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HomeMy WebLinkAbout1920-7 Juvenile - Cash Handling report (FINAL 1-22-2020)Juvenile – Cash handling report #1920-7 January 2020 Juvenile – Cash Handling To request this information in an alternate format, please call (541) 330-4674 or send email to David.Givans@Deschutes.org Deschutes County, Oregon David Givans, CPA, CIA Deschutes County Internal Auditor 1300 NW Wall St Bend, OR 97703 541-330-4674 David.Givans@deschutes.org Audit committee: Daryl Parrish, Chair - Public member Jodi Burch – Public Member Tom Linhares - Public member Scott Reich - Public member Summer Sears – Public member Stan Turel - Public member Patti Adair, County Commissioner Nancy Blankenship, County Clerk James Lewis, Property Manager Take a survey by clicking HERE Juvenile – Cash handling report #1920-7 January 2020 TABLE OF CONTENTS: HIGHLIGHTS 1. INTRODUCTION 1.1. Background on Audit …………..……………..……………………………………………. 1 1.2. Objectives and Scope ……………….……..…………….…………….…………………… 1 1.3. Methodology …………………………………….………….…………………………..……… 2 1.4. Background on Juvenile ……………………………….……….………….…………… 2-3 2. FINDINGS and OBSERVATIONS 2.1. Observations ……....………………………..…………………………………………….… 3-6 3. MANAGEMENT RESPONSE 3.1. Community Justice Department ………………………..……………..………..... 7 Juvenile – Cash handling report #1920-7 January 2020 HIGHLIGHTS Why this audit was performed: A periodic review of internal controls over cash handling of receipts. What was recommended: Recommendations include: • recounting un-deposited cash with a witness at the time the envelope is opened; • Identifying and disbursing the identified outstanding 2019 monies still held in trust; • juvenile supervisor periodically reviewing the trust balance to see if the accounts are clearing as designed; and • consider refining measures used in the program budget and provide data. Juvenile– Cash Handling The focus of the review was on internal control over handling of external customer payments. What was found Overall, the Juvenile Division (within the Community Justice Department) performed well in providing fiscal controls over receipts. The Division had extensive procedures that are periodically updated. Recommendations were developed to assist the Juvenile Division comply with County policy or prudent business practices for cash handling. The audit identified the following areas for further improvement, including • additional controls to provide accountability could be improved over movement of monies between staff; and • clearing monies placed in trust could be improved. The Division has a performance measure in the FY20 program budget, but may benefit from selecting better measures and providing better information. Deschutes County Internal Audit Juvenile – Cash handling report #1920-7 January 2020 Page 1 1. Introduction 1.1 BACKGROUND ON AUDIT Audit Authority: The Deschutes County Audit Committee authorized the review of cash handling practices of Juvenile Division (within the Community Justice Department) in the Internal Audit Program Work Plan for 2019- 2021. Internal audits of cash handling are routinely performed for identified County departments/divisions. 1.2 OBJECTIVES and SCOPE “Audit objectives” define the goals of the audit. Objectives included: 1) Review of internal controls for cash handling with the Division as outlined in County Finance policy for cash handling (F-11). Identify areas for improvement. 2) Review management of any change, petty cash, checking accounts, and billings, as applicable. 3) Be aware of any issues with compliance with federal and state regulations and requirements, as may be applicable. Scope and timing: The audit commenced in December 2019 and extended through December 2019. Included in review of cash handling of the Juvenile Division are accounting funds handled which include Fund 030 and some trust funds. The focus of the review was on internal control over handling of third party customer payments. Juvenile has change cash of $50 and no checking account or petty cash funds. The scope of the audit did not include all aspects of internal controls employed. Juvenile – Cash handling report #1920-7 January 2020 Page 2 1.3 METHODOLOGY “Audit procedures are created to address the audit objectives” Audit procedures included: • Interviewing staff related to cash handling, receipting, and billing procedures (staff reviewed and answered the County’s cash handling checklist provided in the cash handling policy F-11), • Reviewing written procedures and documents provided, • Reviewing and analyzing receipt transaction data for the identified funds, and • Reviewing and analyzing revenue data for the identified funds. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. (2018 Revision of Government Auditing Standards, issued by the Comptroller General of the United States.) The County Internal Auditor was created by the Deschutes County Code as an independent office conducting performance audits to provide information and recommendations for improvement. 1.4 BACKGROUND ON JUVENILE The Juvenile Community Justice Division provides youth programs and field operations, as well as operates the County’s juvenile detention center. Field operation services include probation supervision of adjudicated delinquents, diversion supervision in lieu of adjudication for both delinquent and non-delinquent juvenile violators. Programs include mental health program, community service program as well as functional family therapy for at-risk youth. The detention facility, built in 1998, has four living units and maximum capacity of fifty-six (56) beds. The County currently staffs the detention facility for a maximum population of sixteen (16) detainees. Two living Juvenile – Cash handling report #1920-7 January 2020 Page 3 Graph I Composition of Juvenile resources (FY 20 budget) units are leased for use as residential behavioral treatment centers. With a fiscal year (FY) 2020 operating budget of $7.9 million and staff of 47.9 FTE, they are one of the larger County functions. The Juvenile Division is a significant recipient of general fund resources of $6.0 million representing 87% of their needed resources (outside of beginning working capital). The composition of these resources have been fairly consistent over the last number of years. 