Professional Documents
Culture Documents
OF
COUNTY
THE
AUDITOR
ELVA FUENTES
EXECUTIVE ACCOUNTANT
November 7, 2014
Background
Judge Joe Benavides has served as JPl-1 since he was elected in 2013. His average annual budget is $222,538.
The average annual amount collected by this court over the past five years is $507,313. He currently has four
full-time employees (including him) and one temporary employee.
Conclusion
During the cash count and related review of accounting procedures, we observed the office did perform daily
closeout and prepared daily deposits. The office follows proper procedures to insure county monies are adequately
safeguarded.
We also identified three instances where internal controls were below minimum standards. Internal control
standards establish the minimum level of quality acceptable in business operations. Internal controls help to
ensure compliance with laws and regulations, as well as to help safeguard county assets against waste, loss, and
misuse. The internal control weaknesses present at the time of the audit were separation of duties regarding case
assignments, no printed documentation to verify that change fund is counted, and unreceipted mail receipts.
A complete and detailed explanation of each of the findings as well as recommendations for improvement are
presented in the section, Opportunities for Improvement, immediately follows this page. Several of the flDdings
require management's attention and a written response is necessary in order to evaluate compliance with your
action plan in the future.
We would like to express our sincere appreciation in providing our office full access and cooperation in order to
complete this audit
Sincerely,
CWx
_tit
..
Internal Control Weaknesses
The Nueces County Fraud Policy states that "Every county official/department head shall develop and maintain
an internal control system that is to be clearly documented and readily available for examination in compliance
with this Policy. The internal control system should compose five standards: (1) control environment, (2) control
procedures, (3) risk assessment, (4) communication and reporting, and (5) monitoring. Objectives for each of
these standards are to be identified or developed for each office/department activity and are to be logical,
applicable and complete. Documentation of the office/department's internal control system will provide an
organizational structure for management directives, administrative policy, accounting policies, procedures and
manuals, and audit reports."
The internal control standard #1 control environment is where the environment is set to be committed in adhering
to the organizations policies and procedures and its ethical and behavioral standards.
The internal control standard #2 control procedures indicates controls are performed at various levels to reduce
risks in achievement of fmancial reportiugobjectives. Controls can either be preventive or detective. The intent
of these controls is different. Preventive controls attempt to deter or prevent undesirable events from occurring.
They are proactive controls that help to prevent a loss. Examples of preventive controls are separation of duties,
proper authorization, adequate documentation, and physical control over assets. Example of detective controls are
reviews, analysis, variance analysis, reconciliations, physical inventories, and self-audits.
Control Procedures - Separation ofDuties
Attachment I of the Fraud Policy states under Control Procedures - (3) a-b Separation of Duties states as follows:
Separation ofduties may be incorporated into the job descriptions. The main point ofthis is to heighten
awareness of those positions that have full control ofa transaction. Key duties and responsibilities that
show a separation ofduties are:
a. Having the custody of assets, having authority to perform the transaction, having the
responsibility to record the transaction and having the responsibility to reconcile or approve the
transaction cannot be performed by the same individual. In small offices where an employee is
out sick or on vacation and one individual has to perform all duties then a review has to be
completed by upper level management or upon return of the absent employee. Deliberate
procedures must be in place in such situations.
b. The process ofreceiving assets and-issuing assets has to be ccn:efully monitored For example a
JP clerk who receives payments should not be responsible for issuing refunds without having
another person involved in the process.
14-01
Separation of Duties
We observed that each court clerk has been designated to handle specific case types (Traffic, Juvenile,
~d Civil). Each clerk has authority in their assigned case type to assess fines/fees, make adjustments, and
In other words, they have full control ofthe case.
Issue
,'"'....""UJ'UU.1t;S
separation of duties, thus the more effective the internal controls are (preventive control). When staff is reduced,
managements close control and documented review becomes critical (detective control).
All transactions and other significant events are to be promptly recorded, clearly documented and
properly classified. Documentation of a transaction or event should include the entire process or life
cycle ofthe transaction or event, including:
a. The initiation or authorization ofthe transaction or event
b. All aspects ofthe transaction while in process
c. The final classification in summary records
14-02 Unreceipted Mail Payments
Nueces county accounting procedures requires that money received be deposited by the next business day
upon reaching $300 or by the seventh business day from when the funds were received if less than $300.
