HomeMy WebLinkAboutCash Controls - 4HReport# 04/05 - 8 (Dated July 22, 2005)
EXTENSION AND 4-H
COUNTY SERVICE DISTRICT -
Review of Internal Controls
Over Receipts
Presented to the
Deschutes County Audit Committee
by the
Internal Audit Program
David Givans, CPA – County Internal Auditor
Report# 04/05 - 8 Dated July 22, 2005
Deschutes County,
Oregon
Report# 04/05 - 8 (Dated July 22, 2005)
{This page intent ionally left blank}
Report# 04/05 - 8 (Dated July 22, 2005)
To: Audit Co mmittee
CC: Mike Daly, Tom DeWolf
From: David Givans, Count y Internal Auditor
Subject: Internal Audit Report on Extension and 4-H County Service District
(Report #04/05 - 8)
Date: July 22, 2005
The enclosed audit report provides informat ion concerning the internal control structure of
the Deschutes County Extensio n and 4-H County Service District (the District) as it relates
to handling of receipts. Informat ion contained in this reports is from interviews and
observat ions performed.
Audit results have been discussed with the District as well as appropriate Oregon State
Universit y Extension Staff. Management’s response is included at the end of this report and
addresses the findings and reco mmendat ions.
The staff of District were cooperative and responsive during the review.
Deschutes County,
Oregon
Internal Audit Program
David Givans, CPA
County Internal Auditor
Deschutes Services Center
1300 NW Wall St., Suite 200
Bend, OR 97701
Phone: 541-330-4674
Fax: 541-385-3202
davidg@co.deschutes.or.us
Report# 04/05 - 8 (Dated July 22, 2005)
{This page intent ionally left blank}
Report# 04/05 - 8 (Dated July 22, 2005)
EXTENSION AND 4-H
COUNTY SERVICE DISTRICT -
Review of Internal Controls Over Receipts
TABLE OF CONTENTS:
EXECUTIVE SUMMARY
1. INTRODUCTION
1.1. Background …………………………………………………………………….…... 1
1.2. Object ives and Scope …………………………………………………………...…. 2
1.3. Methodology …………………………………………………………………..…… 2
2. FINDINGS
2.1. Laws, regulat ions and policy ………………………………………………………. 3
2.2. Controls ………………………………………………………………………….. 3-9
2.3. Performance ….……………………………………………………………….... 9-10
3. RESPONSE FROM MANAGEMENT ……………………………………..... 11-13
Report# 04/05 - 8 (Dated July 22, 2005)
{THIS PAGE LEFT BLANK}
Report# 04/05 - 8 (Dated July 22, 2005) i
EXTENSION / 4-H County Service District –
Evaluation of Internal Controls Over Receipts
Report# 04/05 - 8 (Dated July 22, 2005)
EXECUTIVE SUMMARY
Purpose
This audit was init iated in response to the County’s desire to review the internal controls
over its cash handling. This audit is one of a number of limited scope audits to review
internal controls over receipt ing of monies. The report also includes managements’
response to these recommendat ions.
Results in brief
Audit findings result from incidents of non-co mpliance with stated procedures and/or
departures from prudent operation. The findings are, by nature, subject ive.
The fo llowing highlights the significant findings presented to management for consideration
in a summarized format. The findings and an excerpt of the associated recommendat ion
include:
LAWS, REGULATIONS AND POLICY
Monies are not deposited daily and sometimes not weekly
It is reco mmended that District staff establish procedures to deposit all District monies on a
daily basis in accordance with Count y po licy.
It is reco mmended that OSU monies received to be deposited in accordance with those
policies, which is probably weekly but at times may be daily.
It is reco mmended the monies receipted on behalf of other organizat ions be accounted for
unt il deposited and locked up. For non-profit organizat ion monies, the underlying
accounting should be provided to the organization with a copy to the bookkeeper (if
applicable). It is recommended for monies held at the end of the day to be secured in a safe
or locking file cabinet. Tamperproof bank bags may be utilized for counted and reconciled
mo nies.
CONTROLS
District customers are not provided receipts
It is reco mmended the District obtain and utilize receipt books conforming to County policy.
