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Audit Report 2014-12 Parks and Recreation - Beach Parking - Cash Review
InternalAuditDepartment AuditReport2014-12 ParksandRecreationDepartment BeachParking CashReview 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 IlonkaWashburn,OperationsManager,ParksandRecreation NancyOlson,RegionalManager,ParksandRecreation JakeSullivan,ParkRangersSupervisor,ParksandRecreation JeffKlatzkow,CountyAttorney Cc:DwightE.Brock,ClerkoftheCircuitCourt CrystalK.Kinzel,DirectorofFinance&Accounting JamesD.Molenaar,InternalAuditManager TABLEOFCONTENTS SUMMARY..................................................................................................................................2 OBJECTIVES...............................................................................................................................2 SCOPE..........................................................................................................................................3 BACKGROUND..........................................................................................................................3 OBSERVATIONS,RECOMMENDATIONS,&MANAGEMENTRESPONSES...................4 OTHEROBSERVATIONS,RECOMMENDATIONS,&MANAGEMENTRESPONSES.....6 CONCLUSION.............................................................................................................................9 ADDITIONALMANAGEMENTCOMMENTS........................................................................9 Thefilesanddraftversionsofauditreportsremainconfidentialandprotectedfrompublicrecordsrequests duringanactiveauditunder Nicolaiv.Baldwin(Aug.28,1998DCAofFL,5 th District)andFlorida Statute119.0713.Work-paperssupportingtheobservationsnotedwithinthisreportwillbecomepublic recordandwillbemadeavailableuponrequestoncethefinalauditreporthasbeenissued. 2 TheDraftAuditReportwasinitiallyreviewedwiththeParksandRecreationDepartmentonJune3,2014andwas releasedtotheDepartmentformanagementresponseonJune4,2014.CountyManagementprovidedCounty ManagementResponsesonJune13,2014. Summary Thefollowingauditobservationsforchangedrawerfundsweregeneratedduringthereview: 1.CertificateandRequestofImprestFundformshavenotbeenupdatedandprovidedtoClerk’sFinanceas changeshaveoccurred. 2.AnnualConfirmationshavenotbeenreturnedtoClerk’sFinancebytheduedateandhavenotbeen returnedonayearlybasis. 3.Thechangedrawersdidnotbalancetotheauthorizedfundamount. Thefollowingotherauditobservationsforchangedrawerfundsweregeneratedduringthereview: 1.LocationshavenotcompliedwithParksandRecreationPolicyAF0001forcashdrops/deposits. 2.Cutkeys/manualkeyshavebeenusedtooverridetheautomatedcashregistercontrolscompromisingthe integrityofthetransactionandmanualkeysarenotproperlysecured. 3.Fundshavenotbeenproperlysecuredorsafeguarded. 4.Sub-custodian/cashierwasunclearofcashpoliciesandprocedures. ImprestfundpoliciesandproceduresneedtobefollowedtoprovidetheClerk’sFinanceDepartmentwithaccurate informationforyear-endreporting,toprovidetheexternalauditorsreliableinformation,andtosafeguardthe County’simprestfunds. FloridaStatuteandParksandRecreationPoliciesandProceduresforchangedrawersandcashhandling(partial review)havenotalwaysbeenadheredtobyParksandRecreationstaff.Staffshouldbeproperlytrainedtoensure theyunderstandpoliciesandbeheldaccountableforcompliance. Compliancefordepositingrequirements(ParksandRecreationPoliciesandProceduresrequirebankdepositsbe completedwithintwobusinessdays)wasreviewedinconjunctionwiththisaudit.100%testingforthefourbeach