Local Government Code 113.022 and Code of Criminal Procedures 103.004 state that "a county officer
shall deposit the money with the county treasurer on or before the next business day after the date on
which the money was received. If the deadline cannot be met, the officer or person must deposit the
money, without exception, on or before the fifth business day after the day on which the money is
received."
It is the fiduciary duty of the officer to safeguard county assets by complying with the state statutes and
county policy. Excessive accumulation of cash increases the risk of loss due to mishandling and theft.
At the time of the audit, there were 20 checks totaling $ 421.25. Ten of the checks were received in
October and ten were received in July, August, and September. The checks for July, August, and
September ranged from $1 - $ 5. Most of the checks are mostly for civil cases. The office does maintain
a daily log of monies received and is maintained in a binder.
Recommendation: All payments should be timely receipted and deposited in accordance with County and state
statutes (Local Government Code.I13.0l2 and Code oferirrrinalProcedures 103.004).
14-03
Recommendation: That a simple calculator tape of the counted monies is attached to each clerks Odyssey
deposit report. The supervisor can then initial the tape so that they verify all monies including change fund were
counted by the clerk (preventive).
5
OFFICE
OF
COUNTY
THE
AUDITOR
D I A N A ROSAS, M A M .
ELVAFUENTES
FIRST A S S I S T A N T
INTERNAL A U D I T SUPERVISOR
DALE ATCHLEY, C P A
COUNTY AUDITOR
LISA DAVIS, C I . O .
EXECUTIVE A C C O U N T A N T
November 21,2014
Background
Judge Larry Cox has served as JP2-2 since February 1, 1980. His average annual budget is $203,724. Judge Cox
served as presiding judge for the years of 2010 and 2011. The average annual amount collected by this court over
the past five years is $285,989. He currently has three full time employees and one temporary employee.
Over the last couple of years, this office has had turnover. Clerk turnover has been one each year for the last three
years. The temporary position turnover is two to three times every year.
Page 1
Conclusion
During the cash count audit, the first thing noticed was the volume of manual receipts used by this particular
office. It appears that this court uses a higher volume of the manual receipts compared to other courts. The
inability to monitor fhe volume of manual receipts resulted in various findings including a possible theft of $672,
variances in amounts and tender types when transferring receipts to the Odyssey system along with delays in
transferring receipts. Due to the fact that there was possible theft, there will be a full audit scheduled in the near
future.
Eight instances were identified that intemal controls were below minimum standards. Intemal control standards
establish fhe minimum level of quality acceptable in business operations. Intemal controls help to ensure
compliance with laws and regulations, as well as to help safeguard county assets against waste, loss, and misuse.
The intemal control weaknesses present at the tune of the audit were untimely deposits, untimely receipts, hot
check restitution monies not properly handled, manual receipts not used m sequential order or monitored, no
printed documentation diat change fund is verified and manual receipts not properly filled out. Other findmgs
include commingling of monies for employee group lotto ticket monies with county monies and money orders not
restrictively endorsed.
A complete and detailed explanation of each of the findings as well as recommendations for improvement are
presented in the section, Opportunities for Improvement, immediately follows this page. Several ofthe fmdings
require management's attention and a written response is necessary in order to evaluate compliance with your
action plan in the future.
We would like to express our sincere appreciation in providing our office full access and cooperation in order to
complete fhis audit.
Sincerely.
cc:
Page 2
14-01
Recommendation: Management/supervisors must review manual receipts more thoroughly to verify receipts
have been transferred to the Odyssey system (preventive control).
Page 4
Page 5
TMs court has a bank bag that holds checks payable to the merchant. Once a week, the checks are mailed
to the merchants. At die tune of the audit, diere were two checks payable the Judge Cox and one check
was payable to Jenny Craig. One of those checks was dated 4/13/12 had not been receipted; the next
check is a refund from Peter Piper claiming the check they received was not theirs. The money order
payable to Jenny Craig stated it did not belong to them. There was no indication of follow-up action on
these money orders. These items were in the possession of the clerk mentioned in fmding 14-01.
Recommendation: Management/supervisors must review each employees work to ensure procedures are
properly followed. Management/supervisors must review that checks submitted to the proper merchant.
