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Home My WebLink AboutCash controls - Fair ticket and changeReport# 05/06 - 2 (Dated November 3, 2005) 2005 COUNTY FAIR - Review of Internal Controls Over Gate Receipts Presented to the Deschutes County Audit Committee by the Internal Audit Program David Givans, CPA – County Internal Auditor Report# 05/06 - 2 Dated November 3, 2005 Deschutes County, Oregon Report# 05/06 - 2 (Dated November 3, 2005) {This page intent ionally left blank} Report# 05/06 - 2 (Dated November 3, 2005) To: Audit Co mmittee, Dan Despotopulos CC: Mike Daly, Tom DeWolf From: David Givans, Count y Internal Auditor Subject: Internal Audit Report on 2005 County Fair internal controls over gate receipts (Report #05/06 - 2) Date: November 3, 2005 The enclosed audit report provides informat ion concerning the internal control structure of the Deschutes County 2005 County Fair as it relates to handling of gate receipts. Informat ion contained in this reports is fro m interviews and observat ions performed. Audit results have been discussed with Fair/expo management, the Finance Depart ment, and the Redmond Rotary club. Responses from Fair/expo management and the Redmond Rotary are included at the end of this report and address the findings and reco mmendat ions. The Finance depart ment did not want to provide a comment until the Fair/expo management had determined their course of act ion in response to these recommendat ions. Fair/Expo staff, Finance staff, and Rotary vo lunteers 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# 05/06 - 2 (Dated November 3, 2005) {This page intent ionally left blank} Report# 05/06 - 2 (Dated November 3, 2005) 2005 COUNTY FAIR - Review of Internal Controls Over Gate Receipts TABLE OF CONTENTS: EXECUTIVE SUMMARY 1. INTRODUCTION 1.1. Audit purpose ………………………………………………………………….…... 1 1.2. Object ives and Scope …………………………………………………………...…. 1 1.3. Methodology …………………………………………………………………..…… 2 1.4. Background of County Fair ……………………………………………………… 2-4 2. FINDINGS 2.1. Controls ………………………………………………………………………….. 5-9 2.2. Performance ….……………………………………………………………….... 9-10 2.3. Laws, regulat ions and policies …..……………………………………………. 10-11 3. RESPONSES FROM COUNTY MANAGEMENT and ROTARY 3.1. Fair/expo management ………………………………...................................... 11- 13 3.2. Redmond Rotary ……………………………………………………………..…… 13 Report# 05/06 - 2 (Dated November 3, 2005) {THIS PAGE LEFT BLANK} Report# 05/06 - 2 (Dated November 3, 2005) i 2005 County Fair - Review of Internal Controls Over Gate Receipts Report# 05/06 - 2 (Dated November 3, 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 considerat ion in a summarized format. The findings and an excerpt of the associated recommendat ion include: CONTROLS More training needed for volunteer ticket sellers It is reco mmended that Fair management document ticket selling po licies and procedures. It is also recommended that all t icket sellers should be required to attend training sessio ns (each year) and document their adherence to the Fair’s policies and procedures. It is recommended for Fair management to approve a slate of ticket seller attendants and time slots. Fair management should manage the schedule for ticket sellers. Time slots should only be filled with ticket sellers meet ing Fair management requirements. It is reco mmended a certain number of backup ticket sellers are available during each shift to provide breaks for other ticket sellers and fill-in when needed. Fair management might consider longer and recurring ticket selling shifts to maximize ut ilizat ion of trained t icket sellers. It is recommended that management close-out ticket windows at the end of each shift. Controls over season pass ticket stock and off-site ticket sales could be improved It is reco mmended for season pass ticket stock and off-site ticket sales be controlled and tickets sold reconciled to the revenues received. It is recommended for Fair management to consider alternat ive ticket machines that could control all forms of tickets and utilize tendered money informat ion to provide change amounts. Additional controls needed over monies taken from ticket booths It is reco mmended that ticket booth windows be closed out each shift so that problems wit h specific t icket sellers/shifts can be identified. It is recommended that Fair Report# 05/06 - 2 (Dated November 3, 2005) ii management/Finance consider a method to assure mo nies taken fro m ticket sellers are controlled unt il they are counted and deposited. Used tickets not controlled It is reco mmended that Fair management inst itute policies restrict ing the access to collected tickets or destroying the tickets during collection. The easiest safeguard is to have so me form of canceling or destruction of t ickets as the tickets are collected. Ticket collect ion boxes should be locked and secured during the Fair Booth security improved during the Fair but could be