Cashiering Functions (Selected Departments)M~AMIBEACH
BUDGET AND PERFORMANCE IMPROVEMENT
Internal Audit Division
TO:
VIA:
FROM:
DATE:
AUDIT:
PERIOD:
Jimmy L. Morales, City Manager .-~a..
Kathie G. Brooks, Assistant Cit~ ~r-lf
James J. sutter, Internal Auditor~·"'
May 15, 2013
Selected Departments' Cashiering Functions Audit
October 1, 2010 through July 31,2012
INTERNAL AUDIT REPORT
This report is the result of a regularly scheduled audit of the cashiering, reconciliation and
reporting functions performed by the Building, Police (Records Management Section) and
Parking Departments. Similar but separate internal audits were previously conducted of the
Finance Department's Central Cashier's Office and selected cashiering locations operated by
the Parks and Recreation Department.
INTRODUCTION
Although the Finance Department's Central Cashier's Office processes a majority of the City's
financial transactions, other off-site cashiering locations are scattered throughout the City to
collect monies from the public. A majority of these locations (Scott Rakow Youth Center,
Flamingo Park Pool, North Shore Youth Center, etc.) fall under the purview of the Parks and
Recreation Department, which has also been addressed in a separate internal audit. As a
result, this audit focused on the cashiering functions performed by the Building, Police (Records
Management Section) and Parking Departments with a brief summary of each to follow.
The Building Department's Permit Clerks accept currency, checks, money orders and credit
cards as payment for various permit fees, violations, etc. All transactions are to be recorded in
the Permits Plus System which was pre-programmed to calculate the associated amounts due
based on the entered data. Designated departmental reviewers will subsequently examine
permit transactions to help ensure that the customer was billed accurately.
The Building Department processes a high number of transactions daily with total revenues
frequently exceeding $50,000. A $50 petty cash bank is used to provide change as needed to
any customers paying with currency, which is the least common payment method. Designated
supervisors reconcile all the monies received daily with the supporting Permits Plus System
reports entitled "Daily Fee Summary Excluding Lockbox and Online Permits" and the "Fee Detail
Excluding Lockbox and BLDG City Jobs". Once reconciled, it is brought to the Central Cashier's
Office for processing and posting to the appropriate general ledger accounts in the City's
Financial System.
Secondly, the Police Department's Records Management Section accepts currency, money
orders and checks in exchange for copies of police reports, fingerprints, photographs,
background checks and letters of good conduct. Many of these transactions cost less than $10
thereby increasing the need for the maintained $50 petty cash change bank, which is secured in
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Internal Audit Report
Selected Departments' Cashiering Functions Audit
May 15, 2013
a locked bank bag at the end of each business day and is stored in the nearby Police Evidence
Unit. A log book is signed indicating receipt and issuance of the bank bag to and from Records
Management Section personnel.
All transactions (on average 24 per day) are to be recorded in the in-house software system
created by the City's Information Technology Division in the Bbm and Sequel programming
languages. Each day's monies are to be reconciled with the software system's generated Daily
Receipt Transaction Reports by either the Police Records Manager or the Police Records
Supervisor. Once completed, these items accompanied by a Miscellaneous Cash Receipt
(MCR) are stored inside an interoffice envelope until delivered usually by a sworn police officer
to the Central Cashier's Office for processing. All Records Management Section revenues are
to be posted to general ledger account number 011-8000-341400 entitled "Photocopies".
Thirdly, Parking Department customers remit currency, money orders, checks or credit cards in
return for parking decals, permits, etc. All amounts owed are calculated based upon the
cashiers' entries into the Parking Permit Manager System. Each of the six primary cashiers
received $200 in currency to provide change as needed to customers. Two additional locked
bank bags containing an additional $500 in petty cash are also kept in the safe until needed for
either change by any of the cashiers ($400) or for a back-up cashier ($1 00).
A designated Financial Analyst reviews the reconciliation of each cashier's monies and
supporting documentation before they are transported by TransValue Inc.'s armored car
services to SunTrust Bank. The Finance Department similarly reviews these transactions and
once approved they are posted to the City's Financial System based upon the Daily MCR
Report's general ledger breakdown which includes a cash over and under account for any
calculated daily reconciliation differences.
