HomeMy WebLinkAbout1516-12 Follow-up report on Sheriffs Office Transition (Final 7-13-16)Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
FOLLOW-UP REPORT
Sheriff’s Office Transition
(Internal audit report #14/15-9 issued August 2015)
To request this information in an alternate format, please call (541) 330-4674 or send email to David.Givans@Deschutes.org
Deschutes County,
Oregon
David Givans, CPA, CIA, CGMA
Deschutes County Internal Auditor
PO Box 6005
1300 NW Wall St
Bend, OR 97708-6005
(541) 330-4674
David.Givans@Deschutes.org
Audit committee:
Shawn Armstrong, Chair - Public member
John Barnett - Public member
Lindsey Lombard - Public member
Michael Shadrach - Public member
Wayne Yeatman - Public member
Anthony DeBone, County Commissioner
Nancy Blankenship, County Clerk
Dan Despotopulos, Fair & Expo Director
Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
TABLE OF
CONTENTS:
1. INTRODUCTION
1.1. Background ………………………………………...………………................................... 1
1.2. Objectives & Scope ……………………………………..………………………….…….… 1
1.3. Methodology ……………………………………………………..…………………….……. 1
2. FOLLOW-UP RESULTS ……………….…...…………………………........................... 2-3
3. APPENDIX
3.1. Appendix I – Updated Workplan for Report #14/15-9
(Status as of July 2016) …............................................................................... 4-5
Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
Page 1
1. Introduction
1.1 BACKGROUND
Audit Authority:
The Deschutes County Audit Committee has suggested that follow-ups occur from nine months to one
year after the original report issuance. The Audit Committee’s would like to make sure departments
satisfactorily address recommendations.
1.2 OBJECTIVES and SCOPE
Objectives:
The objective was to follow-up on the outstanding audit recommendations.
Scope:
The follow-up included six (6) recommendations from the internal audit report on Sheriff’s Office Transition
for County Administration (#14/15-9 issued August 2015).
The follow-up reflects the status as of June 2016. The original internal audit report should be referenced for
the full text of recommendations and discussion.
1.3 METHODOLOGY
The follow-up report was developed from information provided by Beth Raguine, Sheriff’s Office Business
Manager. In cases where recommendations have not been implemented, comments were sought for the
reasons why and the timing for addressing these. The follow-up is, by nature, subjective. In determining the
status of recommendations that were followed up, we relied on assertions provided by those involved and
did not attempt to independently verify those assertions.
The updates received from the Sheriff’s Office are included in Appendix I.
Since no substantive audit work was performed, Government Auditing Standards issued by the Comptroller
General of the United States were not followed.
DESCHUTES COUNTY
INTERNAL AUDIT
REPORT
DESCHUTES COUNTY
INTERNAL AUDIT
REPORT
DESCHUTES COUNTY
INTERNAL AUDIT
REPORT
Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
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2.
Follow-up
Results
Figure I -
How were
recommendations
implemented?
Internal audit
recommendation
resulted in
identification of
fraud
The follow-up included six (6) recommendations. Management agreed with all of the recommendations.
They are to be recognized for their complete and quick response to the recommendations identified.
Figure I provides an overview of the implementation status of the recommendations. The details of the
updated workplan are provided in Appendix I.
With this follow-up, one-hundred percent (100%) of the recommendations are completed.
Fraud discovery highlights:
The report highlighted the need for “certain cash is held for investigative purposes in different places and
should be logged in a master ledger” and recommended that the Sheriff’s Office “include in program ledgers
all investigative cash monies held by location”. This finding and associated recommendation was related to
a perceived lack of segregation of duties over this cash.
The Sheriff’s Office staff in response to this finding explored these logs and associated cash movements.
They identified the potential weakness had in fact been exploited. With limited assistance of the internal
Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
Page 3
auditor, Sheriff’s Office staff and FBI assembled a case against the now former Captain Beard responsible
for safeguarding those monies. It was also determined additional monies under the former Captain’s
oversight had also been compromised. After the investigation was completed, the case was m ade against
the former Captain for stealing approximately $205 thousand dollars.