From discussio ns with staff, it appears the receipt book should be in triplicate so one can be
Report# 04/05 - 8 (Dated July 22, 2005) ii
provided to the customer, one can be retained, and one can be provided to the office
manager with the monies. The office manager should track the receipt numbering to assure
they have received monies for all o f the receipts issued. The receipt books used by District
staff should have the name of the District on them so it is clear who received the monies.
It is reco mmended that monies, received by mail, be logged into a schedule (probably by the
office manager) so that monies may be reconciled through to deposits. This log may be
computerized and used to aggregate monies co llected by organizat ion. A receipt may be
issued for total mail payments received to facilitate having all monies received represented
in receipts. Supporting documentation should be notated with the form and amount of
payment received and forwarded to the appropriate staff for accounting. Monies received
should be centralized with the office manager for deposit. A supervisor should periodically
validate deposits to receipts issued and the accounting records.
The monies received are not deposited intact
It is reco mmended the monies received be deposited intact to Deschutes Count y 4-H
Leaders Associat ion and then an invo ice submitted for the amount due to OSU for
publicat ion costs. This might also beco me part of the account ing for monies received.
The District needs additional endorsement stamps
It is reco mmended District staff endorse all inco ming checks when the mail is opened or
upon receipt. It is reco mmended the District obtain a County endorsement stamp for the
District. County Finance has since ordered an endorsement staff for the District. It is
recommended the District work with non-profits organizat ions, they receive mo nies for, to
ident ify what endorsement stamps are needed.
No formal agreement defining roles and responsibilities between the
District and non-profit organizations
It is reco mmended the District consider developing operational agreements with non-profit
organizat ions to better define the nature and extent of services that can or will be provided
and the coordinat ion of those services to fulfill the District’s purpose. The District should
establish sufficient internal controls to cover these requested services.
Written accounting policies and procedures concerning duties of staff are
insufficient
It is reco mmended District staff document their accounting policies and procedures. The
procedures should emphasize the areas of monitoring, supervision and segregat ion of dut ies.
Report# 04/05 - 8 (Dated July 22, 2005) iii
Lack of adequate segregation of duties between 4-H Leaders Association
and the District
It is reco mmended the District not be the direct recipient of 4-H Leaders Association bank
statements. It is recommended that District staff transit ion, as soon as possible, the
accounting dut ies to the 4-H Leaders Associat ion or their contracted bookkeeper.
It is reco mmended the District provide an account ing of mo nies received and deposited on
behalf o f any non-profit organizations. The non-profit organizat ion should be encouraged to
reconcile deposits to the accounting informat ion provided.
It is reco mmended that District services to non-profit organizat ions about receipt ing of
mo nies, be limited to making timely deposits to authorized bank accounts. Other services
might be contemplated given appropriate controls and agreement.
It is reco mmended that any check stock retained be maintained in a locked file cabinet. The
check stock should be controlled by recording the stock on hand and maintaining a list of
issued check numbers.
It is reco mmended for District staff to leave co llectio n and scho larships decisio ns to the
associated non-profit organizat ion
Volunteer coordinator utilizes credit cards with District name for 4-H
business
It is reco mmended these cards be destroyed. It would be better if the Deschutes County 4-H
Leaders Associat ion established appropriate policies and guidelines for handling of
vo lunteer paid expenses that District staff could fo llow.
Some received monies are commingled with change funds
It is reco mmended change monies be secured. Monies in excess of the authorized $10
should be deposited. Each day the drawer should start only with the authorized change
funds of $10 and should be verified by custodian of those monies.
PERFORMANCE
Use of accounting software inefficient
It is reco mmended the District consider conso lidat ing procedures and software to account
for monies being received.
Report# 04/05 - 8 (Dated July 22, 2005) iv
OSU Registration system improvement needed
It is reco mmended a supervisor periodically reconcile deposits to registration informat ion
entered. In order to facilitate this with the exist ing software, District staff should work with
OSU staff to ask for improvements in the software so they can better utilize the power of the
system. This would require:
date sensit ive reports and
reports of monies receipted by category (including relevant fields and receipt
number).
Report# 04/05 - 8 (Dated July 22, 2005) Page 1
1. INTRODUCTION
1.1 BACKGROUND
Audit Authorit y:
As approved by Deschutes County’s Audit Committee, a review was conducted of the
internal controls over receipts for the Deschutes County Extensio n and 4-H County Service
District (the District). The Audit Co mmittee authorized the audit by its approval o f the
County’s internal audit workplan for fiscal year 2004/2005.
