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HomeMy WebLinkAboutReconciliation of Solid Waste accounting systemDavid Givan August 27, 2014 Timm Schimke -Director of Solid Waste PO Box 6005, Bend, OR 97708-6005 1300 NW Wall St., Suite 200, Bend, OR 97701 (541) 330-4674-Fax (541) 385-3202 David. Givans@Deschutes.org cc: Tom Anderson, Debbie Parret, Wayne Lowry, Joe Sadony, Audit Committee (via email) RE: Internal audit to reconcile accounting systems (Internal Audit #14/15-1) An internal audit was initiated to reconcile electronic records from the Solid Waste Department's accounting system to the County's financial system. Solid Waste's accounting system was purchased in 2011 for $44 thousand and has not been fully implemented by department staff. There is no data to reconcile. The balance of the internal audit has been put on hold. Staff indicate there were problems receiving support and training from the software implementation vendor. The accounting software provider has recently contacted Solid Waste and indicated they are willing to help provide additional guidance on the software. The Solid Waste software system was intended to provide cost accounting for operations and to inform management decisions. It appears the software can be implemented to address the initial management objectives. The department continues to use manual deposit processes that have been previously reviewed. Therefore, the delay in software implementation would not be considered a significant deficiency that could adversely affect the entity's ability to initiate, record, process, and report financial revenue data consistent with the assertions of management in the financial statements. Recommendations include: It is recommended for Solid Waste to complete their implementation of the cost accounting system. It is recommended for Solid Waste to request assistance from County Finance to complete the implementation. It is recommended for the County to assess the required involvement of Finance in departmental accounting systems. The County should consider directing some level of responsibility for County/Departmental accounting systems to Finance. Enhancing the Lives o/ Citizens by Delivering Quality Services in a Cost-Effective Manner August 27, 2014 Finance can design meaningful financial controls, provide accounting expertise and provide ongoing management of accounting systems. It is equally important that Finance be involved as decisions are made with accounting systems in order to reinforce controls, provide effective design, and provide effective and efficient coordination of accounting required for financial reporting. Background Internal audit utilizes computer assisted audit techniques to assess County systems. These computerized techniques allow for more information to be addressed in a more effective way. A number of County departments have added new accounting systems since prior internal audits. This internal audit is focused on comparing information from departmental revenue systems to County financial records. In fiscal year 2014, the Solid Waste department had $7.2 million in revenues. Internal Audit Objectives: The audit objectives include: 1) Utilizing computer assisted audit techniques to assemble and compare revenue amounts from Solid Waste accounting systems to Solid Waste accounting information with County Finance (primarily deposit information). a) If variances, evaluate the internal control structure and internal procedures implemented by Solid Waste to handle revenue streams. Scope: Solid Waste's accounting system purchased in 2011 was the focus. Internal audit work on this project was primarily in July 2014. It was anticipated that data for FY 2014 would be utilized. 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 focused on a specific objective and internal control, for which there was not adequate information to proceed. Methodology Audit procedures included: • interview with departmental employees. • Acquired accounting data from County accounting system. 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. (2011 Revision of Government Auditing Standards, issued by the Comptroller General of the United States.) Page 2 of3 Internal Audit # 14115-1 Reconciliation of Solid Waste accounting system August 27, 2014 Management comments received: To: From: Date: David Givans, County Internal Auditor Timm Schimke, Director of Solid Waste August 21, 2014 Subject: Comments Regarding Reconciling Accounting Systems The criteria we used when considering cost accounting software systems did not include the ability to reconcile with Finance Department. Our focus was internal, recognizing the need to track revenues and expenditures from the various sites to enable us to make better management decisions when considering changes to individual sites, or the solid waste system as a whole. We are pleased to learn that reconciliation with finance is possible and agree that this should be incorporated into our system. We will work with IT and Finance to accomplish this. To: From: Date: David Givans, County Internal Auditor Wayne Lowry, CPA I Finance Director/Treasurer Deschutes County August 27, 2014 Subject: Solid Waste report Recommendation #2 -It is recommended for Solid Waste to request assistance from County Finance to complete the implementation. Finance will assist Solid Waste and any other Departments with Financial Systems on an as needed basis. Recommendation #3 -It is recommended for the County to assess the required involvement of Finance in departmental accounting systems. The County should consider directing some level of responsibility for County/Departmental accounting systems to Finance. Finance could provide assistance to departments with software implementations that involve financial transactions. Finance could be called upon to review financial systems before they are selected or purchased and provide input on internal control features. In addition, Finance could assist departments with establishing controls in the system during implementation. {End of report} Page 3 of3 Internal Audit #14/15-1 Reconciliation of Solid Waste accounting system