbeen returnedonayearlybasis. ChangeDrawerProceduresItem7statesthecustodianorsub-custodianisresponsibleforreturningtheverifiedAnnual ConfirmationtoFinance,includingallupdates,bytheAnnualConfirmation’sspecifiedduedateonayearlybasis. ThechangedrawerannualconfirmationwasnotreturnedbytheduedateandhasnotreturnedAnnualConfirmationson ayearlybasis.TheannualconfirmationincludedanupdatedCertificateandRequestofImprestFundsformtoupdate changes.Theformwasnotsignedandapprovedbythedirector. IftheAnnualConfirmationform,includingallupdates,isnotcompleteandreturnedbythedeadlineprovided,funds maynotbeproperlyrecorded. Recommendations: Custodiansorsub-custodiansshouldreturntheAnnualConfirmations,includingallupdates,bytheduedate. WhenCertificateandRequestofImprestFundformsarecompleted,thedirectorshouldapproveallchanges. ManagementResponse : UpdatedconfirmationformswereprovidedtotheFinanceDepartmentinSeptemberafterconsultationwith Financestaff.TheseformsareupdatedannuallyandclarificationwasreceivedbytheParksDepartment regardingprovidingupdatesthroughouttheyear.TheParksandRecreationDepartmenthashiredapayroll fiscaltechnicianwhowillensureannualconfirmationnoticesarecompletedeachAugustforthecomingyearas wellasmaintainingthecurrencyofchangesincustodian,sub-custodian,andcashiersthroughouttheyear. 2)CertificateandRequestofImprestFundformshavenotbeenupdatedandprovidedto Financeaschangesoccurred. ChangeDrawerPolicyItem5requiresanewCertificateandRequestofImprestFundformtobecompletedand submittedeachtimethereisachangetothecustodianand/orsub-custodian,director,orphysicallocation. AnnualConfirmationsreturnedforFY2011year-enddidnotincludechangesthathaveoccurred.OnAugust23,2011, thesub-custodianstatedhewouldcompleteanupdatedCertificateandRequestofImprestFundform.Itdoesnotappear thisoccurred. OnMay11,2012,thechangedrawerfundhadacustodianandsub-custodianlistedwhoarenolongeremployeesof CollierCounty.Thereisasub-custodianlistedwhonolongerworksatthelocation.Therearetwoemployeeswhohave accesstothechangedrawerarenotlistedassub-custodians. Ascustodiansandsub-custodianschange,itisimportanttoupdatetheCertificateandRequestofImprestFundForm andensurethatonlyauthorizedcustodiansandsub-custodianshaveaccesstotheimprestfund. Recommendations: Thepoliciesandproceduresshouldbefollowed.Authorizationsshouldbeimmediatelyupdatedforchangesin custodiansandsub-custodians,withappropriatetrainingonpoliciesandprocedures. CertificateandRequestofImprestFundformsshouldbeupdatedtocomplywithpolicy. Uponcustodianchanges,anofficialcountofthechangedrawerfundsshouldbecompletedanddocumented, approvedbytheterminatingcustodian,thenewcustodian,andthesupervisor. 15 TheDepartmentshouldcreateaninternalpolicythatprovidesproceduresaddressingpotentialsituationsand changestothecashprocesses. ManagementResponse : WhiletheImprestFundcustodianswillberequiredtoprovidechangesastheyoccur,theParksandRecreation Departmenthasimplementedapolicywhereoperationsstaffwillprovideaquarterlyaudittotheimprestfunds inordertoensurenochangeshaveoccurredandifchangesaredetectedarereportedtoFinanceimmediately. OTHEROBSERVATIONS 1)ParksandRecreationstaffwereunabletolocateamanualcashregister. TheFY2011YearEndAnnualAssetsInventoryReportprovidedtotheParksandRecreationDepartmentbyClerk’s FinancewasreturnedonSeptember1,2011,signedbytheParksandRecreationDirectorconfirmingtheImmokalee SportsComplexwasinpossessionofaSanyo645CashRegister(manualcashregister).TheAnnualAssetsInventory WorksheetindicatedtheassetwasinfairconditionandoriginallypurchasedonJuly31,1996. OnMay11,2012,InternalAuditcompletedasitevisitwithParksandRecreationstaff.TheSanyo645CashRegister wasunabletobelocated. OnAugust2,2012theSanyo645CashRegisterwasdisposedfromCountyrecordsbecausetheitemwasunabletobe found. Amanualcashregisterisanadditionalcashintakepointthatshouldbeproperlysafeguarded,controlled,andmonitored. Whenthemanualcashregisterisusedforoperationsattheendofthedaytheamountcollectedinrevenuesshouldbe enteredintotheCLASSPOSsystemtoproperlyrecordtherevenue.Whenmanualcashregistersarenotproperly safeguarded,aperson/employeecouldcollectcashwiththemanualcashregisterwithoutrecordingtherevenueas Countyincome.Withoutpropercontrolsinplaceforcashintakepointsitispossiblecashmaybestolen,revenuenot