The following table summarizes the monies processed during each fiscal year of the audit
period by the listed departments' cashiers:
10/01/10-09/30/11 10/01/11-07/31/12 Total
Building $10,275,244 $10,747,471 $21,022,715
Police Records $34,945 $21,849 $56,794
Parkin!:l $3,865,501 $3,238,847 $7,104,348
Total $14,175,690 $14,008,167 $28,183,857
Finally, the Building and Parking Department's cashiering functions are projected to be
transferred to the Finance Department during the 2012/13 fiscal year. At this time, the payment
process will be revised which will include the addition of newly cross trained employees and
stronger internal controls aimed at separating those responsible for the decals from those
receiving the monies.
The Parking Department also issued Request For Proposal No. 55-11/12 on July 26, 2012 as
the City intends to migrate to a License Plate Recognition (LPR) enforcement system and
eventually have "paperless" parking payment options and solutions. One distinct advantage
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May 15,2013
would be the elimination of parking permits and decals which are currently handled, monitored
and safeguarded by the Parking Department's cashiers. City Resolution No. 2012-27986 was
adopted on September 12, 2012 authorizing the Administration to enter into negotiations with
ParkTrak for the handheld LPR parking enforcement system as it was deemed the sole
responsive proposer. Meanwhile, the Administration's purchase of a mobile LPR parking
system is still being investigated.
OVERALL OPINION
Overall monies received are properly deposited and reported based on the testing performed on
the documentation provided and the internal controls implemented. Tested reconciliations were
performed timely and correctly. Despite these and other positive factors, the following
weaknesses separated by department, were noted and are in need of improvement and/or
corrective action:
Building Department
• The maintained petty cash change bank used to absorb daily overages and shortages is
not reported in the City's Financial System.
• The Building Department set restrictive terms against returned check payees that were not
uniformly enforced during the audit period.
• Security weaknesses are identified that if not timely corrected could possibly increase
the City's risk of loss.
• The Development Review Service Coordinator's job duties are not always properly
assigned to satisfy the segregation of duties principle.
Police Department's Records Management Section (RMS)
• Noted daily reconciliation shortcomings were observed.
• Current software system deficiencies in need of corrective action are identified.
• Credit cards are not accepted resulting in the receipt of more currency and checks with
their additional inherent risks.
• All revenues are recorded to general ledger account 011-8000-341400 whereby its
entered description hindered location and reconciliation.
Parking Department
• The safe used to secure daily revenues and petty cash remained open during daily
operations thereby placing too much dependence on the camera's recordings as a
preventive internal control.
All Tested Divisions/Departments Affected
• Internal control and financial reporting weaknesses were observed in the returned or NSF
checks process.
• Departmental policies and procedures tended to be either non-existent, incomplete or not
form approved by management.
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May 15, 2013
PURPOSE
The purpose of this audit was to determine whether the Building, Police and Parking
Departments maintained updated policies and procedures that were known and followed by
staff; whether City assets and personnel were adequately safeguarded and accounted for;
whether sufficient documentation and internal controls were implemented to help determine the
completeness and correctness of tested transactions; and whether these tested transactions
were accurately recorded into the City's Financial System.
SCOPE
This report does not focus on the Permits Plus System deficiencies, which have been well
documented in previous audit reports considering that it is projected to be replaced by Accela
during the 2012/13 fiscal year.
1. Confirm that effective and detailed operating policies and procedures have been
developed and are being utilized for the proper control and accountability of all related
transactions.
2. Confirm that collections are adequately safeguarded, that access to key supporting
documents and records is properly restricted to authorized employees and permitted
only in accordance with management policy.
3. Confirm that proper segregation of duties and internal controls are followed to provide
reasonable assurance that all monies are accounted for.
4. Confirm that all files and records are neatly organized and properly maintained.
5. Confirm that sampled collections were timely and correctly processed by the Central
Cashier's Office and posted in the City's Financial System.
FINDINGS, RECOMMENDATIONS AND MANAGEMENT RESPONSES
BUILDING DEPARTMENT
1. Finding: The Maintained Petty Cash Change Bank Used to Absorb Daily Overages and
Shortages is Not Reported in the City's Financial System
More than ten years ago, the Building Department was given petty cash monies to
provide change as needed to its paying customers. The balance maintained was
gradually reduced over time until it reached $50 during the 2003/04 fiscal year.