2. Findings and Observations The audit included limited procedures to understand the systems of internal control around revenues. No significant deficiencies were found in this audit. A significant deficiency is defined as an internal control deficiency that could adversely affect the entity’s ability to initiate, record, process, and report financial data consistent with the assertions of management in the financial statements. The findings noted were primarily compliance and efficiency matters. Audit findings result from incidents of non-compliance with stated procedures and/or departures from prudent operation. The findings are, by nature, subjective. The audit disclosed certain policies, procedures and practices that could be improved. The audit was neither designed nor intended to be a detailed study of every relevant system, procedure or transaction. Accordingly, the opportunities for improvement presented in the report may not be all-inclusive of areas where improvement may be needed and does not replace efforts needed to design an effective system of internal control. Juvenile – Cash handling report #1920-7 January 2020 Page 4 2.1 OBSERVATIONS Overall, the Juvenile Division performed well in providing fiscal controls over collected revenues. The Division had extensive procedures that are periodically updated. The following observations are noted to help further improve the procedures put into place. Overall, Juvenile performed well in providing fiscal controls over collected monies. Additional controls could improve oversight over receipts. Juvenile handles monies that relate to fees and services provide to their juvenile clients. They also collect and remand restitution received from their juvenile clients. During review and discussion of the Division’s cash handling processes, a couple of areas were noted where additional procedures could be beneficial. • Accountability could be improved over movement of monies between staff. Cash and checks received are sealed and signed off on by staff. However, the staff person responsible for preparing the deposit, must collect; open the envelopes; and re-count the monies. They do not have another staff person witness the recount of cash and if a discrepancy occurred it would be a matter of each staff person’s opinion. Monies as they move from one staff person to another should be recounted. This assures the monies are agreed to and there is not disagreement. The County’s cash handling policy (F-11) indicates that there should be adequate accountability for movement of funds between people. The Division has not experienced any issues with the monies not agreeing with what is described to be in the envelope. In the absence of this accountability, it is possible if monies do not agree, there will be Juvenile – Cash handling report #1920-7 January 2020 Page 5 disagreement on where the difference occurred. It is recommended for un-deposited cash be recounted with a witness at the time the envelope is opened. • Clearing monies placed in trust could be improved. When restitution monies are received they are placed in one of two trust funds for subsequent disbursement to the appropriate party (Court, victim(s), etc…). Trust accounts are established to collect and hold monies until they can be disbursed. The amounts owing should always be identifiable and should be regularly clearing out. There were two restitution payments from May and June 2019 totaling $172. It wasn’t clear that supervisory staff or Finance had identified that these monies hadn’t been cleared. It is recommended for Juvenile to identify and disburse the identified outstanding 2019 monies still held in trust. It is recommended for a Juvenile supervisor to periodically review the trust balance to see if the accounts are clearing as designed. Juvenile – Cash handling report #1920-7 January 2020 Page 6 Program budget performance measure information for Juvenile could be improved. Juvenile Division has one performance measure on service delivery in the FY20 program budget, for • utilizing performance measure dashboard metrics for supervisory CJO and PO performance review. The budget document does not include any information on what actual measures makeup this dashboard, the movement of those measures over time; or how they compare to a benchmark. Juvenile does internally manage and monitor an extensive array of metrics. A good budgetary measure should help inform the discussion of how services are being performed and whether additional or less resources are required. Trends in measurement data can help decision makers assess if changes in resources are necessary. The published measure is a start in addressing some overall goals of the Juvenile. However, the Division has not reported in the budget document on how they are performing against those measures. Decision makers are left not knowing how Juvenile is performing to these measures. Without information presented on the results of performance measures, it can be difficult for government to demonstrate accountability and that they achieved their intended goals/objectives. It is also difficult for policy makers to assess where best to allocate and direct public funds. The County continues to work on how it presents measures in the County budget process. It is recommended for the Juvenile Division to consider refining their measures used in the program budget and provide data (trend and possibly benchmarks) for their performance measures to demonstrate the quality, cost, and effectiveness of the services they provide. Juvenile – Cash handling report #1920-7 January 2020 Page 7 3. Management response Community Justice Department (Juvenile Division) Ken Hales, Community Justice Director The Juvenile Division thanks David Givans for this audit on cash handling and offers this response to recommendations. Topic: Additional controls could improve oversight over receipts. Accountability could be improved over movement of monies between staff. Front Office Procedure 126: Deposit and Disbursement of Restitution Payments was revised to include obtaining a second person sign-off on currency/coins received. Senior Accounting Technician to conduct monthly Munis reconciliation of restitution received. Completed Clearing monies placed in trust could be improved. Front Office Procedure 126: Deposit and Disbursement of Restitution Payments was revised to include Senior Accounting Technician to conduct monthly Munis reconciliation of restitution received. Additionally, un-cleared monies in the restitution trust account at the time of the audit have subsequently been cleared with the assistance of Finance Accounting Manager James Wood. Completed Topic: Program budget performance measure information for Juvenile could be improved. The Juvenile Division will work diligently with County Administrator and other budget officials to develop requested and acceptable performance measures that adequately describe division operations as part of annual budget process. Juvenile – Cash handling report #1920-7 January 2020 Page 8 {End of Report} Please take a survey on this report by clicking on the attached link: https://www.surveymonkey.com/r/1920-7JuvenileCashHandling If you would like to receive future reports and information from Internal Audit or know someone else who might like to receive our updates, sign up at http://bit.ly/DCInternalAudit.