Purpose of Audit:
This audit was init iated in response to the County’s desire to review the internal controls
over its cash handling. This audit is one of a number of limited scope audits to review
internal controls over receipt ing of monies. This report also includes managements’
response to these recommendat ions.
The District
The voters of Deschutes County approved the format ion of the District in 1982. The District
operates on a 2.24 cent per thousand permanent rate. The funding is used to support the
Oregon State Universit y Extensio n services to the people of Deschutes County. OSU
Extensio n offers programs in 4-H, youth, agriculture, home econo mics, horticulture, and
energy conservat ion. An advisory co mmittee assists staff in planning, promoting,
developing, implement ing, and evaluat ing programs to meet the needs and interests of
County residents. The District works with various non-profit organizat ions including the
Deschutes County 4-H Leaders Associat ion.
Internal Controls:
Government is responsible for using public assets and public funds in a prudent and
responsible manner. Public sector managers in turn are responsible for developing and
maintaining procedures to protect public assets and promote efficient and effect ive services.
These procedures and the environment promoted by management are called internal
controls. Management is ult imately responsible for implement ing appropriate internal
control systems.
Effect ive internal controls minimize the potential for errors and/or irregularit ies to occur. If
they do occur, effect ive internal controls detect such errors and/or irregularit ies in a t imely
manner during the normal course of business. An effect ive system of internal controls:
· Safeguards assets fro m waste, fraud and inefficient use
· Promotes accuracy and reliabilit y in the account ing records
· Encourages and measures co mpliance wit h established practices
· Evaluates the efficiency of operations
The audit disclo sed certain po licies, procedures and practices that could be improved. The
audit was neit her designed nor intended to be a detailed study of every relevant system,
procedure or transact ion. Accordingly, the opportunit ies for improvement presented in the
report many not be all-inclusive of areas where improvement may be needed.
Report# 04/05 - 8 (Dated July 22, 2005) Page 2
1.2 OBJECTIVES and SCOPE
Audit objectives:
The object ives of the audit were:
1. To review the internal control structure and internal procedures to handle receipts.
Opportunities for increased efficiency and effect iveness were included in the
recommendat ions when applicable.
Scope:
The audit was limit ed to the District’s receiving of mo nies during the normal course of
business as described during May 2005 interviews and observat ions. The review procedures
were not extensive enough to provide an overall conclusion as to the effect iveness of the
internal control system for the District.
Since the most of the monies received by District staff are monies for OSU or the 4-H
Leaders Associat ion (the Associat ion), the focus was on ways to control these monies while
they are under the control of District staff. The audit procedures did not focus on procedures
in place by these other organizat ions and were limited to those duties being provided by
District staff and their appropriateness.
1.3 METHODOLOGY
The audit involved gaining an understanding o f the receipting control environment as
described by management and staff during interviews. This review is, by nature, subject ive.
Audit procedures were limited to:
· Developing an understanding of District issues through review o f audit reports and
associated recommendat ions issued by other local governments.
· Interviews with District staff to ident ify procedures and related internal control
environment.
· Observations of actual transact ions and procedures to see how the procedures were
being performed.
The audit was conducted in accordance with Government Auditing Standards issued by the
Comptroller General of the United States.
2. FINDINGS
Some internal controls over receipts are in place but more segregation of duties, monitoring
controls and supervisory controls could be used to assure monies received and receipted are
protected until deposit with the appropriate ent ity.
Report# 04/05 - 8 (Dated July 22, 2005) Page 3
2.1 Laws, regulations and policy
Monies are not deposited daily and sometimes not weekly
District staff are not routinely making deposits on a daily basis and so met imes not weekly.
Monies are not secured in a locked file cabinet or safe. Monies held for deposit include
District monies, OSU monies, and non-profit organizat ion monies. Some mo nies received
are held for the non-profit organizat ion’s Treasurer to pick up and deposit. The vo lunteer
coordinator indicated that sometimes the undeposited 4-H cash is used for change during 4-
H events. All staff have access to areas that monies are kept. The monies may or may not
be accounted for by staff but there is no indication the organization receives an account ing
for the monies received.