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The Finance Department began requ1nng City departments/divisions with petty cash
funds during the 2008/09 fiscal year to perform quarterly reconcilements so that the
corresponding year end cash counts could be recorded in the City's Financial System.
In response, the Building Department stated that they did not know the location of the
monies so the $50 was expensed to general ledger account number 011-1510-000343
(other operating expenditures).
However, the petty cash funds have continued to be used for change purposes by the
department's Permit Clerks. In fact, testing found that the balance had grown to $139.62
as of June 20, 2012 since the Building Department adjusts the daily petty cash change
bank balance accordingly for any overages and/or shortages identified during
reconciling.
Recommendation( s):
The petty cash fund balance should be reduced to the approved $50 maximum so that it
can be reported in the City's Financial System under general ledger account number 011-
7000-102056. Going forward, any identified reconciliation differences should be recorded
in a designated cash over and short account rather than adjusting the petty cash fund
balance accordingly. Finally, the balance should be counted quarterly by a Building
Department employee independent of the cashiering function so that it can be accurately
reported in the City's Financial System.
Management Response (Building Department):
The Building Department does not currently handle cash transactions and does not have
a petty cash fund. All cash transactions were transferred to Finance Department on
August 2ih 2012 and the petty cash was closed effective September 51h, 2012. The
balance of $32.38 was returned to the Finance Department.
Management Response (Finance Department):
Once the Finance Department took over the Building Department's cashiering functions
in September 2012, the petty cash, a total of $32.38, was returned to the Finance
Department. The Finance Department, in turn, deposited the funds in the bank on
October 19, 2012, and it was recorded in general ledger account 011-8000-369990.
2. Finding: The Building Department Set Restrictive Terms Against Returned Check Payees
that Were Not Umform/y Enforced During the Audit Period
The Building Department maintained an Excel schedule showing that a total of 379 NSF
customer checks were returned by the bank due to insufficient funds in their account
between January 2006 and July 2011. The department implemented its own policy
whereby these customers were to be restricted from writing the Building Department
another check for six months after the first offense, one year after the second offense, five
years after the third offense, etc. However, this detailed schedule has not been updated
since July 2011 but its terms continue to be followed by the Permit Clerks for any
previously listed customers.
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Recommendation(s):
A Citywide policy on returned checks should be created that is uniformly and consistently
applied by all departments/divisions.
Management Response (Building Department):
The Building Department agrees to follow any adopted Citywide policy concerning the
receipt of any returned or NSF customer checks.
3. Finding: Security Weaknesses are Identified that Increase the City's Risk of Loss
Although the Building Department's cashiering functions will soon be eliminated with the
Finance Department's planned consolidation of operations in the 1700 Meridian Avenue
building, the current implemented security procedures were reviewed with the following
weaknesses noted:
a. The Building Department properly instituted sound cash handling procedures that
appear to have been followed and work well. However, one drawback noted was
that the simplistic cash register was used primarily as a cash drawer which can
be easily accessed by any City employees behind the counter. As a result, it
would be difficult to identify the employee(s) responsible for any calculated
currency shortages.
b. The $139.62 petty cash change bank is stored in a locked desk drawer when not
in use. In addition, the daily proceeds are stored overnight in this same drawer
whenever time prohibits Building Department employees from furnishing the
monies to the Central Cashier's Office for processing. A key to open this drawer
is maintained in the Development Review Coordinator's office where it can be
retrieved by anyone knowing its location.
c. The Building Department installed cameras but they are focused primarily on the
customer waiting areas to be used in determining the length of the queue. Few
were aimed on the money collection areas, with none aimed at the cash register.
d. Although a blue light scanner was provided some time ago to help detect
counterfeit currency, it is not being used as the departmental employees instead
rely on the accuracy of the less effective counterfeit pen.
Recommendation( s):
Given the pending elimination of cashiering functions by the Building Department,
management should consider the feasibility of correcting these identified shortcomings.
However, the blue light scanner should be used and the keys to the desk drawer
protecting the department's monies should be better safeguarded at a minimum.
Management Response (Building Department):
All cash transactions are now handled by the Finance Department rendering some of
these suggestions moot. However, management agrees that cameras should be
focused on staff as well as the lobby area and will make this correction if it has not been
done already. Once pay-ease kiosks are operational, the Building Department will
transfer all other cashier functions (credit card and check payments) to the kiosks and
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Finance Department cashiers.
