HomeMy WebLinkAboutFollow-up on Finance Dept RecommendationsReport# 05/06 - 6 (Dated January 13, 2006)
Follow-up on Finance Department -
Review of Internal Controls over Receipts
and Investments
(Internal audit report #04/05-5 issued February 6, 2005)
Presented to the
Deschutes County Audit Committee
by the
Internal Audit Program
David Givans, CPA – County Internal Auditor
Report# 05/06 - 6 Dated January 13, 2006
Deschutes Count y,
Oregon
Report# 05/06 - 6 (Dated January 13, 2006)
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Report# 05/06 - 6 (Dated January 13, 2006)
To: Audit Co mmittee
CC: Mike Daly, Bev Clarno
From: David Givans, Count y Internal Auditor
Subject: Fo llow-up on audit of Finance Depart ment (Report #04/05-5)
Date: January 13, 2006
This fo llow-up report covers the performance review of Finance as covered in Internal Audit
Report #04/05-5. The audit covered the internal controls over receipts and invest ments and
was issued February 6, 2005.
This fo llow-up report was compiled fro m informatio n provided by Finance.
Deschutes Count y,
Oregon
Internal Audit Program
David Givans, CPA
County Internal Auditor
Deschutes County- Administrative Services
1300 NW Wall Street, Suite 200
Bend, OR 97701
Phone: 541-330-4674
Fax: 541-385-3202
davidg@co.deschutes.or.us
Report# 05/06 - 6 (Dated January 13, 2006)
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Report# 05/06 - 6 (Dated May 31, 2004)
Follow -up on Finance Depart ment – Review of Internal
Controls Over Receipts and Investments
(Internal audit report #04/05-5 issued February 6, 2005)
TABLE OF CONTENTS:
1. INTRODUCTION
1.1. Background ……………………………………………………………………….... 1
1.2. Object ives & Scope ……………………………………………………………...… 1
1.3. Methodology ……………………………………………………………………….. 1
2. OVERVIEW of FOLLOW-UP RESULTS …………………………………….. 1-2
3. Highlighted recommendations
3.1. Reco mmendat ions – not implemented …………………………………………... 2-3
3.2. Reco mmendat ions – pending and planned implementation ………………..…....… 4
3.3. Reco mmendat ions – specific accomplishments ………………………………….... 4
4. Appendix
4.1. Appendix I –Finance’s implementation response 12-15-05 ……..…………...... 5-13
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1. INTRODUCTION
1.1 BACKGROUND
Audit Authorit y:
The Deschutes County Audit Committee has suggested that follow-ups occur within nine
mo nths of the reports. The Audit Co mmittee’s would like to make sure depart ments
satisfactorily address recommendat ions.
1.2 OBJECTIVES and SCOPE
Object ives:
The object ive was to follow-up on recommendat ions ident ified in the audit report performed
for the Finance department.
Scope:
The fo llow-up included all pert inent recommendat ions made in the original internal audit
report (#04/05-5). The audit covered internal controls over receipts and invest ments and was
issued February 6, 2005.
1.3 METHODOLOGY
The fo llow-up report was developed from informatio n provided by Marty Wynne, Finance
Director/Treasurer. In cases where the recommendations had not been implemented, these
were noted and the explanat ion. The fo llow-up is, by nature, subject ive. In determining the
status of recommendations that were fo llowed up, we relied on assertions provided by those
invo lved and did not attempt to independent ly verify those assert ions. If a response or lack
of a response merited a reply by the auditor those have been added.
Since no substant ive audit work was performed, Government Auditing Standards issued by
the Comptroller General o f the United States were not fo llowed.
2. Overview of Follow-up Results
We fo llowed up on 35 recommendations made in the report. Figure I provides a breakdown
of the status for recommendat ions. Recommendations have for the most part been
implemented or are in the process of being implemented.
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Figure I – How were recommendations
implemented?