The former Captain has pleaded guilty to two counts each of money laundering and theft from a program
receiving federal funds. The Sheriff’s Office is seeking recovery of the stolen funds from PERS retirement
accounts and personal assets. He is due to be sentenced August 23, 2016 and faces up to five years in
prison.
Additional follow-up procedures:
Shortly after the above fraud was discovered, the Sheriff’s Office, the County and internal audit worked
together at identifying additional procedures, forms and controls to prevent future issues over investigative
and evidence cash handling.
In coordination with this follow-up, internal audit and the Sheriff’s Office Business Manager completed a
surprise cash count of investigative monies located with CODE and with the Sheriff’s Office and found that
monies agreed to the associated accounting records. Monies requested for investigative funds (since the
fraud) were traced though to those custodian accounting records. Reports and processes were reviewed
for evidence and investigative funds. The improved communications and transparency of transactions
appears to be working as intended. Some minor observations were made on further improving the stated
policies.
Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
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3. Appendix Appendix I – Updated Workplan for Report #14/15-9 (Status as of July 2016)
tart, we have been meeting weekly for the past several months to develop/refine a policy that we intend to use
Audit #14/15-9 workplan Implementation Status
Rec # Recommendations Co
m
p
l
e
t
e
d
Un
d
e
r
w
a
y
Pl
a
n
n
e
d
Estimated
or Actual
Date of
Completion Sheriff's Office Comments
1
It is recommended for the Sheriff’s Office to
establish a routine schedule for having
these financial statements audited by their
due date. X
A schedule has been established to have the
financial statements audited by October 31. This
will allow sufficient time for the County's Finance
department to process year-end invoices, and allow
for scheduling with the external auditor.
2
It is recommended the Sheriff’s Office
include with credit card purchases a brief
explanation (if it is not apparent) how these
purchases fall under an “emergency
situation” identified in the policy. It might be
necessary for the Sheriff’s Office to seek a
more expanded credit card use policy from
the County for certain internet purchases. X
The Sheriff's Office has established a Credit Card
Documentation Form to provide a detailed
description of the use of the credit card. Internal
policy has also been updated to address the
appropriate use of credit cards.
3
It is recommended for staff who have
custody and use of County credit cards in
the Sheriff’s Office be provided copies of the
policy and sign an acknowledgment that
they have read the policy and will comply
with its terms.
{Staff authorized to have credit cards have
signed and provided copies of the policy for
the current transition.} X Completed
Follow-up report of Sheriff’s Office Transition #15/16-12 July 2016
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Audit #14/15-9 workplan Implementation Status
Rec # Recommendations Co
m
p
l
e
t
e
d
Un
d
e
r
w
a
y
Pl
a
n
n
e
d
Estimated
or Actual
Date of
Completion Sheriff's Office Comments
4
It is recommended that purchase of gift
cards be discouraged and practices be
established to address potential use of gift
cards in accordance with the credit card
policy or operationally. X
The use of gift cards is strongly discouraged.
Procedures for tracking gift cards have been
established.
5
It is recommended the Sheriff’s Office to
identify and exclude certain transactions that
do not meet the reporting requirements.
Accordingly, appropriate staff training will
need to occur on these reporting standards. X
Staff has been trained on the proper reporting of
these transactions.
6
It is recommended the Sheriff’s Office
• have the business manager receive the
bank statements and review prior to
providing to the division for reconciliation;
• provide the business manager and
Finance copies of bank reconciliations
performed for review;
• establish practices to remit unclaimed
property that is older than two years; and
• include in program ledgers all investigative
cash monies held by location. X
Bank statements are reviewed by the Business
Manager prior to reconciliation. Once reconciled,
the Administrative Analyst sends copies of the
reconciled statements to the Business Manager,
Corrections Captain and County Finance.
Unclaimed property submittals are up to date and
have been scheduled for October 2016.
The Business Manager has established master logs
of cash monies held by location.
versation with client departments. We feel it would be better to have something in-hand when we he discupolicy that has
been vetted through client departments. I am hopef that we will have good information in time for the FY 18 Budget
process.ndfor the delay. For whatever reason I had it in my mind that it was due today.
{END OF REPORT}