County po licy (P-1999-075) requires all mo nies received to be deposited within 24 hours
with the Treasurer’s Office or the Bank. OSU policy (FIS 1401-01) indicates that “Unless
the total is more than $1,000 and there is sufficient justification, deposits must be made
daily. Under no circumstances should deposits be held for longer than one week.” Money
not deposited that day should be secured in a safe or locking file cabinet.
Wit hout sufficient physical securit y and accounting of mo nies received, it would be difficult
to know if all mo nies are deposited. Monies not deposited could be misappropriated.
It is recommended the monies, receipted on behalf of other organizations, be accounted
for until deposited and locked up. For non-profit organization monies, the underlying
accounting should be provided to the organization with a copy to the bookkeeper (if
applicable).
It is recommended for monies held at the end of the day to be secured in a safe or locking
file cabinet. Tamperproof bank bags may be utilized for counted and reconciled monies.
It is recommended that District staff establish procedures to deposit all District monies on
a daily basis in accordance with County policy.
It is recommended that OSU monies received to be deposited in accordance with those
policies, which is probably weekly but at times may be daily.
As discussed further in this report, an agreement should be made with non-profit
organizations as to the expected time frame for delivery of deposits to the Bank or delivery
to one of their officers. It is recommended for this to be daily but no greater than weekly.
2.2 Controls
District customers are not provided receipts
District staff are not routinely providing customer receipts on collect ion of monies. Monies
are somet imes received in cash. The District, itself, receives very litt le outside monies.
Report# 04/05 - 8 (Dated July 22, 2005) Page 4
However, District staff receive mo nies for OSU or non-profit organizat ions for activit ies
including class registrations, fair entries, sponsorships, fundraising and publicat ions. The
District has an un-numbered receipt book that is used infrequent ly. A pre-numbered OSU
receipt book is used primarily to transmit account ing informat ion to OSU.
County po licy #1999-075 requires all invo icing for goods and services and subsequent
collect ion shall be recorded using pre-numbered forms imprinted with the Count y’s name
and department. No departments will use “generic” receipts. Departments using such
“generic” receipts should retain the receipt books but effect ively void any unused receipt
stock.
The use of generic receipts books provides an ineffective control over monies receipted.
Given the current system, it would be difficult to determine if all mo nies received are
deposited or turned over to the proper organizat ion. Oversight by the non-profit
organizat ions and OSU is limited.
It is recommended the District obtain and utilize receipt books conforming to County
policy. From discussions with staff, it appears the receipt book should be in triplicate so
one can be provided to the customer, one can be retained, and one can be provided to the
office manager with the monies. The office manager should track the receipt numbering
to assure they have received monies for all of the receipts issued. The receipt books used
by District staff should have the name of the District on them so it is clear who received
the monies.
It is recommended that monies, received by mail, be logged into a schedule (probably by
the office manager) so that monies may be reconciled through to deposits. This log may
be computerized and used to aggregate monies collected by organization. A receipt may
be issued for total mail payments received to facilitate having all monies received
represented in receipts. Supporting documentation should be notated with the form and
amount of payment received and forwarded to the appropriate staff for accounting.
Monies received should be centralized with the office manager for deposit. A supervisor
should periodically validate deposits to receipts issued and the accounting records.
In situations where there is a class or event where all participants are listed and there is
insufficient time and resources to provide individual receipts, one person should be
responsible for collecting monies. When possible, another person should be responsible
for noting attendance and payment on the class list. Attendance sheets should be
maintained for verification and a person separate from the person collecting the money
should reconcile the monies to the event participants. Fees collected may be transferred to
one pre-numbered receipt.
One additional consideration for monies received, is the need to pass on important
donation information from contributors to the non-profit organizations. Such checks
should be photocopied and passed on to these organizations (or their representative) so
their responsibilities for providing a charitable contribution receipt can be met.
Report# 04/05 - 8 (Dated July 22, 2005) Page 5
The monies received are not deposited intact
Monies received, primarily for 4-H registration fees, are separated and some go to 4-H
Leaders Associat ion and so me to OSU. Some of the mo nies are due to OSU for publication
costs but, instead of processing a payment request to the Deschutes County 4-H Leaders
Associat ion, these monies are pulled from the registration monies. Amounts received are
accounted for in various ledgers wit hin a Quicken accounting program. The accounting
informat ion of mo nies received is not shared with anyo ne or used to reconcile to monies
deposited.
