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Home My WebLink About2122-11 Adult P&P - Cash Handling report (Final 5-10-22)Adult Parole and Probation – Cash handling report #2122-11 May 2022 Adult Parole and Probation – Cash Handling To request this information in an alternate format, please call (541) 330-4674 or send email to internal.audit@deschutescounty.gov Deschutes County, Oregon The Office of County Internal Audit David Givans, CPA, CIA – County Internal Auditor Aaron Kay – Performance Auditor internal.audit@deschutescounty.gov 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 Charles Fadeley, Justice of the Peace Lee Randall, Facilities Director Take a survey by clicking HERE Adult Parole and Probation – Cash handling report #2122-11 May 2022 TABLE OF CONTENTS: HIGHLIGHTS 1. BACKGROUND ON ADULT PAROLE AND PROBATION 1.1. Background on the Audit .……………………………….……….………….…………… 1 1.2. Background on the Division …………………………………………………………….. 1 2. FINDINGS and OBSERVATIONS 2.1. Observations ……....………………………..………………………………………….….. 2-3 3. MANAGEMENT RESPONSE 3.1. Adult Parole and Probation Division ..…………………..……………..……….. 3-4 A. APPENDIX A: OBJECTIVES, SCOPE, AND METHODOLOGY i. Objectives and Scope ...……………….……..………….…………….…………………… 4 ii. Methodology …………………………………….………….…………………………..……… 5 Adult Parole and Probation – Cash handling report #2122-11 May 2022 HIGHLIGHTS Why this audit was performed: A periodic review of internal controls over cash handling of receipts. What was recommended: Recommendations include: • eliminating petty cash monies Adult Parole and Probation – Cash Handling The focus of the review was on internal control over handling of infrequent client payments and other receipts. What was found Overall, the Adult Parole and Probation division performed well in providing fiscal controls over receipts. The division has extensive procedures that are documented and periodically updated. Due to recent Legislative action repealing the collection of probation supervision fees, the division handles limited client payments and other receipts. The division may be able to eliminate two separate petty cash funds. The County has moved away from petty cash by issuing procurement cards and providing faster processing times for County payments. Deschutes County Internal Audit Adult Parole and Probation – Cash handling report #2122-11 May 2022 Page 1 1.1 BACKGROUND ON THE AUDIT 1. Introduction Audit Authority: The Deschutes County Audit Committee authorized the review of cash handling practices of Adult Parole and Probation in the Internal Audit Program Work Plan for 2022-2023. Internal audits of cash handling are routinely performed for identified County departments. Audit objectives, scope, and methodology can be found in Appendix A. 1.2 BACKGROUND ON ADULT PAROLE AND PROBATION Graph I Composition of Adult Parole and Probation Revenues (FY22 Budget) Adult Parole and Probation is a division of the Community Justice Department. The division operates the Community Corrections program, including supervision and services for persons on felony and specified misdemeanor probations, parole and post-prison supervision, and transitional leave from prison. Services include community service crew and community based volunteer service, cognitive behavioral programming and electronic monitoring of supervised persons. The Community Safety and Restoration program is also operated by Adult Parole and Probation. It includes monitoring and supervision of persons on misdemeanor probation and contractual management of pretrial electronic monitoring services. Probation supervision fees were repealed in the 2021 Legislative Session. Adult Parole and Probation – Cash handling report #2122-11 May 2022 Page 2 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. 2.1 OBSERVATION Adult Parole and Probation don’t frequently receive client payments. Overall, the Adult Parole and Probation division performed well in providing fiscal controls over infrequent collected revenues. The following observation is noted to help further improve the procedures put into place. Petty cash funds duplicate existing County payment options. Adult Parole and Probation has two funds of petty cash being utilized for small purchases: • A traditional fund of $150 approved through resolution. It is used minimally, with only one expenditure receipt pending and no reimbursements in the last year; and • Another fund of $452.50 for providing clients’ money orders to purchase DMV identification cards. Money orders are requested only 10 times per year on average. Finance assisted in the Adult Parole and Probation – Cash handling report #2122-11 May 2022 Page 3 establishment of this petty cash fund to address the specific needs of the division, but it did not follow the normal process. The County has moved away from petty cash by issuing procurement cards and providing faster processing times for County payments. Procurement cards provide greater efficiencies and improve financial controls over petty cash funds. The County has a weekly check processing cycle to ensure payments are consistently issued. Sufficient controls over the petty cash funds were in place, however petty cash monies increase the probability of errors and are a target for theft/fraud. Internal processes should be regularly evaluated as business needs change. It is recommended Adult Parole and Probation eliminate their petty cash monies. 3. Management response Adult Parole and Probation Division Deevy Holcomb, Community Justice Director Thank you for your recent internal audit of the Parole & Probation’s Cash Handling policies and practices. We appreciate the work, agree with the findings, and accept your sole recommendation associated Adult Parole and Probation – Cash handling report #2122-11 May 2022 Page 4 with Observation 2.1 that the division’s petty cash funds duplicate County payment options. Specifically you recommend that Adult Parole and Probation eliminate our petty cash monies. Staff and I have analyzed and do not see significant drawbacks to eliminating our petty cash fund, the only one being a possible weeklong wait for clients needing a DMV identification card in order for a check to be processed. The protections that are afforded through use of purchase card or check processing outweigh this drawback. I will direct staff to close out and eliminate use of petty cash funds in accordance with Finance requirements for such an activity, no later than June 30, 2022. I will update you when that is completed. i. OBJECTIVES and SCOPE Appendix A: Objective, Scope, and Methodology “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. Additionally, review management of any change, petty cash, checking accounts, and billings, as applicable. 2) Be aware of any issues with compliance with federal and state regulations and requirements, as may be applicable. Scope and timing: The audit took place in April 2022. Included in review of cash handling of the Adult Parole and Probation division are accounting funds primarily handled in Fund 355. The division employs petty cash, but does not use change funds or a checking account. The focus of the review was on internal control over handling of third party client payments. The scope of the audit did not include all aspects of internal controls employed. Adult Parole and Probation – Cash handling report #2122-11 May 2022 Page 5 ii. 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 Practices Policy F-11), • Reviewing written procedures and documents provided, • Reviewing and analyzing receipt transaction data for the identified funds, • Reviewing and analyzing revenue data for the identified funds, and • Reviewing petty cash monies on hand in accordance with Petty Cash Policy F-8. 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. Adult Parole and Probation – Cash handling report #2122-11 May 2022 Page 6 {End of Report} Please take a survey on this report by clicking on the attached link: https://www.surveymonkey.com/r/2122-11 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.