improved It is reco mmended for ticket sellers to keep the ticket booth doors locked and only open them for staff with the proper credentials. PERFORMANCE Anticipated gate receipts versus ticket sales within acceptable levels The current year over/short rate appears comparable in perspect ive of prior year history and in comparison with another local government. LAWS, REGULATIONS AND POLICY Change funds for County Fair increased without Board of County Commissioners resolution It is reco mmended that Fair management (in consultat ion with Finance) prepare an updated resolut ion for County Fair change funds. It is recommended that Fair management (in consultation wit h Finance) consider reducing the amount of change funds. They should consider making change fro m daily receipts (or during the skinning process) and develop the addit ional procedures to accommodate this during the deposit preparation process. It is recommended that Finance mo nitor change fund issuance with approved reso lutions. Report# 05/06 - 2 (Dated November 3, 2005) Page 1 1. INTRODUCTION 1.1 AUDIT PURPOSE 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 2005 County Fair. The Audit Committee authorized the audit by its approval of the Count y’s internal audit workplan for fiscal year 2005/2006. 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 Fair/expo management and Redmo nd Rotary responses to these reco mmendat ions. 1.2 OBJECTIVES and SCOPE Audit objectives: The object ives of the audit were: 1. Review the adequacy o f internal controls over Count y Fair gate admissio ns. 2. Review compliance with exist ing policy and procedures relating to the cash collect ions of County Fair gate admission revenue. Opportunities for increased efficiency and effect iveness were included in the recommendat ions when applicable. Scope: The audit period covered the County Fair dates during August 3 – 7, 2005. Fieldwork was substant ially co mpleted on August 7, 2005. The scope of audit work on internal controls was limited to the handling of gate receipts and did not include all aspects of internal controls over County Fair operations. 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 Report# 05/06 - 2 (Dated November 3, 2005) Page 2 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 included: · Developing an understanding of Fair issues through review of audit reports and associated recommendat ions issued by other local governments, · Interviews with Fair and Finance staff to ident ify procedures and related internal control environment, · Observations of cash handling of gate receipts during the Fair, and · Detailed analyses of revenue reports available from the Count y’s financial system and as developed to summarize the Fair act ivit y. Privileged and Confidential Information In accordance with Oregon Revised Statute - Chapter 192.501(22) & (23), certain privileged and/or confident ial information has not been presented in this report. This informat ion, by the nature of its content, could disclose vulnerabilities and/or reveal securit y measures at public facilit ies. This information has been shared with management. Noteworthy Accomplishments While observing the 2005 County Fair operations, the revenue collection staff (Fair management, Finance department staff, and Rotarians) fully cooperated with the audit. Finance staff had spent considerable t ime outlining procedures for handling of cash. The audit was conducted in accordance with the 2003 Revisio n of Government Audit ing Standards, which are issued by the Co mptroller General o f the United States. 1.4 BACKGROUND of COUNTY FAIR The Deschutes County Fair has been in existence since 1919. In October of 2000, Deschutes County took over management of the fair/expo center. The County Fair is a five- day event and utilizes the fair/expo center. The Count y Fair is put on with a significant number of vo lunteers including the Fair Board, Fair association, Extensio n/4-H and other vo lunteer groups. Fair/Expo management (with the aide of Deschutes County Finance) collect, monitor and safeguard monies collected on behalf o f the County Fair. Fair/expo management primarily uses Redmo nd Rotary for ticket selling and gate admissio ns. Rotary has a history of handling ticket sales for the Fair. This year, Fair/expo management hired temporary workers to attend to one of the Fair gates. Gate receipts are significant ly co mprised of cash. Approximately 9% of 2005 ticket sales were by credit card. Table 1 compares attendance and revenue fro m the 2002 – 2005 Deschutes County Fairs. Report# 05/06 - 2 (Dated November 3, 2005) Page 3 Table 1: Comparative Ticket Receipts and Admissions Information Fair Year Ticket Receipts Admissions 2002 342,222$ 52,441 2003 319,889$ 55,953 2004 331,579$ 60,411 2005 359,202$ 71,952 Source: Finance/Fair management schedules and County financial systems Paid Fair attendance for 2005 was up some 19% from 2004. Ticket receipts were