4. Finding: The Segregation of Duties Principle is Violated which may Potentially Result in
Misappropriations if not Corrected
The Development Review Service Coordinator that typically performs the daily
reconciliation also participates in receiving monies and processing transactions.
Furthermore, all Building Department employees having access have the ability to
backdate transactions and to perform voids. This scenario contradicts the segregation
of duties principle which warrants a separation of those handling the monies from those
performing the reconciliation and if not corrected could possibly lead to misappropriated
monies going undetected.
Recommendation( s):
The designated Building Department employee performing the daily reconciliation should
not also receive monies and process transactions. Instead, the reconciler should be an
independent third party who signs the reconciliation documentation indicating his/her
review and approval. Finally, employees should not have the ability to backdate
transactions while only supervisors should have the ability to make adjustments in the
Permits Plus System and they should be sufficiently documented providing a proper audit
trail.
Management Response (Building Department):
Once the transfer of cashiering functions to the Finance Department is complete,
reconciliations will be a function of the Finance Department. In the short term, the
Department will assign reconciliation responsibilities to another employee. Currently,
only supervisors have the ability to void transactions and transfer payments. Once
Accela Automation has been implemented, better auditing capabilities and security
measures will be implemented. At this time, permits plus lacks the ability to restrict
backdating, but such practices are not part of the Department's operational protocols.
POLICE DEPARTMENT'S RECORDS MANAGEMENT SECTION (RMS)
5. Finding: Noted Daily Reconciliation Shortcomings were Observed
The following shortcomings were noted during our review of the Records Management
System's (RMS) reconciliation process:
a. Proper segregation of duties is an essential internal control and job duties need
to be assigned accordingly. One basic tenet is that the individual receiving and
processing the monies should be independent of the one performing daily
reconciliations. Yet, RMS's designated reconcilers can perform both of these
functions daily and void transactions as needed.
b. Any of up to four RMS personnel are typically assigned the responsibility of
processing customer transactions on a given day thereby making it difficult to
determine who was responsible for any identified cash shortages.
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c. Instead of reporting the amount of the overage or shortage during the
reconciliation process like the Police Records Supervisor, the Police Records
Manager maintained an envelope with slightly more than $13 on June 29, 2012
that was used for any calculated differences. Therefore, this balance would
increase for any overages and conversely would decrease for any identified
shortages and it was not recorded on the City's Financial System.
d. The Daily Receipts for Deposit cover letter is prepared electronically with the
name of a designated RMS employee that supposedly verified the
reconciliation's results. However, inquiries determined that this individual rarely
reviewed the reconciliation as it was typically performed by only one supervisor.
e. Although the day's revenues are usually transported to the Central Cashier's
Office by a sworn police officer, they are delivered in an interoffice envelope
which could be comprised.
f. The Police Department's Financial Management Unit does not periodically perform
unannounced site visits to confirm that the petty cash change bank balance is
correct. Also, inquiries found that they have not been verifying that the supporting
documentation equals the amounts posted to the City's Financial System and that
each day's receipts are accounted for.
g. The daily receipts were not always posted to the City's Financial System timely.
For example, the largest calculated differences were for the 11/15/11 and
11/16/11 daily receipts which were not posted in the Eden System until 06/13/12
(211 days) and 06/21/12 (218 days) respectively. Furthermore, it was found on
08/21/12 that the daily receipts for 06/08/12, 06/19/12 and 07/03/12 were still
present in the RMS and had not yet been deposited and posted.
Recommendation( s ):
The implementation of the following recommendations should help improve the RMS
reconciliation process:
a. The designated individual responsible for reconciling the monies with the
documentation should also not have the ability to process transactions and to
perform voids.
b. Access to the cash drawer should be restricted to a minimum number of people.
c. The petty cash fund balance should be reduced to the approved $50 maximum
with the excess reported in the City's Financial System. Additionally, the Finance
Department should consider creating an over and short account to capture any
reconciliation differences.
d. A designated employee should review the day's reconciliation with both
individuals signing the Daily Receipts for Deposit cover letter attesting to its
accuracy and completeness.
e. The day's revenues should be secured in a locked bank bag until transported to
the Central Cashier's Office similar to the one used to safeguard the $50 petty
cash monies each night.
f. The Police Department's Financial Management Unit should periodically confirm
that the petty cash funds balance is correct and that the supporting
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documentation equals the amounts posted to the City's Financial System and that
each day's receipts are accounted for.
g. All RMS monies should be processed by the Central Cashier's Office within three
business days to facilitate reconciliation with postings, expedite departmental
access to the funds, reduce the likelihood that the monies may be
misappropriated, etc.
