Sonoma County Sheriff s Office Inmate Cash Management. Auditor-Controller s Report On Processes and Procedures. For The Fiscal Year 2010/2011

Transcription

1 Sonoma County Sheriff s Office Inmate Cash Management Auditor-Controller s Report On Processes and For The Fiscal Year 2010/2011

2 Sonoma County Sheriff s Office Inmate Cash Management Auditor-Controller s Report On Processes and For The Fiscal Year 2010/2011 Table of Contents Section Page(s) Objectives, Methodology, Scope & Conclusion I Inmate Booking at MADF II MADF Shift Change Cash Count... 3 III NCDF Shift Change Cash Count... 4 IV Inmate Deposit at MADF and NCDF V Inmate Release from MADF and NCDF... 5 VI MADF Cash Drawer Transfer to Safe and Treasury Deposit... 6 VII MADF Safe Cash Count VIII Inmate Exchange Bank Account... 8

3 Auditor-Controller Treasurer-Tax Collector RODNEY A. DOLE County of Sonoma DONNA M. DUNK AUDITOR-CONTROLLER 585 FISCAL DRIVE ASSISTANT TREASURER -TAX COLLECTOR SUITE 101F AUDITOR-CONTROLLER SANTA ROSA, CALIFORNIA ROBERT BOITANO (707) ASSISTANT FAX (707) TREASURER PAM JOHNSTON ASSISTANT TAX COLLECTOR / AUDITOR Mr. Steve Freitas, Sheriff-Coroner County of Sonoma Sheriff s Office 2796 Ventura Avenue Santa Rosa, California We have performed an observation and evaluation of the design of internal controls related to the Sheriff s Office Inmate Cash Management as agreed to in our engagement letter dated October 29, Objectives The objectives of this engagement were to evaluate the design of the internal controls related to receiving, depositing, disbursing and recording inmate cash, at the Main Adult Detention Facility (MADF) and the North County Detention Facility (NCDF). Methodology The methodology of the evaluation consisted of interviewing Sheriff s personnel and performing walkthroughs of cash handling within each process below: o Inmate booking at MADF o Cashier shift change cash count at MADF and NCDF o Deposit of cash to an inmates account at MADF and NCDF o Inmate releases at MADF and NCDF o Cash Transfer from cash drawer to the Jail safe and eventual deposit into the County Treasury o Jail safe cash count and reconciliation o Inmate Exchange Bank account reconciliations, check disbursements and deposits Scope Walkthroughs and reviews of inmate cash handling procedures and documentation were conducted between March 29, and April 7, 2011, using information provided by Sheriff s Office staff.

4 Page 2 of 8 Conclusion We identified certain deficiencies in internal controls related to the shift change cash count at NCDF and the Exchange Bank account reconciliation that we consider to be control weaknesses, and other matters that continue to deserve attention. The swing-shift cashier did not count the bundled cash amounts in the locked drawer during the initial cash count assuming that the bundles were accurate. Accounting personnel perform the Exchange Bank account reconciliation function. However, there is currently no procedure in place to review the bank reconciliation after it is completed. Large amounts of cash kept in the M1 and N1 cash drawer and the jail safe at MADF continues to be a significant concern. Positive steps have been taken to reduce the need for large amounts of cash in the cash drawers. The Sheriff s Office has established an outside bank account at Exchange Bank for prisoner transport, and is in the process of implementing an electronic process to receive and disburse cash for inmates. It is our understanding that the amount of cash kept in these locations will be significantly reduced, after TouchPay has been fully implemented. Our findings and recommendations presented below, all of which have been discussed with appropriate members of management, are intended to improve the internal control or result in other operating efficiencies. Performed, and I. Inmate Booking at MADF We observed the booking of an inmate at MADF. We then reviewed the Inmate Personal Property Receipt, the amount of funds presented by the booking officer, the cash receipt generated by UNIX after inmate cash deposit and the UNIX Cash Summary Report before and after the transaction to assure complete and accurate recordation. We did not identify deficiencies in the design of internal controls over cash handling, during the inmate booking process. Based on the inmate booking we observed, the cash transactions were recorded and accurately reflected within UNIX.