only up some 8% from 2004. Chart 1 compares the ticket receipts and admissio ns over the last four Fairs. Ticket receipts did not increase as much as the gate admissio ns due to the composit ion of the sales. Ticket prices remained the same over this period. Chart 1 - Comparative Ticket Receipts and Admissions Information $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000 2002 2003 2004 2005 R e v e n u e s - 10,000 20,000 30,000 40,000 50,000 60,000 70,000 A d m i s s i o n s Ticket Receipts Admissions Source: Finance/Fair management schedules Based on Fair records, attendance fro m season passes represented 39% of attendance in 2005. Season pass attendance in 2005 was up 62% from prior year. Adult season pass attendance contributed to most of the increase and was up 86% over 2004. Child/Senior season pass attendance was up 22% over 2004. Fair management markets season passes at a price just under the cost for two daily admissio ns. This makes it cost effect ive to purchase a season pass if you plan to attend two or more days. Season passes are available prior to and during the fair. Fair management calculates attendance levels for season passes based on the date sold times the number of days the fair will cont inue to operate. The increase in season passes explains the increase in calculated attendance relat ive to the increase in gate receipts. This is demonstrated in Chart 2. Report# 05/06 - 2 (Dated November 3, 2005) Page 4 Chart 2 - Composition of Attendance (by Type of Ticket and Year) 47%43%39% 24% 21% 16% 19% 18% 28% 10% 11%11% 0% 7%5% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2003 2004 2005 Promotional-No fee Child/Senior Season Pass Adult Season Pass Child/Senior Single Day Adult Single Day Source: Finance/Fair management schedules The County Fair’s largest revenue lines items are gate receipts, a share of carnival receipts, and a share of food concessio ns. The 2005 Fair saw an increase of these (in total) of 8.6% over 2004. Chart 3 depicts the relat ive co mposit ion of these revenues. Total revenues from these three line items amounted to over $619,000 in 2005. Chart 3 - Composition of key revenue types 64%64% 58%58% 19%18% 24%22% 18%18%18%21% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2002 2003 2004 2005 Fair year P e r c e n t a g e Food Concessions Carnival Receipts Gate Receipts Source: Finance/Fair management schedules Report# 05/06 - 2 (Dated November 3, 2005) Page 5 2. FINDINGS 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. 2.1 Controls More training needed for volunteer ticket sellers The Fair contracts with Redmo nd Rotary to staff the Fair's ticket ing operations. Ticket sellers provided include Rotarians, Rotarian spouses, Rotarian emplo yees, and other vo lunteers. All vo lunteers are asked to attend a training sessio n held at one of their meetings just prior to the County Fair. The training provided was limited and all ant icipated ticket sellers did not attend. Fair/expo management did not provide any written procedures. Rotarians signup for various time slots and duties for the course of the Fair but fill these times wit h various family members or other volunteers. Many t icket sellers are trained (by other volunteers) in minutes after arrival and are not routinely supervised. Experience wit h handling monies and cashiering varied greatly and a number of the volunteers lacked the familiarit y with cash handling practices. On a couple of occasio ns, assigned Rotary ticket sellers did not show up for their assigned time slots and other volunteers had to fill those posit ions. It was clear that Rotary provides a significant amount of support for the County Fair. Rotarians vo lunteers are often trusted business people fro m the communit y and many have businesses of their own. The issues noted can be readily addressed through the recommendat ions and by working with Fair/expo management as they plan for the next County Fair. Communicat ion is an essent ial co mponent of internal controls and written policies and procedures are most effect ive. Well-designed and maintained policies and procedures enhance accountabilit y and consistency. Ticket sellers are required under the contract with Rotary to attend the training meet ing. The lack o f comprehensive written accounting procedures and lack of t icket seller attendance at the training meeting can lead to ineffective controls, inconsistent handling of customers, poor and inadequate training, and lack of adherence to anticipated control procedures. A reconciliat ion o f the ant icipated receipts with those collected determines an over/short difference. The difference is a partial indicator of the abilit y of t icket sellers to properly record sales and provide change. The over/short percentage is calculated by the over/short difference divided by total receipts. Report# 05/06 - 2 (Dated November 3, 2005) Page 6 Table 2 - Over<Short> Percentage on Daily Ticket Sales 