recorded,andassetsmisstated. Recommendations: TheDepartmentshouldsafeguard,control,andmonitorcashintakepoints. TheDepartmentshouldproperlymonitorassetsandsubmittheappropriateformswhenchangesoccur. ManagementResponse : Staffreportsthatthecashregisterinquestionwasanoldermodelthatwasdamagedanddisposed.Adisposition formhasbeencompletedontheitemandturnedintoFinance.TheDepartmentworkswithFinanceannuallyto reviewallassetsassignedtotheDepartmentforinventorypurposes.Operationsstaffisprovidingroutinespot checksofinventorybetweenannualreviewstofurtherensurepropertrackingofassets.TheDepartmentwill reviewprotocolsassociatedwiththisinventoryinordertoensureitemsaredisposedproperly.TheDepartment isalsoworkingwithanagency-wideinitiativeregardingassettracking. InternalAuditResponsetoManagementResponse : Anyinformation(i.e.registertapes,records)shouldbepreservedpriortothedisposaloftheasset. 16 2)LockerFeeRevenuehasbeenrecordedasPoolPassRevenueandcurrentlyisnotbeing monitored. OnAugust23,2011,CountystaffstatedlockerfeerevenuewasrecordedaspoolpassesintheCLASSPointofSale (POS)system.CountystaffstatedtheywerecreatinganiteminthePOSsystemforlockerfeerevenuetoensure revenuewasproperlyrecorded. OnMay5,2012,theITDepartmentreviewedthePOSsystemfortheImmokaleeSportsComplexandverifiedthatno POSitemhadbeencreated. OnMay11,2012,Countystaffstatedtheyhavenotbeencheckingthelockersforrevenueandhavenotbeenrecording revenue.StaffwasunawareofhowtherevenuewouldberecordedinthePOSsystem. Recommendations: TheDepartmentshouldcreateaniteminthePOSsystemforrecordinglockerfeerevenue. TheDepartmentshouldcreateaninternalpolicythatprovidesproceduresforthefrequencyofrecordinglocker revenue,howfundsarecollectedfromthelockers,andhowtorecordrevenueintheCLASSPOSsystem. ManagementResponse : Staffconcurswiththerecommendationsassetforthherein.TheParksandRecreationDepartmentOperations staffhasprovidedanalternativekeyforlockerfeerevenuesdistinctfrompoolpassrevenuesandarecurrently recordingitinCLASSaslockerfeerevenue.Operationsstaffwillupdatecurrentinternalproceduresregarding thecollectionandtrackingoflockerrentalrevenue. 3)Manualkeysareusedtooverrideautomatedcashregistercontrols. OnMay11,2012,Countystaffhadamanualkeyforthecashregister.Themanualkeyisbeingusedtoopenthecash registerasneededforputtingthestartingbankinthechangedrawer,makingchangeforpatrons,andremovingthe startingbank/depositattheendoftheshift. TheCLASSPOSsystemhasano-salefeaturethatshouldbeusedtopreventtheneedforamanualkey.InFebruary 2012,apromptwasaddedtotheno-salefeaturethatrequiresCountystafftoenterareasonforopeningthecash register.Thereshouldbetwono-saleentriesperday:onetoputthestartingbankintothecashregisterandonetoopen thecashregisterattheendofthedaytocompletethedeposit. Theuseofamanualkeyoverridesthecashregistersautomaticcontrolsandincreasestheopportunityforunrecorded transactionsand/ortheft. TheParksandRecreationRegionalManageragreedthatmanualkeyscircumventedtheno-salefeatureanddidnot properlysafeguardCountyfunds.OnMay11,2012,Managementremovedthemanualkeyfromthecashregisterand secureditinthesafe. Recommendations: Manualkeysshouldbeproperlysecuredandonlyusedbysupervisorsunderspecialcircumstances(i.e.ifthe CLASSsystemfails,theno-salefeaturewouldbeunavailableandmoneywouldneedtoberemovedfromthecash register). ManagementResponse : 17 Ascitedunderfinding#3,staffseparatedthemanualkeyfromthecashregisterseveralmonthsago.Similarly, retraininghasbeenprovidedonproperuseofnosalekey.ParksandRecreationfiscalstaffareperformingspot auditsofcashierstoensuretheDepartment’sstandardoperatingproceduresarebeingfollowed.Parksand Recreationfiscalstaffarereviewingthe“no-sale”reportweeklytoreviewdeviationsfromthestandard proceduresandcorrectiveemailsareissuedtothecashier,thesupervisor,andtheregionalmanagerwhen deviationsaredetected. 