parkinglocationswithchangedrawers/imprestfundswascompletedforMarch2014.Therewerenoexceptions notedduringreview.ThebeachlocationshaveproperlycompliedwithParksandRecreationdepositing requirementsbasedonthesampledtimeperiod. Objectives InternalAuditperformedanauditofthebeachparkinglocationschangedrawersandapartialreviewofrelatedcash handlingprocesses.Theobjectivesoftheauditweretodetermine1)whetherthecashfundsexist,2)whether internalcontrolsoverthecashfundsareadequate,3)whetherimprestfunddataisreliable,and4)whether custodiansareincompliancewithCountypoliciesandprocedures. 3 Scope Thereviewconsistedof,butwasnotlimitedto,thefollowingtasks: ReviewofFloridaStatuteChapter219CountyPublicMoney,HandlingbyStateandCounty; ReviewoftheBoardofCountyCommissioner’s(BCC)InsurancePolicyCoverage; ReviewoftheClerk’sFinanceDepartment’sAccountingProceduresManual(includingpoliciesand procedures); ReviewofParksandRecreationPoliciesandProceduresManual; ReviewofthemostrecentCertificateandRequestofImprestFundupdateforms; ReviewoftheannualconfirmationssubmittedbyParksandRecreationstaff; ReviewofManualCashRegisterreports; ComparisonofthemostrecentinformationprovidedbyClerk’sFinancetotheinformationgatheredduring fieldwork; Completionofunannouncedcashcountsofthechangedrawersforbeachlocations(ImprestFund)on August23,2011,March13,2013,andMay29,2014;and Interviewsofcustodian,sub-custodians,andcashiers:inquiringaboutandobservingtheproceduresusedto accountforandsafeguardtheirrespectivefunds. Background Imprestfundpoliciesandproceduresdefinetheauthorizedusesoffundsprovidingthestructureforhow departmentsestablish,modify,spend,replenish,safeguard,anddiscontinuetheuseofthefundsinaccordancewith FloridaStatute.TheClerkhasestablishedauthoritativeguidelinesforthesafeguardingofcountyresourcesinthe Clerk’sFinanceAccountingProceduresManualeffectiveOctober1,2008. ChangedrawerfundsareusedtomakechangewheremoneyiscollectedduringtransactionsofCountybusiness. BeachparkinglocationsserveaslocationstoprovideCollierCountyresidentsandtouristsaplacetoparkforthe daywhilevisitingtheCollierCountybeaches.Eachbeachlocation(four)withatollboothhasanattendantatthe gate/boothtomakechangeforpatrons.Thelocationsusemanualcashregistersforoperationsandcreditcard machines.Attendantsmayacceptcreditcardspayments.WhenvisitorsatClam’sPassdesiretopayusingacredit card,thevisitorissenttoanautomatedmachinethatacceptsthecreditcardandprovidesareceiptfordisplay. Whentheattendantortheautomatedmachineprovidesareceipt,thereceiptmustbedisplayedinthevisitor’s windowtoindicatetheypaidforparking. 4 Observations 1)CertificateandRequestofImprestFundformshavenotbeenupdatedandprovidedto Clerk’sFinanceaschangeshaveoccurred. ChangeDrawerPolicyItem4indicates“Onlythecustodianand/orthesub-custodianshouldhaveaccesstothe funds.”ChangeDrawerPolicyItem5requiresanewCertificateandRequestofImprestFundformtobecompleted andsubmittedeachtimethereisachangeofcustodianand/orsub-custodian,director,orphysicallocation. Fouroffourchangedrawers(100%)didnothaveaccurateinformationforthecustodian,sub-custodians,and/or cashiers.ThecustodianchangedpriortoFY2011andtheformshadnotbeenproperlyupdatedpriortotheFY2011 unannouncedcashcount.ParkRangersfillinforthecashiers,whencashierstakebreaks.TheParkRangers coveringthebreakswerenotlistedontheformsasauthorizedsub-custodiansand/orcashiers.Employeeswhono longerworkedfortheCountyand/ortransferredtootherlocationsanddepartmentswerelistedonsomeofthe changedrawerauthorizeduserlists.Insomeinstances,employeesusedthechangedrawersandwerenotlistedas