08/03/05 08/04/05 08/05/05 08/06/05 08/07/05 Total Rotary Staff Gates 0.08%-0.45%-0.05%-0.59%0.02%-0.20% Fair Staff Gates 0.09%0.36%-0.51%0.13%0.02%0.06% All GATES 0.08%-0.26%-0.12%-0.41%0.02%-0.14% Source: Finance/Fair management schedules This percentage was (on average) higher for the Rotarians than for the paid attendants. The Rotarians averaged a shortfall of .20% whereas the paid attendants average an overage of .06%. The vo lunteer ticket sellers (primarily Rotarians) did account for over three times the ticket sales. The Rotary attendants seldo m had lo ng shift s and changed frequently. Conversely, the paid attendants worked the gates in six-hour shifts each day over the duration of the fair. The lower over/short percentage for paid attendants might be attributable to a number of factors including: recent cash handling experience, training, and lo nger and mult iple shifts. The overall trend and amount of over/short percentage appeared to be within a reasonable range. It is recommended that Fair management document ticket selling policies and procedures. Any changes from the prior year should be highlighted. It is also recommended that all ticket sellers should be required to attend training sessions (each year) and document their adherence to the Fair’s policies and procedures. These policies and procedures should continue to be available to all ticket sellers during the Fair. Ticket seller training session should include: Customer service - Courteousness and professional assistance should be emphasized. Using ticket-selling equipment including KIS machines and use of credit card machines, including how to change the paper in the various machines. Detail of identification needed for credit card sales (if applicable, whether the signature on the credit card should be checked and if so what is appropriate support), Comparing credit card charges to the amount of the sale, Whether checks are taken or not (if so, what form of identification is needed when taking a check), Proper cash handling for counting out money in front of customer, How to handle various issues with customers in a consistent manner, and Ticket seller responsibilities for ticket booth until following shift arrives or a close- out is performed. It is recommended for Fair management to approve a slate of ticket seller attendants and time slots. Fair management should manage the schedule for ticket sellers. Time slots should only be filled with ticket sellers meeting Fair management requirements. Fair management should make sure ticket sellers have taken their training and have adequate Report# 05/06 - 2 (Dated November 3, 2005) Page 7 experience and skill level required. No staffing substitutions should be allowed except by other properly trained staff. It is recommended a certain number of backup ticket sellers are available during each shift to provide breaks for other ticket sellers and fill-in when needed. Fair management might consider longer and recurring ticket selling shifts to maximize utilization of trained ticket sellers. It is suggested that ticket sellers maintain adequate separation of sales for their window and not commingle sales with adjacent ticket windows. It is recommended that management close-out ticket windows at the end of each shift. Controls over season pass ticket stock and off-site ticket sales could be improved Fair management used pre-numbered and un-numbered season passes during the Fair. Season passes were not controlled on their issuance, as the ticket machines used for daily passes did not issue them. Season passes were printed on standard paper. Off-site locat ions were provided all forms of tickets. Tickets provided to off-site locat ions were counted, but unso ld t ickets were not returned for reconciliat ion at the end of the Fair. Over/short variances at the gates were greater in the init ial days o f the Fair when more season-passes were sold. The variances may have occurred since ticket machines did not issue season passes but were used to track all ticket sales (including season tickets). All t icket stock should be pre-numbered and should be on paper that is not easily counterfeited. All tickets issued should be controlled so monies received can be reconciled to tickets issued. Unso ld t ickets should be returned to fair management for reconciliat ion. The affect of loose controls over season pass t ickets and off-site ticket sales could not be ascertained. One reason for the use of un-numbered season passes was the significant increase in sales of season passes. Addit ional un-numbered tickets were rush ordered to cover the increased demand. A lack of coordinat ion with o ff-site sales resulted in not being able to control un-used ticket stock. It is recommended for season pass ticket stock and off-site ticket sales be controlled and tickets sold reconciled to the revenues received. Improved control would result from issuance by machine or reconciliation of