4)DepositshavenotbeenmadeinaccordancewithParksandRecreationPolicyAF0004. ParksandRecreationPolicyAF0004(January2011-ineffectatthetimeofreview)statedalldepositsexceeding$50.00 mustbedepositedintothebankduringbusinesshourswithin48hours.OnAugust23,2011,Countystaffstatedthey attemptedtobringthedepositstothebankevery2-3days. ParksandRecreationPolicyAF0004(November2011)wasupdatedstatingalldepositsmustbedepositedinthebank within24hours.Countystaffdidnotalwayscomplywiththepolicy. ParksandRecreationPolicyAF0004(April2012-ineffectatthetimeofthefollow-upreview)wasupdatedstatingall depositsexceeding$100.00mustbedepositedintothebankduringbusinesshourswithintwobusinessdaysand broughtdirectlytothebank.OnMay11,2012,Countystaffstatedtheydonotdepositthefundsdirectlyintothebank. ToreducecostsandstafftimetocompleteadeposittheybringthedepositstotheImmokaleeCourthouseandacourier bringsthedepositstothebank. Follow-upreviewshowedthelocationnowtypicallycompletesdepositswithinthetimeframeprovidedbypolicy, notingafewexceptions.Itappearsthepolicyshouldbereviewedforappropriatecontrolsandtimeframes. Recommendations: Managementshouldconsiderrevisingtheirpolicytoprovideforothersecuredmethodsofdepositingfunds. Depositsshouldcontinuetobemadeaccordingtopolicy. ManagementResponse : TheDepartmenthasuniquevenuesthroughouttheCountywherelogisticalvariablesmakeitdifficulttofully standardizethedepositprocess.Forexample,thearrangementinImmokaleewheredepositsarecouriered throughthePropertyTaxCollector’sofficeduetothelackofa5/3BanklocationinImmokalee.TheDepartment willcontinuetoenforcethecurrentdepositprocedures.Pursuanttothenextupdateoftheseprocedures,staff willreviselanguageintheprocedurethataddressestheseuniquevariables. InternalAuditResponsetoManagementResponse : Itremainsimportant,regardlessofvenue,thatfundsaredepositedinatimelymannerandinaccordancewith policytodetertheft. 5)ItdoesnotappearCashControlLogsarebeingused. ParksandRecreationPolicyAF0032CashControlLogsarerequiredtobeusedforcashierstosigninandoutfor changedrawers.CashControlLogsareusedbythedepartmentforcashierstosigninandoutforthechangedrawers, signconfirmingtheamount,andrecordthedeposit. OnMay11,2012,CountystaffwerenotusingCashControlLogs. Recommendations: Staffshouldbeawareofcurrentpoliciesandanychanges. 18 Policiesshouldbefollowed. ManagementResponse : Thiswascorrectedimmediatelyandcashcontrollogsarebeingcompleted.Willcontinuetoprovideinternalspot checkstoverifyuseoftheselogs. 19 CONCLUSION TheChangeDrawerFundPoliciesandProceduresforimprestfundshavenotalwaysbeenadheredtobythecustodians and/orsub-custodians.ThecustodianforeachimprestfundshouldupdatetheirrespectiveCertificateandReceiptof ImprestFundformsandkeepthedocumentationcurrent. ParksandRecreationPoliciesandProceduresforchangedrawersandcashhandling(partialreview)havenotalways beenadheredtobyParksandRecreationstaff.Staffshouldbeproperlytrainedtoensuretheyunderstandpoliciesand beheldaccountableforcompliance. Auditsdonotrelievemanagementoftheirresponsibilities.Itistheresponsibilityofmanagementtounderstandand implementtheproperprocessesandproceduralcontrolstocomplywiththeimprestfundpoliciesandprocedures.The Clerk’sOfficemaysuggestrecommendationsinauditreports,butitisthedecisionofmanagementtoformulateand implementcontrolsforoperations. AdditionalRecommendations: Thedirectororanindependentemployee(notacustodianorsub-custodianofthefund)shouldperformperiodic cashcountsofthedepartment’simprestfundsonanon-routinebasistoensurethatthecustodianand/orsub- custodiansarecomplyingwiththeCounty’schangedrawerfundpoliciesandproceduresandthatadequate documentationexistsforauditpurposes. Additionally,InternalAuditwillcontinuetoperformunannouncedcashcounts. Trainingshouldbeprovidedtoallcustodiansandsub-custodianstoensuretheyunderstandthepolicies,procedures, andformsgoverningchangedrawerandpettycashfunds. Additionaltrainingshouldbeprovidedtoallcustodians,sub-custodians,andcashierstoensuretheyunderstandhow toprintCLASSreportsandoperatethePOSsystem. AdditionalManagementComments : TheDepartmenthashiredadditionalpersonneltoconductspotauditsrelatedtotheimprestfundsthatareused forpointofsalelocations.Operations’staffdevelopedacashhandlingtrainingthatisrequiredbyeachstaff memberwhohandlescash.Theycreatedanon-linetrainingmoduleforannualupdatesforeachstaff,which requiresthemtocompleteaperformancetestanddocumenttheresults. TheDepartmentwillcontinuetoworkboththroughitsownauditingandfeedbackfrominternalaudittoensure documentedcompliancewithallproceduresrelatedtothesefunds. InternalAuditResponse/Comment : ItappearsthedepartmentisduplicatingtheInternalAuditfunction.Managementcontrolofregularprocesses shouldprovidesafeguardsthatcanthenbereviewedbyInternalAudit.