All receipts should be deposited intact in the form received (i.e. cash or check). In no
instance should personal checks or those of customers be cashed fro m undeposited funds.
Wit hout sufficient controls over collected monies, mo nies might be exchanged or removed
without appropriate oversight.
It is recommended the monies received be deposited intact to Deschutes County 4-H
Leaders Association and then an invoice submitted for the amount due to OSU for
publication costs. This might also become part of the accounting for monies received.
The District needs additional endorsement stamps
District staff do not have a County endorsement stamp and have been sending County
deposits via interoffice mail and wit hout endorsement. Monies are also received for
Deschutes County 4-H Leaders Associat ion and these checks are not always endorsed
immediately upon receipt.
All checks (or negotiable instruments) should be endorsed upon receipt. Endorsing all
checks received upon receipt minimizes the opportunit y for misuse. Endorsement stamps
should include at least the organizat ion’s name; bank name and account number; and
indicate “for deposit only”.
It is recommended District staff endorse all incoming checks when the mail is opened or
upon receipt.
It is recommended the District obtain a County endorsement stamp for the District.
County Finance has since ordered an endorsement staff for the District.
It is recommended the District work with non-profits organizations, they receive monies
for, to identify what endorsement stamps are needed.
Report# 04/05 - 8 (Dated July 22, 2005) Page 6
No formal agreement defining roles and responsibilities between the
District and non-profit organizations
The District performs many operational duties on behalf o f non-profit organizat ions
(primarily the 4-H Leaders Associat ion). There is no agreement as to the appropriate level
of duties that should be performed and/or allowable to be performed. No reimbursement for
services occurs.
When District resources are being utilized to support the operations of a private non-profit
organizat ion, the roles and responsibilit ies should be clearly defined so that the Board of
County Co mmissio ners can clearly ascertain the public benefit received vs. the resources
used. Without a clearly defined agreement, there is no assurance the use of District
resources provide primarily a public benefit rather than primarily a benefit to a private
organizat ion. District staff should only provide general support services and these should be
enumerated by formal written procedures, contain proper internal controls and segregat ion
of duties.
The District is at risk if they do not have sufficient internal controls and segregat ion of
duties for the agreed upon services performed for non-profit organizat ions.
It is recommended the District consider developing operational agreements with non-
profit organizations to better define the nature and extent of services that can or will be
provided and the coordination of those services to fulfill the District’s purpose. The
District should establish sufficient internal controls to cover these requested services.
Written accounting policies and procedures concerning duties of staff are
insufficient
There were no current written accounting policies and procedures for the District staff. Staff
routinely co llects monies on behalf o f OSU and non-profit organizat ions (primarily 4-H
Leaders Associat ion). District staff have been with the District for numerous years and their
duties far exceed their current job descript ions. Many of these duties include specialized
programs for which instruction would be necessary.
Communicat ion is an essent ial co mponent of internal controls. Written policies and
procedures are effect ive for controls. Well-designed and maintained po licies and procedures
enhance accountabilit y and consistency. The resulting documentation is also useful for
training and cross-training personnel.
The lack o f comprehensive written accounting procedures can lead to inadequately planned
controls, inadequate supervisio n, poor and inadequate training, and lack of adherence to
stated control procedures.
It is recommended District staff document their accounting policies and procedures. The
procedures should emphasize the areas of monitoring, supervision and segregation of
Report# 04/05 - 8 (Dated July 22, 2005) Page 7
duties. In addition, staff should document the extent of their daily duties and the
applications they use to facilitate cross training.
Lack of adequate segregation of duties between 4-H Leaders Association
and the District
A number of services are being provided by District staff to the Deschutes County 4-H
Leaders Associat ion, which may be inappropriate. These would include:
· District staff are providing account ing services including
- writing checks,
- maintaining supporting informat ion,
- reconciling bank statements, and
- providing annual account ing reports for use by the organizat ion in preparing
their returns.
· The District receives all bank statements for the 4-H Leaders Association. Staff
currently provide the general account statement to the Treasurer. There are 12 bank
statements that District staff are current ly keeping and filing in their o ffices, which
are associated with the above account ing services.
· District staff so met imes deal wit h bad checks or insufficient payment for the 4-H
Leaders Associat ion class registrations. District staff do not currently obtain approval
fro m the non-profit on how to administer these scholarships and bad checks.