numbers of issued tickets. This would require purchasing adequate pre-numbered stock. All unused ticket stock should be returned and counted for reconciliation to the figures provided by outside sales locations. It is recommended for Fair management to consider alternative ticket machines that could control all forms of tickets and utilize tendered money information to provide change amounts. Report# 05/06 - 2 (Dated November 3, 2005) Page 8 Additional controls needed over monies taken from ticket booths Finance staff are primarily responsible for collect ing and account ing for cash from t icket booths. Ticket booth attendants do not account for monies or bags being used to secure transport of monies. Ticket booths are not periodically closed out as attendants change. On one window for one day, a ticket machine lacked sufficient sales to account for the monies. The machine’s record of sales indicated it had only been open since 5pm when it was open at 7am. All sales during 7am to 5pm were lost. This cannot occur by a mere power loss. This is most likely attributable to the use of a master key to close out the register. No attendants or County personnel recall any clo seouts of that machine. The amount of monies in excess of the reported sales was so me $2,279. Fair management estimated sales to show a $4 overage. If the over/short was re-calculated, with this overage, the Fair would have had a net overage of $1,600 and the overage as a percentage of receipts would have been .45%. There should be adequate controls to account for all mo nies taken from ticket booths during the course of the day. The contract with Rotary indicates that closeouts will occur at the end of each shift. In the absence of addit ional informat ion, it is unclear what occurred with the missing ticket informat ion. It is also unclear if mo nies have been taken as monies are transferred fro m ticket booths until they are counted. It is also impossible to determine if more sales occurred where management estimated additional t icket sales. It is recommended that ticket booth windows be closed out each shift so that problems with specific ticket sellers/shifts can be identified. This will need to be coordinated so the inconvenience to customers is minimized. It is recommended that Fair management/Finance consider a method to assure monies taken from ticket sellers are controlled until they are counted and deposited. The best form of control is to have dual custody of all receipts from ticket booths and count the monies before they are placed in the safe. Another option is for ticket sellers to maintain a log to account for the tamperproof bags used to transport monies. The log will include the date; time; full name of seller and money taker; tamperproof bag# used in pickup; and sellers and money takers initials. The log should also include a record of the machine closeout sales so the log can be maintained separate from the monies for control purposes. While counting monies for each ticket window, Finance should log the tamperproof bag numbers. Fair management can compare the Finance log to the log from the ticket booths. Used tickets not controlled Tickets collected after customer entry are not cancelled, in any manner, and are placed in collected ticket boxes. These boxes contain daily tickets but also contain many forms of Report# 05/06 - 2 (Dated November 3, 2005) Page 9 complimentary tickets. The ticket boxes are not locked. Fair management observed one incidence where an individual took some t ickets (presumably to allow so meone to enter the Fair for free). Many t icket types are used during the Fair. Tickets collected are not normally cancelled, punched or destroyed. Wit hout sufficient controls over collected tickets, the tickets may be re-used without any further considerat ion to the Fair. It is impossible to determine the extent of this issue or the lost revenue to the Fair. It is recommended that Fair management institute policies restricting the access to collected tickets or destroying the tickets during collection. The easiest safeguard is to have some form of canceling or destruction of tickets as the tickets are collected. Ticket collection boxes should be locked and secured during the Fair. Ticket takers should not accumulate tickets in their hands and should promptly cancel and deposit tickets into ticket boxes after collection. No one should be allowed access into the ticket boxes during the Fair. Booth security improved during the Fair but could be improved Rotary ticket sellers were primarily observed keeping the ticket booth doors unlocked or open during the Fair. In addit ion, ticket sellers opened the doors without knowing who was at the door. Ticket sellers were given a number of reminders to lock their booth doors. As the Fair progressed, fewer issues were noted. Fair management instructed sellers that those with the authorit y to access ticket booths would have keys. Ticket sellers were supposed to keep ticket booth doors closed and locked during the Fair. It is recommended for ticket sellers to keep the ticket booth doors locked and only open them for staff with the proper credentials. 