Pending
implementation
3%
Not implemented
9%
Implemented
71%
Partially
implemented
17%
3. RESULTS
The fo llowing informat ion highlights those recommendat ions that were not fully
implemented. Items implemented or in the process of implementation are included at the
end of the report in Appendix I.
3.1 RECOMMENDATIONS - NOT IMPLEMENTED
1. In the tax area, some staff person other than the one receipt ing the money should be
responsible for authorizing any vo ids or reversals and should retain support for the
changes made.
Tax area comments:
It is understood that this issue for the tax area is significant ly mit igated by the fo llow-up
on any outstanding tax balances.
Auditor Comment:
In the tax area there is a significant mitigating control since Finance sends out
statements for tax amounts owing and taxpayers would question if their payments were
not credited. In addition, Finance is continuing work to develop oversight reports for
transactions that should be reviewed. No additional follow-up should be required.
2. It is reco mmended steps be taken to acquire cash register drawers that could be
physically mounted to the underside of the counter/desk area. It should have a unique
key lock and allow for only one emplo yee’s access at a time. Other desirable features
include a slot to allow checks to be added without opening the drawer and a mechanism
incorporated into the receipt ing system to open the drawer only when change is required.
Tax area comments:
After reviewing the workstations, we disagree that the cash drawers need to be mounted
to the front counter stations. We current ly use a filing pedestal, in which the second
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drawer is where the cash tray is stored. This drawer is farther from the customers reach
and is less visible than if we were to switch to a mounted cash drawer. Mounting a cash
drawer would also impede moving the workstations pieces to different heights (lose
ergonomic benefit of furniture) and emplo yees could injure themselves bumping into the
mounted drawer (this happened frequent ly in our old building and the cash drawers were
mounted under the workstation).
Auditor Comment:
The reply sufficiently addressed the location of cash drawers; however, the response did
not address segregating access through locking the cash drawers.
Sole custody over cash register drawers is the most effective way to track problems in
the event the monies and activity reports do not agree. In discussing this reply further
with management, it is acknowledged the department has not had any problems
reconciling monies and there are mitigating factors in their favor such as, long tenured
employees, little changeover in employees, and adequate supervision.
From discussions with management, it is clear they are monitoring this area and will be
continuing to do so. If they perceive any issues, they should consider additional
safeguards as recommended. No additional follow-up should be required.
3. A report should be developed to tally the supply receipts entered into the tax system, this
should be reconciled with the supply slips submitted, and amounts paid from the change
mo nies.
Tax area comments:
Current documentation and audit trail seem sufficient.
Auditor Comment:
This recommendation was a minor part of the overall recommendation. The suggestion
was one for efficiency and ease of monitoring. No issues have been raised by
management on reconciling these receipts. No additional follow-up should be required.
4. It is reco mmended the tax area consider whether they are properly co mplying with their
legal obligation to obtain written address changes in accordance wit h the Oregon
Revised Statutes.
Tax area comments:
Management has since implemented this recommendat ion.
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3.2 RECOMMENDATIONS - PENDING AND PLANNED
IMPLEMENTATION
See Appendix I for the completed workplan, which outlines Finance’s response and timing
for implementation.
3.3 RECOMMENDATIONS - SPECIFIC ACCOMPLISHMENTS
1. LOCKBOX SERVICES
Finance implemented the recommended lockbox arrangement for tax payments starting with
2005/206 tax payments that commenced in November 2005. Deschutes County used US
Bank to provide lockbox services. US Bank is the only provider of these services in the
state and some 15 Oregon Counties ut ilize these services.
Management has indicated the benefits included:
i. Receipt ing of tax payments was accelerated and therefore the various taxing
districts received their mo nies earlier.
ii. Input errors were observed to be much less frequent.
iii. Stress to the department for the seasonal build-up in work was significant ly
reduced.
iv. The electronic payment data furnished can be tied to customer accounts for better
servicing.
The department has not quantified the impact of the benefits. They are pleased with
the init ial outcomes after implement ing the recommendat ion.
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4. Appendix
4.1 Appendix I – Finance’s Follow-up response on 12-15-05
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