authorizedusers. AftertheFY2013unannouncedcashcounts,thecustodianproperlyupdatedtheImprestFundformsandlistedall employeeswithaccesstothefund.Threeofthreechangedrawer’sinformationwereverifiedbyInternalAuditon May31,2014. Ascustodians,sub-custodians,andcashierschange,itisimportanttoupdatetheCertificateandRequestofImprest Fundformandensurethatonlyauthorizedusershaveaccesstotheimprestfund. Recommendations: TheDepartment’sAdministrationshouldcontinuetotakecaretoensureupdatedformsareapprovedbythe DepartmentDirectorandprovidedtoClerk’sFinanceinatimelymanner. TheDepartmentshouldcontinuetocomplywithpoliciesandprocedures.Authorizationsshouldbeimmediately updatedforchangesinauthorizedusers,withappropriatetrainingonpoliciesandprocedures. Uponcustodianchanges,anofficialcountofthechangedrawerfundsshouldbecompletedanddocumented, approvedbytheterminatingcustodian,thenewcustodian,andthesupervisor. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatImprestFundsFormswerenotupdatedandsubmittedtimely in2011and2013.TheDepartmentappreciatestheacknowledgementthatperformanceinthisareademonstrated noexceptionsin2014.TheDepartmentwillcontinuetocompleteandsubmitformsinatimelymanneraschanges occur.” 2)AnnualConfirmationshavenotbeenreturnedtoClerk’sFinancebytheduedateand havenotbeenreturnedonayearlybasis. ChangeDrawerProceduresItem7indicatesthecustodianorsub-custodianisresponsibleforreturningtheverified AnnualConfirmationtoClerk’sFinance,includingallupdates,bytheAnnualConfirmation’sspecifiedduedateon ayearlybasis. 100%ofchangedrawerAnnualConfirmationsforbeachlocationshavenotbeenreturnedbytheduedateandhave notbeenreturnedonayearlybasis.AnAnnualConfirmationformwasnotreceivedbyClerk’sFinancefor FY2008,FY2009,orFY2010.TheFY2011,FY2012,andFY2013AnnualConfirmationswerereceivedby Clerk’sFinanceaftertheduedate. TheFY2013AnnualConfirmationwasnotproperlyapprovedbytheParksandRecreationDirector.TheAnnual Confirmationswerereturnedtothedepartmentandsubsequentlyproperlyapprovedbythedirector.Annual 5 ConfirmationsshouldbeproperlyreviewedandapprovedbythedirectorpriortobeingreturnedtoClerk’sFinance toensuretheaccuracyoftheinformationsubmitted. IftheAnnualConfirmationform,includingallupdates,isnotcompletedandreturnedbythedeadlineprovided, fundsmaynotbeproperlyrecorded. Recommendations: TheDepartmentshouldreturntheAnnualConfirmations,includingallupdates,bytheduedate. WhenCertificateandRequestofImprestFundformsarecompleted,theinformationprovidedshouldbe accurate. ThedirectorshouldproperlyreviewandapproveAnnualConfirmations. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatAnnualConfirmationshavenotbeensubmittedorhavenot beensubmittedcompleteandtimely.TheDepartmentwillredoubleeffortstocompleteandsubmitformsbythe deadlineeachyear.” 3)Thechangedrawersdidnotbalancetotheauthorizedfundamount. FourchangedrawersweretestedinFY2011,FY2013,andFY2014(inFY2014onlythreechangedrawerswere tested),atotalof11unannouncedcashcountswerecompleted.Threeofthe11(27.3%)unannouncedcashcounts hadchangedrawersthatexceededtheauthorizedfundamountbyaminusculeamount. OnMay29,2014,threeofthreechangedrawersproperlybalancedtotheauthorizedfundamount.Noexceptions werenotedduringtheFY2014follow-upunannouncedcashcounts. Thechangedrawershouldbebalancedonadailybasistotheauthorizedamountwithoutoveragesandshortages. WhileitmayseemthattheCountybenefitsfromchangedraweroverages,itcanjustaseasilyleadtochangedrawer shortages.Custodiansandsub-custodiansmustexercisecareforchangedrawerstopreventoveragesandshortages. Recommendations: Ifanoverageorshortageoccurs,theamountneedstoberecordedatthetimeofthedepositintheover/under account.Thereshouldbeanexplanationforwhatoccurredcausingtheoverage/shortage. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatchangedrawersexceededthebalanceamountbyaminiscule amountinthreeinstancesandfullybalancedineightotherinstances.TheDepartmentappreciatesthe acknowledgementthatperformanceinthisareademonstratednoexceptionsin2014.TheDepartmentwillcontinue totrainemployeesontheproperandpromptreportingofoveragesandshortagesandwillmonitorforcompliance duringroutinesitevisits.” 6 OtherObservations 1)LocationshavenotcompliedwithParksandRecreationPolicyAF0001forcashdrops/ deposits. ParksandRecreationPolicyAF0001indicatesthecashiershallmakeacashdropiftheirdrawerexceeds$800.00. March2014wasreviewedforcompliancewithParksandRecreationPoliciesandProcedures.Allbeachparking collectionlocationsrepetitivelyexceededthe$800.00droprequirement.Cashiersindicatedduringinterviewsin March2013thatthepolicywasnotcompliedwithbecauseoflocationtraffic.Whenthecashierwasbusy,the cashierindicatedtheywereunabletocomplywiththepolicy. OnMay29,2014,cashiersindicatedduringinterviewsthatthelocationswereincompliancewiththe$800.00 deposit/droppolicy.ThiswasnotvalidatedbyInternalAudit. CashiersshouldbeproperlytrainedandcomplywithcashpoliciestoproperlysafeguardCountyfundsandreduce riskoftheft.Whencashiersdonotcomplywiththecashdroppolicy,theyexposetheCountytogreaterriskand/or lossfromtheft. Recommendation: Cashdropsshouldbecompletedasrequiredbypolicy. TheDepartmentshouldcontinuetoprovidecashierstrainingforcashdroprequirements. TheDepartmentshouldreviewthepolicyforactualoperationsandreviseasnecessarytoreflectoperations. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatitspolicyoncashdropshasnotbeenfollowedstrictly.The Departmenthasconcludedthatthepolicyaswrittenisnotalwaysfeasiblewithinthedemandsofactualoperations. TheDepartmentwillrevisethepolicytoaccommodateoperations.TheDepartmentwilltrainemployeesonthenew policyandwillmonitorforcomplianceduringroutinesitevisits.” 2)Cutkeys/manualkeyshavebeenusedtooverridetheautomatedcashregistercontrols compromisingtheintegrityofthetransactionandmanualkeysarenotproperlysecured. ParksandRecreationPolicyAF0001indicates“TheNoSaleButton(nottheregisterkey)shallbeutilizedtoopen thecashregisterdrawerwhenatransactionhasnottakenplace.Thisincludesthestartandendofyourshiftinorder toplaceorremoveyourstartingbankfromthedrawer…NoSaleslipsfrommanualregistersshallbeinitialed,dated andsubmittedwiththeclosingpaperwork.” FourunannouncedcashcountswerecompletedforbeachparkinglocationsinMarch2013.InternalAuditdidnot observeanyslipsfor“NoSale”Transactionsinthefourchangedrawersorwiththeclosingpaperwork.Cashiers indicated“NoSale”Transactionswerenotcompletedtoopenorclose,ratherthemanualkeywasusedtoopenand closethecashregister.Whenthemanualkeyisusedtooverridetheautomatedcashregistercontrols,it compromisestheintegrityofthetransactionanddoesnotcreateanaudittrail. InMarch2013,threeofthefourlocationsdidnotproperlysecurecutkeys/manualkeyforthechangedrawer.The keyswerefoundnexttothecashregister,ontheshelvesnearthesafe,orabovethecashregister. OnMay29,2014,oneofthreelocationsdidnotproperlysecurethecutkey/manualkeyandhadthecutkey/ manualkeyintheregister.Byhavingakeyinthemanualcashregister,anypersonwithaccesstothecashregister hastheabilitytoopenthecashregister.Bynotproperlysecuringthecashregister,collectedfundshavenotbeen properlysecured. 