· District staff use and store 4-H Leaders Associat ion check stock. This stock is not
locked up and controlled by staff. All staff have access to the stock. Staff are not
signers on these accounts.
Duties should be segregated so that no one person is responsible for receiving, reconciling,
depositing mo ney and posting payments. As noted earlier, District staff receive mo nies for
the 4-H organizat ion and make deposits on behalf of the organizat ion. Collection po licy
should be set and administered by the 4-H organization. It should not be the responsibilit y
of District staff to decide how non-profit monies should be used. Bank statements represent
original financial documents of the organizat ion and should be received by the organizat ions
Treasurer and shared accordingly. Bank statements provide and independent resource of
what has actually been received and disbursed from accounts. Reconciliat ions of the
activit y are an important control element in all accounting systems. Check stock should be
properly controlled and safeguarded in a locked cabinet or safe.
Wit hout sufficient segregation of duties, it may be nearly impossible to detect that monies
are missing.
From discussio ns with District staff, it appears the 4-H will be moving many o f the duties,
noted above, to an outside bookkeeper.
It is recommended the District not be the direct recipient of 4-H Leaders Association bank
statements. It is recommended that District staff transition, as soon as possible, the
accounting duties to the 4-H Leaders Association or their contracted bookkeeper.
Report# 04/05 - 8 (Dated July 22, 2005) Page 8
It is recommended the District provide an accounting of monies received and deposited on
behalf of any non-profit organizations. The non-profit organization should be
encouraged to reconcile deposits to the accounting information provided.
It is recommended that District services to non-profit organizations, in regards to
receipting of monies, be limited to making timely deposits to authorized bank accounts.
Other services might be contemplated given appropriate controls and agreement.
It is recommended that any check stock retained be maintained in a locked file cabinet.
The check stock should be controlled by recording the stock on hand and maintaining a
list of issued check numbers.
It is recommended for District staff to leave collection and scholarships decisions to the
associated non-profit organization.
Volunteer coordinator utilizes credit cards with District name for 4-H
business
The District’s vo lunteer coordinator utilized their personnel credit to obtain two credit card
accounts for use in Deschutes County 4-H Leaders Associat ion activit ies. The cards
indicate they are for Deschutes County/ 4-H. The vo lunteer coordinator is the only signer
on these accounts. The Deschutes County 4-H Leaders Associat ion direct ly pays fro m
statements on these accounts.
The County rescinded po licies allowing for department credit card usage. Since then, credit
cards are allowed in only the most controlled circumstances such as County po licy covering
emergency use by the Sheriff’s Department.
Given that the County policy has discouraged the use of County credit cards, it can be
assumed that this usage is discouraged at the District level. The credit card labeling
indicates a connect ion wit h the Deschutes County / 4-H District.
It is recommended these cards be destroyed. It would be better if the 4-H Leaders
Association established appropriate policies and guidelines for handling of volunteer paid
expenses that District staff could follow. As a note - the County encourages employees to
use County accounts with vendors, local and non-local, or establish credit with vendors
instead of using personal funds. These are billed and supporting documentation and
approval reviewed during payment.
Some received monies are commingled with change funds
District staff has kept some $20-$40 in received monies (fro m small publicat ions) with
change monies in an unlocked drawer. The monies are accessible by more than one staff
person at a time. Staff indicated their authorized OSU change monies were $10. The
District has no authorized change monies. Monies in the drawer had not been counted and
Report# 04/05 - 8 (Dated July 22, 2005) Page 9
there were no receipts to account for monies in the drawer.
Access to cash drawers should be limited. Sole custody over cash register drawers is the
most effective way to track problems in the event the mo nies and activit y reports do not
reconcile. All mo nies received should be receipted.
Wit h insufficient documentation of monies received; insufficient physical securit y o f the
cash drawers (due to concurrent or overnight access); unt imely deposit of monies co llected;
and co mmingling wit h change monies, these revenues could be stolen without notice.
It is recommended change monies be secured. Monies in excess of the authorized $10
should be deposited. Each day the drawer should start only with the authorized change
funds of $10 and should be verified by custodian of those monies. As noted in a previous
recommendation, all customers should receive a receipt on sales.