Management Response (Records Management Section):
a. The current software is set up so that only the two supervisors have the ability to
perform voids as well as having the ability to process transactions. The software
would have to be changed to exclude us from being able to perform transactions.
However, current staffing levels prohibit the implementation of these changes.
b. Only people responsible for the cash drawer will be issued keys for key control
access.
c. The petty cash fund currently maintained is $50. The previously identified $13 plus
overage has been processed by the Central Cashier's Office thereby increasing
RMS's revenues accordingly.
d. Due to the small amounts of monies received daily and current staffing levels,
RMS believes that the attestation of one supervisor should be sufficient. As a
result, we will remove the name of the other supervisor from the Daily Receipts
for Deposit cover letter to remove any confusion as to the individual performing
the reconciliation.
e. The Records Manager will purchase another bank bag with two keys. One key
will be given to the Central Cashier.
f. The FMU's most recent audit was October 4, 2012 but their focus is typically on
ensuring that the sampled day's transactions and current petty cash balance is
correct.. Going forward, the Police Records Manager agrees to periodically
reconcile the amounts posted to the City's Financial System to the day's
supporting documentation once the city creates a budget code for Records. Any
noted differences will be further investigated.
g. All RMS monies will be delivered to the Central Cashier's Office within three
business days. We will be requesting the Central Cashier's Office to send RMS
a scan of the processed/validated MCR to expedite the reconciliation process.
6. Finding: Current Software System Deficiencies are Identified which are in need of
Corrective Action
Various testing performed on the software created by the City's Information Technology
Division for RMS found the following opportunities for improvement:
a. Internal Audit's comparison of 12/28/10 daily receipts with the corresponding
Eden System entries found an $850 difference which was later determined to be
caused by the incorrect processing of two customers' false alarm payments as
RMS payments. Further testing found that the proper entries were made in the
City's Financial System as the $850 was posted to general ledger number 011-
8000-354001. However, the two transactions totaling $850 were not voided in
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the RMS system thereby inflating the division's revenues.
b. Anyone inside RMS can open the cash drawer by merely pressing a button as
there is no documented record of the individual(s) accessing the monies.
Although typically not containing large amounts of money, this scenario makes it
difficult to hold anyone accountable in the event of a shortage.
c. The Daily Photo Receipt Transaction Report, which may or may not contain daily
transactions, was not automatically generated when the Daily Receipt
Transaction Report was run. Instead, it must be selected from a menu and run
separately as RMS personnel must remember to include it when performing their
daily reconciliations.
Recommendation(s):
The implementation of the following software system recommendations should help
improve RMS operations:
a. Management should void the two false alarm payments from the RMS system so
that it agrees to the Eden System's entries and any future analyses conducted on
these entries are accurate.
b. The opening of the cash drawer should be linked to the software system so that
only authorized employees can access its contents after entering their password
and a valid transaction.
c. The software system should be re-programmed to have all the daily transaction
reports combined or run simultaneously to help ensure that all transactions are
captured and the daily reconciliation is accurate.
Management Response (Records Management Section):
a. The two false alarm transactions incorrectly entered into the RMS system were
voided so that it agrees to the City's Financial System entries.
b. We believe that the better solution is the issuance of keys to relevant personnel as
addressed above in the management response to finding #5b.
c. The Records Manager will contact the Information Technology Division to
determine the costs associated with reprogramming the system. If not deemed
feasible, then we will continue our current practice of running all daily reports. The
existence of any money shortages typically alerts us to the possibility of any
photograph transactions.
7. Finding: Credit and/or Debit Cards are Presently Not Accepted Resulting in the Receipt of
More Currency and Checks along with their Additional Inherent Risks
RMS currently does not accept credit and/or debit cards as payment for their services;
only currency, money orders and checks. This practice may result in more currency
transactions thereby increasing the likelihood that received monies may be
misappropriated, misplaced, etc. Similarly, the acceptance of more checks could result
in the receipt of additional returned or NSF checks for which collection becomes difficult.