7 Whencutkeys/manualkeysarenotsecured,itexposesthelocationtounauthorizedaccessand/ortheft.Any individualwhoisabletoentertheareawherethecashregisterismaintainedpotentiallyhastheabilitytousethe manualkeytoaccessthedrawer.ThisexposestheCountytoadditionalriskandloss. Recommendation: Cutkeys/manualkeysshouldbeproperlysecuredandonlyusedunderspecialcircumstances(i.e.ifthesystem fails). TheDepartmentshouldcomplywithpoliciesandprocedures. TheDepartmentshouldprovidecashierstrainingforproperlysecuringcashregistersandforpropercompletion of“NoSale”transactions. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatmanualkeyshavenotbeensecuredandhavebeenusedinlieu ofthepolicy-requiredNoSaletransaction.Keyshavesubsequentlybeensecured.TheDepartmentbelievesthe observationoftheuseofamanualkeyatonelocationinMay2014tobeanoutlier,albeitaconcerningone.A managementsitevisitapproximatelyoneweekpriordidnotrevealthesamefinding.TheDepartmentwillcontinue totrainemployeesontheproperuseanddocumentationofNoSaletransactionsandwillreviewandmonitorthe sameforcompliance.” 3)Fundshavenotbeenproperlysecuredorsafeguarded. FloridaStatute219.02(2)specifies“Itisthedutyofeachofficertokeepsafelyallthepublicmoneycollectedby himorher.Eachofficershallexerciseallpossiblecarefortheprotectionofthepublicmoneyinthatofficer’s custody.” ParksandRecreationPolicyAF0018specifies“Cashand/orchecksmustbekeptinasecuremannertoinsurethat theParksandRecreationDepartmentsrevenuesaresafefrompilferage.”Additionally,thepolicyrequires“All moniesreceivedatanyfacilitywithintheParksandRecreationsystemmustimmediatelybesecured.” ChangeDrawerProceduresItem5indicatesthefundmustbeinasecureplace(i.e.lockedsafeorcashregister) onlyaccessibletotheauthorizedcustodians. OnMay29,2014,onelocationhadadepositbag(unsealed)containingthestartingchangebank($200.00) unsecured.Themanualcashregisterhadacutkey/manualkeyintheregister,causingthefundsinthecashregister tobeunsecured.Thestartingchangebankandfundscollectedduringoperationswereunsecuredatthetimeofthe unannouncedcashcount. TheBCCInsurancePolicyindicateslossofmoney(exceedingthedeductible)fromlossortheftfromalockedsafe, cashregister,orcashdraweriscovered.Thisindicatesifthecashregisterisunlockedorthesafeisnotproperly locked,theinsurancepolicymaynotcovertheloss.Thedeductibleispaidfromtaxpayerfunds.Whenemployees donotproperlysecurefunds,theymayexposethecountyand/ortaxpayerstoadditionalcostsandlosses. Allcountyfundsshouldbeproperlysecuredinlockedsafesorcashregisterstopreventtheftandasrequiredbythe insurancepolicytocoverclaims. Recommendations: Countyfundsshouldbeproperlysecuredandsafeguarded. Employeeshandlingcashshouldcontinuetobeprovidedtrainingforthecashpoliciesandprocedures. Whenpoliciesandproceduresarerevisedorimplemented,Countystaffshouldcontinuetobeprovidedtraining atthetimeofimplementation. 8 CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatinoneinstancefundswerenotproperlysecured.Againthe DepartmentbelievestheobservationatthislocationinMay2014tobeanoutlier.Amanagementsitevisit approximatelyoneweekpriordidnotrevealthesamefinding.Nonetheless,thematterisconsideredseriousand correctiveactionhasbeentaken.TheDepartmentwillcontinuetotrainemployeesontherequirementtosecureand safeguardfundsatalltimesandwillmonitorforcomplianceduringroutinesitevisits.” 