2.3 Performance
Use of accounting software inefficient
Numerous Quicken ledgers are used by District staff to enter monies to be tracked. One staff
person uses the accounting so ftware to facilit ate custody of these funds unt il they are handed
over to other District staff. Other District staff use, yet other Quicken ledgers, to post
accounting for the Deschutes County 4-H Leaders Associat ion. It is not possible to get an
overall account ing from any one system.
Account ing so ftware should be ut ilized to streamline input and provide control over the
number and amounts of receipts. If possible, staff should only input the informat ion once.
Potential software solut ions could include QuickBooks or a spreadsheet program like Excel.
QuickBooks is a more powerful account ing system (than Quicken) and may be utilized to
accumulate all of the data currently being arranged in mult iple ledgers. Receipts can be
accounted for in mult iple revenue accounts that are currently represented by the separate
ledgers in Quicken. It is also possible to report on the activit y in a more meaningful manner.
This might allow for easier reconciliat ion to the deposits. QuickBooks also offers an online
versio n, which can be used by mult iple staff and be accessed remotely. Spreadsheet
programs (as in Excel) could also be used to gather and report on receipts issued and mo nies
deposited.
It is recommended the District consider consolidating procedures and software to account
for monies being received.
OSU Registration system improvement needed
From discussio ns with District staff, the OSU registration system has the capacit y to accept
receipt informat ion but has a poor reporting interface to report on these receipts. Therefore,
Report# 04/05 - 8 (Dated July 22, 2005) Page 10
the receipting system has not been utilized. Reconciling act ivit y in the registration system to
the monies received would be a useful control. Fair registrants’ sign up for projects and
these are entered into the OSU program and into three separate Quicken ledgers to track the
mo nies to the 4-H Leaders Associat ion and OSU. The informat ion in the OSU system and
Quicken are not reconciled.
Computerized systems should have sufficient reports and controls to allow sufficient
mo nitoring and supervisio n.
Wit hout a reconciling of monies to the registrant database, it would be difficult to know if
all mo nies have been accounted for.
It is recommended a supervisor periodically reconcile deposits to registration information
entered. In order to facilitate this with the existing software, District staff should work
with OSU staff to ask for improvements in the software so they can better utilize the power
of the system. This would require:
date sensitive reports and
reports of monies receipted by category (including relevant fields and receipt
number).
Report# 04/05 - 8 (Dated July 22, 2005) Page 11
6. REPONSE FROM MANAGEMENT (responses bolded/italics)
2.1.a. – It is recommended the monies receipted on behalf o f other organizat ions be
accounted for until deposited and locked up. For non-profit organizat ion monies, the
underlying accounting should be provided to the organizat ion wit h a copy to the bookkeeper
(if applicable).
Agreed
2.1.b. – It is recommended for monies held at the end of the day to be secured in a safe or
locking file cabinet. Tamperproof bank bags may be utilized for counted and reconciled
mo nies.
Agreed
2.1.c. – It is recommended that District staff establish procedures to deposit all District
mo nies on a daily basis in accordance wit h County policy.
Receive state, county, and organization monies.
State will be deposited weekly as per OSU policy.
County will be deposited daily as per county policy.
Non-profit organization will be deposited by that association.
2.1.d. - It is recommended that OSU monies received to be deposited in accordance with
those policies, which is probably weekly but at times may be daily.
OSU monies deposited weekly as per OSU policy.
2.1.e. – As discussed further in this report, an agreement should be made wit h non-profit
organizat ions as to the expected time frame for delivery o f deposits to the Bank or delivery
to one of their officers. It is recommended for this to be daily but no greater than weekly.
Agreed
2.2.a. – It is recommended the District obtain and utilize receipt books conforming to
County po licy. From discussio ns with staff, it appears the receipt book should be in
triplicate so one can be provided to the customer, one can be retained, and one can be
provided to the office manager with the monies. The office manager should track the receipt
numbering to assure they have received monies for all o f the receipts issued. The receipt
books used by District staff should have the name of the District on them so it is clear who
received the monies.
Agreed
2.2.b. – It is recommended that monies, received by mail, be logged into a schedule
(probably by the o ffice manager) so that monies may be reconciled through to deposits.
This log may be computerized and used to aggregate monies co llected by organizat ion. A
receipt may be issued for total mail payments received to facilitate having all mo nies
received represented in receipts. Supporting documentation should be notated with the form
and amount of payment received and forwarded to the appropriate staff for accounting.