14-05 Change Fund
There is no documentation on daily closeout work papers indicating that all monies were counted. This
department utilizes the Odyssey system to enter the starting balance (change fimd). This seems to be fhe
norm for most JP offices we have visited. Clerks count their monies and enter the amounts in the
Odyssey system. But die Odyssey system does not provide a detailed printout of counted monies.
Recommendation: That simple calculator tape of the counted monies is attached to each clerks Odyssey deposit
report. This would provide for adequate documentation that all monies were counted by clerk mcluding change
fund.
14-06 Manual Receipts Not Used In Sequential Order or Monitored
Part of the cash audit is to take inventory of manual receipt books on hand. We reviewed the past two
years because that is when the new Odyssey software was put m place. We perform random testing to
confirm payments were transferred (receipted) to the Odyssey system.
This office uses manual receipts in times when fhe Odyssey system is down or when there is a question
on the case and the supervisor is not available. There is a manual receipt book assigned to each clerk. It
appears that this court uses a higher volume of the manual receipts compared to other courts. There were
129 manual receipts used m the last two fiscal years. There were some instances where blank receipts
were not voided out and/or missing one part of the 3-part receipt.
We performed rMidom testing of receipts on each manual receipt book. Random testmg of one the clerk's
manual receipt book triggered questions and mdicated some of the receipts had not been receipted into the
Odyssey system. This led to 100% testing on this particular clerk's receipts.
Best business practice is lhat manual receipts be used in sequential date and number order for easy
reconcilement. Due to this office not having control or monitoring the manual receipts has led to cash
missing (Refer to 14-01).
Recommendation: That manual receipts be used one book at a time and ui sequential order. If a receipt is
inadvertently skipped, the unused receipt needs to be immediately marked "VOID and not used" and initialed by
supervisor (preventive control). Just like all voids should be marked "VOID", initialed by supervisor with a
reason for the void. Remaining receipt books should be kept in the safe. Management must ensure receipts are
properly utilized. Local Govemment Code 103.11 indicates the county auditor has authority over receipt books.
The county auditor can request receipt books be turned over if not utihzed properly.
Page 6
14-08
14-09
Recommendation: That staff needs be further trained in the Odyssey system m effort to minimize the use of
manual receipts. However, the staff needs to be trained to fill out manual receipts properly and comply with CCP
103.010(b). Also, it is recommended that the manual receipt number be referenced in the comment data field of
the Odyssey computer receipt.
Other Findings
14-10
Recommendation: That items that are not county property be removed from the safe. That only county property
and monies be kept in the safe. The purpose of the safe is to safeguard county assets only not personal property.
Management needs to ensure fhe safe is used strictly for counly purposes.
Page 7
Page 8
OFFICE
D I A N A ROSAS,
OF
THE
COUNTY
AUDITOR
M A M .
ELVA FUENTES
FIRST ASSISTANT
INTERNAL A U D I T SUPERVISOR
DALE ATCHLEY, C P A
C O U N T Y AUDITOR
LISA DAVIS, C I . O .
EXECUTIVE A C C O U N T A N T
Interviewed staff
Reviewed till balance and daily close out reports for the period of 10/1/14 through 10/6/14
Reviewed cash receipts journal for the period of 10/1/14 through 10/7/14
The building was also the secondary otFice for Commissioner Precinct 1, Mike Pusley, but he has moved his
office to the Hilltop Community Center, located across die street from the B i l l Bode Building. The space
formerly used by the Commissioner is now used as a secondary ofSce area for the JPl-3 administrative secretary,
who also maintains a primary workstation in the JPl-3 area.
The Bill Bode Building is managed by the Public Works department. The average annual budget for this buildiog
is $ 63,445. There is one employee under this budget.
Judge Robert Balderas has served as XPl-3 since he was elected in 2003 and has served as Presiding Judge for the
term of 2005-2007. His average annual budget is $ 217,549. He currently has four full-time employees and two
temporary employees. The average annual amoimt collected by this court over the past five years is $ 195,382.
Conclusion
The county suffered a cash loss of $300, which was tiie approved change fund amount, as well as addition costs
related to damage to property and the facility itself We observed that the loss could have been avoided if
adequate building securities would have been put in place at the BiU Bode County Building.
The fixed assets were inventoried and identified.