5 Page 3 of 8 No recommendations identified. II. MADF Shift Change Cash Count We observed the cash counting procedures at MADF during the shift change between the day-shift and swing-shift cashiers. We reviewed the Sonoma County Sheriff s Office Detention Division Cash Count Sheet, 10-key tapes and UNIX Cash Drawer balance at the time of the cash count performed by each cashier. We also reviewed the meal ticket cash count total against the meal ticket cash log. We did not identify deficiencies in the design of internal controls over cash handling, while observing the shift change cash count at MADF. However we did identify other matters that continue to deserve attention. The Sheriff s Office has established an outside bank account at Exchange Bank for prisoner transport. It is our understanding that the Sheriff s Office is in the process of implementing an electronic process (TouchPay) to receive and disburse cash for inmates. Positive steps have been taken to reduce the need for large amounts of cash in the cash drawers. However the large amount of cash kept in the M1 cash drawer at MADF continues to be a significant concern. It is our understanding that the amount of cash kept in the M1 cash drawer will be significantly reduced, once TouchPay has been fully implemented. We did not identify a difference between the cash in the M1 cash drawer and the cash count performed by the cashiers. The recommendations below are intended to assist Jail cashiers in establishing stronger preventive internal controls over the cash counting process and asset safeguarding at shift change. We recommend that the Sheriff s Office continue to implement the use of electronic processing of inmate deposits and disbursements. As soon as is practicable, the amount of cash in the cash drawers should be reduced. These recommendations are meant to improve controls over cash handling and reduce the amount of time it currently takes to count the several thousand dollars of cash and coin within the M1 cash drawer.

6 Page 4 of 8 III. NCDF Shift Change Cash Count We observed the cash counting procedures at NCDF during the shift change between the day-shift and swing-shift cashiers. We reviewed the Sonoma County Sheriff s Office Detention Division Cash Count Sheet, 10-key tapes and UNIX N1 Cash Drawer balance at the time of the cash count performed by both cashiers. We also reviewed the meal ticket cash count total against the meal ticket cash log. Finding We identified certain deficiencies in internal controls during the shift change cash count that we consider to be a control weakness, and other matters that continue to deserve attention. The swing-shift cashier did not count the bundled cash amounts in the locked drawer during the initial cash count assuming that the bundles were accurate. The Sheriff s Office has established an outside bank account at Exchange Bank for prisoner transport. It is our understanding that the Sheriff s Office is in the process of implementing an electronic process (TouchPay) to receive and disburse cash for inmates. Positive steps have been taken to reduce the need for large amounts of cash in the cash drawers. However the large amount of cash kept in the N1 cash drawer at NCDF continues to be a significant concern. It is our understanding that the amount of cash kept in the N1 cash drawer will be significantly reduced, once TouchPay has been fully implemented. We did not identify a difference between the cash in the N1 cash drawer and the cash count performed by the cashiers. The recommendations below are intended to assist Jail cashiers in establishing stronger preventive internal controls over the cash counting process and asset safeguarding at shift change. We recommend that all cashiers be reminded to count the bundled cash located in the locked drawer at the beginning of each shift. We recommend that the Sheriff s Office continue to implement the use of electronic processing of inmate deposits and disbursements. As soon as is practicable, the amount of cash in the cash drawers should be reduced. These recommendations are meant to improve controls over cash handling and reduce the amount of time it currently takes to count the several thousand dollars of cash and coin within the N1 cash drawer.

7 Page 5 of 8 IV. Inmate Deposit at MADF and NCDF We observed the receipt and deposit of cash into three inmate s accounts at MADF and NCDF. We reviewed the Deposit Slip prepared by the individuals making the cash deposit, the inmate UNIX deposit receipt and UNIX Cash Summary Reports before and after the transaction as well as counted the cash received to assure complete and accurate recordation. We did not identify deficiencies in the design of internal controls during the inmate deposit process. The inmate deposits observed concluded that the transactions were recorded and accurately reflected within UNIX. No recommendations identified. V. Inmate Release from MADF and NCDF We observed the release of inmates from MADF and NCDF. We reviewed the Sonoma County Adult Detention System Release Verification form completed and signed by the Clerk and inmate, the inmate UNIX release receipt and UNIX Cash Summary Reports before and after the transaction as well as counted the cash presented to the inmate to assure complete and accurate recordation. We did not identify deficiencies in the design of internal controls over cash handling during the inmate release process. The inmate releases observed concluded that the transactions were recorded and accurately reflected within UNIX. No recommendations identified.