Monies received should be centralized with the office manager for deposit. A supervisor
should periodically validate deposits to receipts issued and the accounting records.
Agreed
Report# 04/05 - 8 (Dated July 22, 2005) Page 12
2.2.c. In situations where there is a class or event where all part icipants are listed and there
is insufficient time and resources to provide individual receipts, one person should be
responsible for collect ing monies. When possible, another person should be responsible for
noting attendance and payment on the class list. Attendance sheets should be maintained for
verification and a person separate from the person collect ing the money should reconcile the
mo nies to the event participants. Fees co llected may be transferred to one pre-numbered
receipt.
Agreed
2.2.d. – One addit ional considerat ion for monies received, is the need to pass on important
donation information fro m contributors to the non-profit organizations. Such checks should
be photocopied and passed on to these organizat ions (or their representative) so their
responsibilit ies for providing a charitable contributio n receipt can be met.
Agreed
2.2.e. – It is recommended the monies received be deposited intact to Deschutes Co. 4-H
Leaders Associat ion and then an invo ice submitted for the amount due to OSU for the
publicat ion costs. This might also beco me part of the accounting for monies received.
Agreed
2.2.f. – It is recommended District staff endorse all incoming checks when the mail is
opened or upon receipt..
Agreed
2.2.g. – It is recommended the District obtain a Count y endorsement stamp for the District.
Agreed – we have received a stamp.
2.2.h. – It is recommended the District work with non-profits organizat ions, they receive
mo nies for, to identify what endorsement stamps are needed.
Agreed
2.2.i. – It is recommended the District consider developing operational agreements with non-
profit organizations to better define the nature and extent of services that can or will be
provided and the coordinat ion of those services to fulfill the District’s purpose. The District
should establish sufficient internal controls to cover these requested services.
Agreed
2.2.j. – It is recommended District staff document their account ing policies and procedures.
The procedures should emphasize the areas of monitoring, supervisio n and segregation o f
duties. In addit ion, staff should document the extent of their daily dut ies and the
applicat ions they use to facilitate cross training.
Agreed
2.2.k. – It is recommended the District not be the direct recipient of 4-H Leaders Associat ion
bank statements. It is recommended that District staff transit io n, as soon as possible, the
accounting dut ies to the 4-H Leaders Associat ion or their contracted bookkeeper.
Agreed
Report# 04/05 - 8 (Dated July 22, 2005) Page 13
2.2.l. It is recommended the District provide an accounting of monies received and
deposited on behalf o f any non-profit organizat ions. The non-profit organizat ion should be
encouraged to reconcile deposits to the accounting informat ion provided.
This office will not be making Leaders Assoc. deposits as per OSU policy
Agreed on all others.
2.2.m. – It is recommended that District services to non-profit organizat ions, in regards to
receipt ing of monies, be limited to making timely deposits to authorized bank accounts.
Other services might be contemplated given appropriate controls and agreement.
This office will not be making Leaders Assoc. deposits as per OSU policy.
2.2.n. - It is reco mmended that any check stock retained be maintained in a locked file
cabinet. The check stock should be controlled by recording the stock on hand and
maintaining a list of issued check numbers.
Agreed
2.2.o. – It is recommended for District staff to leave collect ion and scho larships decisio ns to
the associated non-profit organizat ion.
Agreed
2.2.p. It is recommended these cards be destroyed. It would be better if the 4-H Leaders
Associat ion established appropriate policies and guidelines for handling of vo lunteer paid
expenses that District staff could fo llow.
Agreed
2.2.q. – It is recommended change monies be secured. Monies in excess of the authorized
$10 should be deposited. Each day the drawer should start only wit h the authorized change
funds of $10 and should be verified by custodian of those monies. As noted in a previous
recommendat ion, all customers should receive a receipt on sales.
Agreed
2.3.a. – It is recommended the District consider conso lidat ing procedures and software to
account for monies being received.
Agreed
2.3.b. – It is recommended a supervisor periodically reconcile deposits to registration
informat ion entered. In order to facilitate this wit h the exist ing so ftware, District staff
should work with OSU staff to ask for improvements in the software so they can better
utilize the power of the system. This would require:
- date sensit ive reports and
- reports of monies receipted by category (including relevant fields and receipt
number).
Agreed