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HomeMy WebLinkAbout1920-10 CDD - Cash Handling report (FINAL 6-12-2020)Community Development Department – Cash handling report #1920-10 June 2020 Community Development Department – 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 Nick Lelack, Community Development Director Take a survey by clicking HERE Community Development Department – Cash handling report #1920-10 June 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 Community Development Department …...…………… 2-3 2. FINDINGS and OBSERVATIONS 2.1. Observations ……....………………………..…………………………………………….… 3-5 3. MANAGEMENT RESPONSES 3.1. Community Development Department ……………………………………..... 6 3.2. Finance Department ………………………………………………………………….... 6 Community Development Department – Cash handling report #1920-10 June 2020 HIGHLIGHTS Why this audit was performed: A periodic review of internal controls over cash handling of receipts. What was recommended: Recommendations include: • fiscal staff considering process improvements that will address tasks that may be unnecessary and • updating County fiscal policy to allow Finance the authority to manage increases and decreases in petty cash. Community Development Department – Cash Handling The focus of the review was on internal control over handling of customer payments. What was found Overall, the Community Development Department performed well in providing fiscal controls over receipts. The Department has extensive procedures that are documented and periodically updated. During review and discussion with fiscal staff, a couple of areas were noted where efficiencies may be obtained. Those included addressing processes where there are unnecessary handoffs and duplications. The County could improve management of department petty cash. The department’s petty cash was returned to Finance and the petty cash resolution was never rescinded. Finance has been given authority, in recent years, to manage and approve changes to bank accounts and credit cards issued to departments. Adding petty cash to that management might provide greater efficiency and control. Deschutes County Internal Audit Community Development Department – Cash handling report #1920-10 June 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 Community Development Department in the Internal Audit Program Work Plan for 2019-2021. Internal audits of cash handling are routinely performed for identified County departments. 1.2 OBJECTIVES and SCOPE “Audit objectives” define the goals of the audit. Objectives included: 1) Review of internal controls for cash handling 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 May 2020 and extended into June 2020. Included in review of cash handling of the Community Development Department are accounting funds primarily handled in Fund 295. The focus of the review was on internal control over cash handling. The Community Development Department has change cash of $300 and no checking account or petty cash funds. The scope of the audit did not include all aspects of internal controls employed. The work occurred during the COVID- 19 pandemic and therefore there was significantly less cash handling than in prior periods. Community Development Department – Cash handling report #1920-10 June 2020 Page 2 1.3 METHODOLOGY “Audit procedures are created to address the audit objectives” Audit procedures included: • Interviewing staff related to cash handling and receipting (staff reviewed and answered the County’s cash handling checklist provided in the cash handling policy F-11), • Observing staff responsible for cash handling duties. • 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 position 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 COMMUNITY DEVELOPMENT DEPARTMENT The Community Development Department (CDD) is one of the larger departments in the County. With over 56 full time equivalent (FTE) employees they provide services related to building safety, planning, GIS and environmental health. The department is primarily fee supported. During the COVID-19 pandemic the department is only operating their Bend location for residents for physical access to their services. The Department offers virtually all of their services online and accepts payments online. Community Development Department – Cash handling report #1920-10 June 2020 Page 3 Graph I Composition of CDD resources (FY 2020 Estimated) Fiscal year (FY) 2020 operating resources (excluding transfers and beginning working capital) is estimated to come in at $7.9 million. The composition of these resources have been fairly consistent over the last number of years. The projected revenues for FY 2020 are trending two percent higher over prior year and nineteen percent over the last five 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. Community Development Department – Cash handling report #1920-10 June 2020 Page 4 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. Overall, Community Development performed well in providing fiscal controls over collected monies. 2.1 OBSERVATIONS Overall, Community Development Department performed well in providing fiscal controls over collected revenues. The Department has extensive procedures that are periodically updated. The following observations are noted to help further improve the efficiency within their operations. Efficiencies noted to aide process of handling monies. Community Development Department handles monies that relate to fees and services provided to their clients. During review and discussion with fiscal staff, a couple of areas were noted where efficiencies may be obtained. The following areas were discussed with staff as possibilities for streamlining: • Reducing some of the deposit procedures by having the staff preparing deposits scan and send reports to staff preparing electronic journals. • Eliminate duplicate report printing and signoffs. The department has not instituted a fiscal process improvement system whereby they monitor and address processes that create wait times or take additional time. Process improvement could start Community Development Department – Cash handling report #1920-10 June 2020 Page 5 by addressing unnecessary handoffs and duplications. By monitoring what they are doing and why, they can better address whether those tasks could be performed in a more efficient manner. It is recommended for fiscal staff to consider process improvements that will address tasks that may be unnecessary. County could improve management of department petty cash. Community Development was authorized to have petty cash in 2008. In 2015, the petty cash was returned to Finance. No County resolution was prepared to remove the authority to have a petty cash account in CDD. Therefore, the department could reinstitute petty cash without any additional process. The County petty cash policy (F-8) requires Board approval for petty cash. There are no provisions for how to handle decreases in petty cash. In the absence of direction, it is unclear how the petty cash should be closed or administered. Balances are maintained in the County accounting system. Finance has in recent years been given authority to manage and approve changes to bank accounts and credit cards issued to departments. This can provide greater efficiency and control. It is recommended the County consider updating fiscal policy to allow Finance the authority to manage increases and decreases in petty cash. Community Development Department – Cash handling report #1920-10 June 2020 Page 6 3. Management responses Community Development Department Nick Lelack, Community Development Director Department agrees with recommendations to review and eliminate duplicated efforts regarding preparation and processing of daily deposit(s) and reports and supports the recommendation for an update to Finance fiscal policy regarding petty cash. Finance Department Greg Munn, CFO It is recommended the County consider updating fiscal policy to allow Finance the authority to manage increases and decreases in petty cash. It is agreed that Financial Policies (in their entirety) should be updated to conform with current County practices. The current policies were adopted across a range of years reaching back to March 2006. The adoption of these at different times have resulted in guidance that isn’t always clear. Through collaboration with the County Internal Auditor, finance plans to review and update its policies in the near future. {End of Report} Please take a survey on this report by clicking on the attached link: https://www.surveymonkey.com/r/CDD_Cash_Handling_1920-10 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.