Recommendation(s):
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The acceptance of credit and/or debit cards should help reduce the number of currency
and check transactions. However, RMS should first conduct a cost benefit analysis with
respect to the acquisition and maintenance of the credit card machine due to its
associated fees prior to its implementation.
Management Response (Records Management Section):
The cost for copies is .15 cents per page for single sided copies and $.20 per page for
double sided copies. Case reports are usually 2 pages ($.30) and accident reports are 7
double sided pages ($1.40). RMS does not get many requests to pay by credit or debit
card. Therefore, we believe that the cost to acquire and maintain a credit card machine
would not be cost effective.
8. Finding: Received RMS Revenues are Recorded to General Ledger Account 011-8000-
341400 whereby it's entered description hindered location and reconciliation.
RMS customers pay pre-determined amounts for copies of police reports, fingerprints,
letters of good conduct, background checks, etc. However, all the corresponding
revenues received (usually in excess of $30,000 annually) are commingled into one
general ledger account 011-8000-341400 (photocopies) that also contains entries by
other departments thereby making it difficult to determine the amount of RMS revenues.
Also, the Central Cashier's Office normally lists the Miscellaneous Cash Receipt (MCR)
number in the description field when posting to the Eden System. While important
information, the inclusion of the date in which the monies were received by RMS is
omitted which would facilitate location and reconciliation by independent third parties.
Recommendation(s):
The Finance Department should create a separate general ledger account to record
RMS's revenues to facilitate monitoring and analysis. In addition, the Central Cashier's
Office should enter the date that the monies were received by RMS in the description field
along with the MCR number during posting.
Management Response (Finance Department):
The General Ledger Management Section prefers not to create a new general ledger
account due to the immateriality of the transactions and the associated reporting
requirements. Instead, discussions will be held with FMU regarding the possibility of
processing RMS's transactions in another existing little used Police Department revenue
account (if one is available).
The Cashiering Office does not know when the monies were received by RMS. RMS
sends an MCR to the Central Cashier's Office with several checks and cash attached for
deposit in the bank. RMS also includes a summary sheet of the cash and checks sent
along with the MCR. RMS should be the department keeping track of when they
collected the monies and in what MCR it was deposited.
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PARKING DEPARTMENT
9. Finding: The Safe used to Secure Daily Revenues and Petty Cash Remained Open
during Daily Operations
The unused petty cash monies and the prior day's proceeds are stored in the safe which
remains open during the day. As a result, these monies are unnecessarily exposed to
misappropriation as they can be accessed by anyone thereby increasing the
dependence on the installed digital cameras' recordings. This strategy although helpful,
is reactive in nature and does not necessarily provide sufficient safeguards to prevent
misappropriations.
Recommendation(s):
The safe should remain closed at all times during the daily operations to better protect its
contents and to reduce reliance on the digital cameras' recordings. Also, the staff
members knowing its combination should be restricted and it should be changed at a
minimum whenever any affected employees leave.
Management Response (Parking Department):
We concur with the recommendation. The safe will remain locked throughout the day.
When an employee, who knows the combination, leaves our department the
combination will be changed.
ALL TESTED DEPARTMENTS
10. Finding: Internal Control and Financial Reporting Weaknesses were Observed in the
City's Decentralized Returned or NSF Checks Process
Currently, SunTrust Bank notifies an Executive Office Assistant I in the City's Finance
Department of any received NSF checks (checks returned by the bank because the
payer did not have sufficient funds on hand to cover the amount). These NSF checks
are entered into an Excel spreadsheet before it is sent to the originating
department/division so that they can pursue collection. In turn, the originating
department/division provides the general ledger accounts originally posted as a result of
the transaction to the Finance Department.
Following the end of the month, the Excel spreadsheet is used as the supporting
documentation for the creation of journal entry #007 which reverses the original entry
thereby reducing the departments/divisions revenues accordingly. As a result, there is
no longer a record of the transaction because a receivable is not created in the City's
Financial System (EDEN).
