Cash and Internal Controls Audits, Clerk-Recorder June 2020 Cash Receipts, Cash Disbursements, and it Internal Controls Audit

COUNTY OF SAN LUIS OBISPO BOARD OF SUPERVISORS AGENDA ITEM TRANSMITTAL (1) DEPARTMENT (2) MEETING DATE (3) CONTACT/PHONE Auditor – Controller – 7/7/2020 Mark Maier (805) 781-4267 Treasurer – Tax Collector Kari Lekvold (805) 781-4846 (4) SUBJECT Submittal of a cash receipts, cash disbursements, and IT internal controls audit of the Clerk-Recorder covering FYs 2016-17, 2017-18, and 2018-19. All Districts. (5) RECOMMENDED ACTION It is recommended that the Board receive, review, and file the attached Clerk-Recorder’s Office Cash Receipts, Cash Disbursements, and IT Internal Controls Audit Report covering FYs 2016-17, 2017-18, and 2018-19. (6) FUNDING SOURCE(S) (7) CURRENT YEAR FINANCIAL (8) ANNUAL FINANCIAL (9) BUDGETED? N/A IMPACT IMPACT Yes $0.00 $0.00 (10) AGENDA PLACEMENT { X } Consent { } Presentation { } Hearing (Time Est. _______) { } Board Business (Time Est.______) (11) EXECUTED DOCUMENTS { } Resolutions { } Contracts { } Ordinances { X } N/A (12) OUTLINE AGREEMENT REQUISITION NUMBER (OAR) (13) BUDGET ADJUSTMENT REQUIRED? BAR ID Number: N/A { } 4/5th's Vote Required { X } N/A (14) LOCATION MAP (15) BUSINESS IMPACT STATEMENT? (16) AGENDA ITEM HISTORY N/A No { } N/A Date _ 11/25/2014_____ (17) ADMINISTRATIVE OFFICE REVIEW Emily Jackson (18) SUPERVISOR DISTRICT(S) All Districts Page 1 of 3 COUNTY OF SAN LUIS OBISPO TO: Board of Supervisors FROM: James W. Hamilton, CPA, Auditor – Controller – Treasurer – Tax Collector DATE: 7/7/2020 SUBJECT: Submittal of a cash receipts, cash disbursements, and IT internal controls audit of the Clerk- Recorder covering FYs 2016-17, 2017-18, and 2018-19. All Districts. RECOMMENDATION It is recommended that the Board receive, review, and file the attached Clerk-Recorder’s Office Cash Receipts, Cash Disbursements, and IT Internal Controls Audit Report covering FYs 2016-17, 2017-18, and 2018-19. DISCUSSION Cash handling can be an area vulnerable to mistakes or misappropriation. The Auditor-Controller-Treasurer-Tax Collector (ACTTC) has developed policies to minimize the risk associated with cash receipts and disbursements. Additionally, County computers and applications are vulnerable to misuse. County Information Technology has developed policies to minimize the risk associated with misuse of County computing assets. The purpose of our audit was to: 1. Determine if payments received are receipted, recorded, and deposited in accordance with the Cash Handling Policy. 2. Determine if cash disbursements have been properly authorized and invoice documentation is maintained and sufficient to substantiate the payment. 3. Determine the flow of monies received through trust funds and accounts and to assess the use of the monies. 4. Determine whether the following IT controls are in place. a. Staff have signed annually the acknowledgment form of the County IT Acceptable Use Policy. b. The financial system access roles issued to staff are appropriate for job functions. After testing a sample of financial transactions across FY’s 2016-17, 2017-18, and 2018-19, we determined the following to be in compliance with County policies: Page 2 of 3 1. Payments received are receipted, recorded, and deposited in accordance with the County’s Cash Handling Policy. 2. Petty cash was in balance at the time of the count. 3. Cash disbursements were properly supported by invoices and appeared appropriate. 4. Trust fund monies were appropriately accounted for and used. 5. Staff have signed the acknowledgment form of the County IT Acceptable Use Policy annually. 6. The financial system access roles issued to staff were appropriate for the job function. The following issues, which are detailed in our attached report, were determined to be out of compliance with County policies: 1. The payment authorization process and payment recording process were not properly separated. 2. Financial system access roles were not rescinded timely for a staff member whose position was transferred to another department. The two identified issues have both been corrected by the department prior to the issuance of the final report. The Clerk-Recorder agrees with the report and since the two issues have been corrected a response to the report was not required. OTHER AGENCY INVOLVEMENT/IMPACT Clerk-Recorder FINANCIAL CONSIDERATIONS There is no additional cost to the County for conducting cash and internal control audits. Periodic cash and internal control audits are part of the ACTTC’s compliance with Government Code Sections 26881 and 26883. RESULTS The ACTTC’s periodic audits of cash procedures and other internal controls helps maintain and improve internal controls and procedures for cash handling by County staff, reinforces accountability of management, and contributes to the County’s vision of a well-governed community. ATTACHMENTS 1 Clerk Recorder Cash Receipts, Cash Disbursements, and IT Internal Controls Audit Report Page 3 of 3