4)Sub-custodian/cashierwasunclearofcashpoliciesandprocedures. OnMarch12,2013,thesub-custodian/cashierindicatedthedepartmentimplementednewpoliciesandtheyhad notbeenprovidedadditionaltraining.Theemployeeindicatedtheywereunclearaboutpoliciesandprocedures. OnMay29,2014,thesamesub-custodian/cashierindicatedtraininghadbeenprovidedbyParksandRecreation Administration.TheemployeeindicatedbeingprovidedPCIcompliancetraining,creditcardmachineand transactiontraining,andadditionaltrainingonParksandRecreationPoliciesandProcedures. Allsub-custodiansand/orcashiersshouldbeprovidedtrainingwhenpoliciesandproceduresarerevisedor implementedtoensureaproperunderstandingofrequirements.Violationscanresultinlostrevenuesandexposure torisk. Recommendations: Employeeshandlingcashshouldcontinuetobeprovidedtrainingforthecashpoliciesandprocedures. Whenpoliciesandproceduresarerevisedorimplemented,Countystaffshouldbeprovidedtrainingatthetime ofimplementation. CountyManagementResponse : “TheParksandRecreationDepartmentconcursthatin2013oneemployeeindicateds/hewasunclearabout policiesandprocedures.TheDepartmentappreciatestherecognitionthatthissameemployeeindicateds/hehad receivedtrainingandwasfamiliarwithpoliciesandproceduresoneyearlater.TheDepartmentwillcontinueto trainemployeesonpoliciesandproceduresforcashhandlingandwillreviewandmonitorthesamefor compliance.” 9 Conclusion ImprestfundpoliciesandproceduresneedtobefollowedtoprovidetheClerk’sFinanceDepartmentwithaccurate informationforyear-endreporting,toprovidetheexternalauditorsreliableinformation,andtosafeguardthe County’simprestfunds.Thechangedrawerfundpoliciesandproceduresforimprestfundshavenotalwaysbeen adheredtobyParksandRecreationstaff. FloridaStatuteandParksandRecreationPoliciesandProceduresforchangedrawersandcashhandling(partial review)havenotalwaysbeenadheredtobyParksandRecreationstaff.Staffshouldbeproperlytrainedtoensure theyunderstandpoliciesandbeheldaccountableforcompliance. TheParksandRecreationFollow-UpReviewinFY2014indicatestherecontinuetobeareasofconcernand exposuretorisk.TheDepartmenthasimprovedincontrollingcashhandling;however,additionaltrainingand monitoringarenecessary.TheDepartmentshouldensurethepropercontrols,policies,andproceduresareinplace tolimitriskanderror. Auditsdonotrelievemanagementoftheirresponsibilities.ItistheresponsibilityofCountyManagementto understandandimplementtheproperproceduralcontrolsinordertoreduceandlimittheriskoffraud,error,and misappropriationofCountyassets.InternalAuditmayrecommendimprovementsinauditreports,butultimatelyit isthedutyanddecisionofCountyManagementtoformulateprocessesandcontrolsthatensurecompliancewith FederalRegulations,FloridaStatutes,CountyOrdinance,andCountyPolicies. AdditionalRecommendations: Thedirectororanindependentemployee(notacustodian,sub-custodian,orcashierofthefund)shouldperform periodiccashcountsofthedepartment’simprestfundsonanon-routinebasistoensurethatthecustodian,sub- custodians,and/orcashiersarecomplyingwiththeCounty’spoliciesandproceduresandadequate documentationexistsforauditpurposes. Additionally,InternalAuditwillcontinuetoperformunannouncedcashcounts. Trainingshouldcontinuetobeprovidedtoallcustodians,sub-custodians,andcashierstoensurethey understandthepolicies,procedures,andformsgoverningthechangedrawer. AdditionalCountyManagementComments: “TheParksandRecreationDepartmentappreciatestheopportunitytoimprovecontrolsthroughtheauditprocess. TheDepartmentwillcontinuetoupdatePoliciesandProceduresasnecessarytoimprovecontrols,trainemployees onPoliciesandProcedures,andmonitorforcompliance.” InternalAuditComments : InternalAuditwouldliketoacknowledgethecooperationandassistancefromCountystaffforaddressingand implementingadditionalcontrolsbasedonInternalAuditrecommendations.Theassistanceandresponsesprovided bytheParksandRecreationDepartmentgreatlyassistedintheauditprocess.