2.2 Performance Anticipated gate receipts versus ticket sales within acceptable levels Cash over/short amounts result from the handling of cash during ticket sales. Differences occur from miss-entered sales as well as fro m incorrect change being given. The County has developed procedures to minimize differences. County po licy #2003-105 requires over/short amounts be acknowledged by management and recorded in the account ing for the Fair. Report# 05/06 - 2 (Dated November 3, 2005) Page 10 Table 3: Comparison of Over/Short by Fair Year Fair Year Ticket Receipts Over/Short Over<Short> % 2002 342,222$ (517.00)$ -0.15% 2003 319,889$ (805.29)$ -0.25% 2004 331,579$ 172.16$ 0.05% 2005 359,202$ (678.85)$ -0.19% 3 yr Average 336,890$ (437.33)$ -0.13% Source: Fair/finance schedules Based on informat ion received fro m Jackson County who has a Fair of similar size (Gate and parking receipts of $300,357 in 2004) their over/short percentage was a shortfall o f some .13%. Jackson County uses an outside contractor to manage their admissio ns and parking. The current year over/short rate appears comparable in perspective of prior year history and in comparison with another local government. 2.3 Laws, regulations and policy Change funds for County Fair increased without Board of County Commissioners resolution The County Fair had inadequate authorization for change funds utilized in 2004 and 2005. The 2005 County Fair utilized $85,000 in change funds, $25,000 more than the change funds approved by the Board of County Co mmissioners. The last County Fair change fund resolut ion was in July 2002 and authorized an ongoing annual Count y fair change fund o f $60,000. Table 4: Change funds ut ilized and approval received by year Fair Year Change Amount Effective Resolution 2005 $ 85,000 n/a 2004 $ 80,000 n/a 2003 $ 60,000 #2002-074 2002 $ 60,000 #2002-074 2001 $ 9,000 #2001-065 Change monies are not used in any one day but are needed over the course of the Fair. A portion of the change mo nies held were never used. Jackson County, which operates a similar size fair, used $42,500 in change funds in 2005. Jackson County is able to keep their change fund lower by using mo nies fro m current gate receipts, whereas Deschutes Count y deposits monies from t icket booths as they are co llected. Under the current counting-out process, it would not take much more effort to make change available fro m daily deposits and st ill maintain effect ive controls. Report# 05/06 - 2 (Dated November 3, 2005) Page 11 Policy #2003-106 “Opening bank accounts for Deschutes County” indicates monies held in trust for Deschutes County (as in change funds) should be approved by formal board resolut ion. Change mo nies should be sufficient for the operation of the Fair wit hout the significant inconvenience of buying change funds fro m the carnival or going into town. Wit hout sufficient oversight, monies may not have sufficient oversight and protection. Having excessive cash creates a greater risk for theft or embezzlement. It is not clear why the resolut ion was not updated for the increase in change funds. This may have occurred because the 2002 change fund amount was continued for 2003. It is recommended that Fair management (in consultation with Finance) prepare an updated resolution for County Fair change funds. It would need to be updated to reflect the appropriate amount (or range of appropriate amounts) of change funds to be used. It is recommended that Fair management (in consultation with Finance) consider reducing the amount of change funds. They should consider making change from daily receipts (or during the skinning process) and develop the additional procedures to accommodate this during the deposit preparation process. By utilizing daily funds collected to make change this will reduce the pressure to have additional change funds to handle the needs of the ticket booths. It is recommended that Finance monitor change fund issuance with approved resolutions. 3. REPONSES FROM COUNTY MANAGEMENT AND ROTARY 3.1 Fair/expo Management To: David Givans From: Kathy Herringer/Dan Despotopulos Subject: Internal Audit Report on 2005 County Fair internal controls over gate receipts (Report #05/06 -2) Date October 28, 2005 CONTROLS All t icket sellers/takers will be required to take a training course. We will offer these training on 4 or 5 different days/nights. ONLY those who have co mpleted the training will be allowed to work the gates. This is very important to do the best possible job on cutting down on over/short and making sure the ticket handling is done correctly. We would like to contract with the Redmo nd Rotary, however they will have to complete this training as well. If substitutes are required for any