8 Page 6 of 8 VI. MADF Cash Drawer Transfer to Safe and Treasury Deposit We observed the Sheriff s Account Clerk II perform a cash count of the MADF inmate cash received for deposit, meal ticket and lobby locker revenue. We also observed the deposit of revenues from the UNIX Commissary account into the County Treasury. We reviewed UNIX reports, the receipts provided by the Account Clerk II, the Deposit Authorization Form and FAMIS reports to determine if the amount of cash transferred was properly authorized and coded to the correct account, for the correct amount. We did not identify deficiencies in the design of internal controls related to transferring cash from MADF to the jail safe and depositing cash in the County Treasury. However we did identify other matters that continue to deserve attention. The Sheriff s Account Clerk II brings a container from the Sheriff s Offices to MADF in order to transport the money to the County Treasury for deposit. The Account Clerk II counts cash every Monday and Thursday about the same time. The Account Clerk II performs the cash count at the MADF cashier s window in clear view of anyone making a deposit on behalf of an inmate. After counting the cash, the cash and check are then placed into the container. It is quite possible that someone may put two and two together that the employee that walks with the container every Monday and Thursday has a container full of cash. During our observation, the Account Clerk II walked unescorted with $8, in cash and checks in the roller box. This is not only an issue of asset safeguarding but a safety concern for the Account Clerk II. We recommend that Sheriff s Office consider having an armed Deputy accompany employees, when the amount of cash being transferred from the County detention facilities to the County Treasury for deposit is $1,000 or greater.

9 Page 7 of 8 VII. MADF Safe Cash Count We reviewed the quarterly jail safe cash count performed on March 23, 2011 by Sheriff s Accounting, at MADF. We reviewed the UNIX Cash Summary Report and compared that total with the physical cash count performed plus the total funds held in Exchange Bank and the County Treasury via FAMIS Reports to assess the safe counting procedures as well as the accuracy of the safe balance. We did not identify deficiencies in the design of internal controls related to the jail safe cash count performed by Sheriff s Accounting. However we did identify other matters that continue to deserve attention. The large amount of cash kept in the jail safe continues to be a significant concern. On the date of the jail safe cash count $18, was in the safe, which is approximately half of the cash compared to the last time we performed this engagement. Positive steps have been taken to reduce the need for large amounts of cash in the jail safe. It is our understanding that the amount of cash kept in the jail safe will be significantly reduced, once TouchPay has been fully implemented. We recommend that the Sheriff s Office continue to implement the use of electronic processing of inmate deposits and disbursements. As soon as is practicable, the amount of cash in the jail safe should be reduced. These recommendations are meant to improve controls over cash handling and reduce the amount of time it currently takes to count the several thousand dollars of cash and coin within the jail safe. We recommend the safe count be performed on a monthly rather than quarterly basis to reduce the amount of transactions that would need to be investigated to identify overages and shortages. This would lead to less time being spent investigating while increasing the likelihood of finding the error. We also recommend the combination of the safe be changed and only provide the combination to the current full time employees of the Sheriff s Office. We again recommend the Jail opening an outside checking account for issuing checks instead of cash to inmates during release. As noted above, during our observation the cash count did not reconcile with the UNIX cash summary balance causing a recount of the safe to determine if the cash count was performed in error. With the amount of cash in the safe, the initial count and re-count took well over an hour to perform. Reducing or

10 Page 8 of 8 eliminating the cash in the safe would reduce the amount of time it currently takes to count the several thousand dollars of cash within the safe providing more time to perform other tasks. VIII. Inmate Exchange Bank Account We reviewed the Exchange Bank inmate account reconciliation for February 28, 2011 and the Sheriff s process for, writing and recording checks and replenishing the inmate account. We compared the ending cash balance on the reconciliation to the February Exchange Bank statement, to the balance in FAMIS and to the list of outstanding checks. The Inmate Welfare Trust bank reconciliation is performed on a monthly basis by the Sheriff s Accountant II, to reconcile the ending balance on the Exchange Bank statement to the check register balance and the balance in FAMIS. The reconciliation is not reviewed by anyone in the Sheriff's Office. Accounting personnel perform the bank reconciliation function. However, there is currently no procedure in place to review the bank reconciliation after it is completed. This practice would greatly enforce the checks and balances necessary for strong controls over cash. We recommend that a member of management, who is not part of the inmate cash handling process, review the bank reconciliations for any unusual items, investigate and fully resolve any such items, and document his or her approval by initialing the form. Upon receipt of this letter, please respond to the above comments, directly to the Auditor- Controller s office within 60 days. We appreciate the cooperation and assistance provided by Jim Piercy, Shellie Olson, Julie Bertoli, Judy Brubaker and the other staff at the Sheriff s Office. If you have questions about the aforementioned matters, please feel free to contact Damian Gonshorowski at (707) Sincerely, Sonoma County Auditor-Controller