This scenario represents a control weakness since these transactions would not appear
on an aging report and outstanding amounts may not be recovered leaving insufficient
audit trails. Moreover, the current method does not follow best accounting practices,
which require revenues to be recognized once earned upon rendering the services to the
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customers; recognizing revenues and related expenses in the same period; and
recognizing revenues from services separately from recovered financial charges
assessed.
Any monies subsequently collected by the City would include the initial transaction
amount plus any service charges assessed in accordance with Florida Statute
832.062(4)(a). Although the Finance Department has created separate general ledger
accounts for these service charges, the tested departments incorrectly recorded the total
amount received as revenue.
Recommendation(s):
Outstanding amounts as a result of an NSF check should be recorded as a receivable in
. the City's Financial System through the preparation of a City Bill which should be
prepared with two line items: one for the original transaction amount and a second for
the corresponding service charges levied. Consequently, the transaction would appear
on the City's Financial System and it would be captured in an aging report thereby
leaving a proper audit trail to help determine the effectiveness of the department' or
division's collection efforts.
Management Response (Finance Department):
The Finance Department agrees with the stated recommendation and will begin working
on revising the NSF check process during the current fiscal year.
11. Finding: Policies and Procedures were either Non-Existent, Incomplete or not Form
Approved by Management
Operating policies and procedures should include a descriptive outline of desired
cashiering and reconciliation operations since they serve both as a benchmark to
measure individuals' performance and as an instruction manual in the event employees'
are out of the office for whatever reason. A review of each department's provided
policies and procedures is as follows:
• The Building Department did not maintain formalized policies and procedures
detailing current cashiering and reconciliation operations. This process should
be better documented to avoid potential confusion especially given the number of
temporary and part time employees working as Permit Clerks. The Police
Department's RMS provided Standard Operating Procedure #026, Records
Management Section VII "Funds Procedure" which covers all monetary
transactions and was last revised and approved by the Police Chief on 7/15/2003.
• The Parking Department supplied their policies and procedures concerning daily
deposit log and cash balance reports verification but they were not form
approved by management. Furthermore, the cashiering process was not
addressed in any of the received documents.
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Recommendation( s):
Operating policies and procedures should be updated to include a more descriptive
outline of desired cashiering and reconciliation operations. Once completed, they should
be reviewed and approved by management and the City Administration before being
implemented.
Management Response (Building Department):
Cashiering Policies and Procedures have been implemented and are followed by the
Department to properly balance and reconcile operations on a daily basis. The written
policy that has already been implemented operationally will be formalized no later than
Jan 30, 2013. All transactions are reconciled pertaining to checks and credit cards since
cash is no longer accepted as method of payment by the Department.
Management Response (Records Management Section):
Standard Operating Procedure #026, Records Management Section VII "Funds
Procedure" is scheduled for update during the next CALEA cycle.
Management Response (Parking Department):
The permitting and cashiering services transitioned from the Parking Department to the
Finance Department on Wednesday, December 19, 2012. The Parking Department will
work closely with the Finance Department staff to update the SOP (Standard Operating
Procedures) to include any new processes and/or procedures. The final SOP document
will be approved by Management.
EXIT CONFERENCE
Separate exit conferences were held with the Building and Police Departments respectively to
discuss the audit report in the Office of Budget and Performance Improvement. Attendees
included Building Director Stephen Scott, Police Division Major Brian Sliman, Police Records
Manger John Babcock, Internal Auditor James Sutter and Auditor Fidel Miranda. The applicable
findings were emailed separately to the Finance Department for their review and separate
discussions were held afterwards. Management responses were solicited and were received
shortly thereafter. All were in agreement with the contents of this report.
JJS:MC:mc:FM:fm
(audit performed by Senior Auditor Mark Coolidge and Auditor Fidel Miranda)
F:\OBPI\$AUD\INTERNAL AUDIT FILES\DOC11-12\REPORTS -FINAL\SELECTED DEPARTMENTS CASHIERING FUNCTIONS
REPORT.docx
cc: Jorge Gomez, Assistant City Manager
Mariano Fernandez, Building Director
Stephen Scott, Assistant Building Director
Raymond Martinez, Police Chief
Page 14 of 15
Internal Audit Report
Selected Departments' Cashiering Functions Audit
May 15, 2013
Mark Overton, Assistant Chief of Police
Brian Sliman, Police Division Major
Saul Frances, Parking Director
Patricia Walker, Chief Financial Officer
Page 15 of 15