given shift, the subs must have been certified. Our goal is to have the policies & procedures completed by December 31, 2005. Report# 05/06 - 2 (Dated November 3, 2005) Page 12 CONTROLS OVER SEASON PASS TICKET STOCK AND OFF-SITE SALES COULD BE IMPROVED We do number each season pass ticket and have each Les Schwab store (only off-site ticket sales) sign for the number of tickets issued. This year we were OVERWHELMED with sales. In 2004 we sold approx. $12,000 in o ff-site sales, in 2005 we sold over $34,000. We printed tickets based on history and history did not repeat itself (good problem). We had to call in orders at the last minute and there was not enough time to number the tickets (leaving us difficult y in accounting for everyt hing-we were on the honor system wit h Les Schwab). At that point to get all the tickets back was not an issue. We have in the past required them to return the unused (numbered) tickets so we could balance out. We will print more than enough tickets in the future and balance out with each off-site locat ion. We are looking into new software and ticket ing machines that could help eliminate the problem. ADDITIONAL CONROLS NEEDED OVER MONIES TAKEN FROM TICKET BOOTHS Not to sound repetitive, I believe with the training and controls I have ment ioned previously it will also eliminate some of these problems. USED TICKES NOT CONTROLLED We do have tickets boxes that have the abilit y to be locked. Again with proper training this will help control the possibilit y o f tickets being re-used. This would be established in our policies & procedures. BOOTH SECURITY IMPROVED DURING THE FAIR BUT COULD BE IMPROVED Again, part of our policies and training. PERFORMANCE ANTICIPATED GATE RECEIPTS VERSUS TICKET SALES WITHIN ACCEPTABLE LEVELS When we develop the policies regarding the ticket sales and all participants have been cert ified, the over/short occurrences will decrease. This year we used paid help that worked 7 hour shifts and the over/short was at approx. . . .06% which was considerably less than the other gates that had too many participants. The training and longer shifts will have workers more consistent on the use of the machines, therefore cutting down on the number of mistakes. CHANGE FUNDS FOR COUNTY FAIR INCREASED WITHOUT BOARD OF COUNTY COMMISIONERS RESOLUTION The request for change has been delivered to the finance department with the proper paperwork needed. We (DCFE) were never informed to request a resolut ion allowing us to purchase change for the Fair. We have increased the amounts for obvious reasons; we were getting busier and running out of change. I, as stated earlier think we should be able to make Report# 05/06 - 2 (Dated November 3, 2005) Page 13 change from deposits before they go to the banks, therefore cutting down on the amount of change on hand(Jackson County example- utilizes deposits and only has $42,500 on hand – they also use an outside vendor to handle their gates). Instead of a resolut ion, noting this not an ongo ing change fund(reso lution required), it is a temporary change fund used for a five day period, I would suggest a policy be set that gives the Fair the abilit y to get the needed change with so me flexibilit y. Although I think making change fro m the deposits is a good idea, we do not know that on any given day we may have a record attendance and need to make adjust ments (i.e.: run to the bank or carnival) to get change. This year (2005) we had 68% more attendance than the previous year on opening day, there are so many factors to consider. I agree we should keep as little cash on hand as possible, however there needs to be so me flexibilit y set in a policy. 3.2 Redmond Rotary Redmond Rotary Club Response Allen Pearce, President I agree with the recommendat ion on more training. I think the past focus has been on the machine. The machine itself is so easy to use I think it is taken for granted that everyone knows how to use it or that they can learn to use it in 2 minutes. We really need training on how to handle all the issues that could arise with these machines, visas, returns, wrong orders, etc… Rotarians need to know how the Fairgrounds wants us to handle the numerous issues that happen at the Ticket Gates. It should be a printed form in every gate. Everyone associated with the fair should have them, securit y, fair employees, everyo ne. Fair management should give Rotary a shift schedule. They should not have to approve who is on the schedule. They could give us guidelines on this however. Shifts should be 6 hours. Monies taken from booth. I agree with having a signed log. I think counting receipts to mo ney received would take to long for those working a busy shift at the main gates. The fair management needs to open all available gates at the main entrance. Especially during the concert rush hours. Report# 05/06 - 2 (Dated November 3, 2005) Page 14 {This page intent ionally left blank - END OF REPORT}