During tibe cash count and related review of accounting procedures, we observed the office did follow timely
deposit procedures which minimized the amount of the cash loss. However, we identified seven Instances where
intemal controls were below minimum standards. Intemal control standards estabhsh the minimum level of
quality acceptable in business operations. Intemal controls help to ensure compliance with laws and regulations,
as well as to help safeguard county assets against waste, loss, and misuse. The internal control weaknesses
present at the time of the audit were a lack of separation of duties, insufficient authorization of reductions in
Odyssey system, insufficient documentation of void authorization in Odyssey system, password integrity
compromised, clerk ID not adequately identified on Odyssey receipts, overpayments are not receipted, and change
fimd kept in safe during business hours.
A complete and detailed explanation of each of the findings as well as recommendations for improvement are
presented in the section. Opportunities for Improvement, immediately follows this page. Several of the findings
require management's attention and a written response is necessary in order to evaluate compliance with your
action plan in the future.
We would like to express our sincere appreciation in providing our office full access and cooperation in order to
complete this audit
Sincerely,
They are proactive controls that help to prevent a loss. Examples of preventive controls are separation of duties,
proper authorization, adequate documentation, and physical control over assets. Example of detective controls are
revievi's, analysis, variance analysis, reconciliations, physical inventories, and self-audits.
Separation of Duties
We observed.that each comt cleric has been designated to handle specific case types (Traffic, Juvenile,
and Civil). Each clerk has authority in their assigned case type to assess fines/fees, make adjustments, and
issue receipts. In other words, they have full control of the case.
Recommendation: Responsibilities and duties involving transactions and events should be separated among
different employees vvdth respect to assessing fines/fees, adjusting fines/fees, collecting and receipting payments,
and maintauiing custody of the cases. Die responsibility for opening mail should be assigned to individuals who
have no responsibility to assess fmes/fees. The fewer actions perfonned by a single employee the greater the
separation of duties, thus the more effective the intemal controls are (preventive control). When staff is reduced,
managements close control and documented review becomes critical (detective control).
14-04
Recommendation: For 14-03 and 14-04, current practices in place should be modified to be in agreement with
county intemal control pohcies. The Odyssey system needs to be default setup that the person who issued the
receipt cannot be the same user which approves (review) the voiding, adjusting, or reversing of that s ^ e receipt
(preventive control). It is preferred that a supervisor authorize a void, adjustment, or reversal. But it is not
necessary i f a dual-control principle is put in place this way there is another person confirmiag the action in the
event the supervisor is not available.
Password Integrity
Per tiie Nueces County Network Communications Policy, Violations and Prohibited Used, 3.2.2., it is
strictly prohibited to "adopt the identity of another person on any electronic message, attempting to send
electronic mail anonymously, or using another person's password."
During interview witii staff, it was disclosed that passwords have been compromised. This compromises
the integrity of the audit trail and the accountability of the system. This occurred because the employees
did not have access to electronic files.
Recommendation: Documents should be saved on a shared network so designated employees will have access
to those files as needed. Management-needs to make sure eanpJoyees..are. cross-trained and,_tiiatthej^ each have
proper access (with their own sign in) to files needed in effort to perform job duties without compromising
intemal controls.
14-06
Recommendatioii: Nueces County Information Technology department should be contacted and instructed that
receipts for departments utilizing Odyssey be standardised.
It should be noted that when it was discovered during tiie course ofthe audit that Odyssey was not indicating the
clerk ID on the receipts of two of the clerks, the staff at JPl-3 contacted the county's infonnation technology
department and this issue has been corrected for those two clerks.
Recommendation: A l l payments should be receipted and deposited in accordance with County and state statutes
(Local Govermnent Code 113.022 and Code of Criminal Procedures 103.004). In the event that an overpayment
is received and a refund is due to the payer, it needs to be properly receipted in the Odyssey software. Then, an
7
order to pay disbursement request also referred to as a check request should be prepared, and then signed by the
judge. The request and the supporting documentation, including a copy of receipt indicating that a refund is due,
should be submitted to the county auditor's office.
Recommendation: Each clerk's designated change fund should be retrieved from the safe at the beginning of the
work day and kept in a locked drawer m their workstation during the day. A t the end of the business day after the
till/change fund is reconciled; we then recommend that the change fund be retumed to the safe for safekeeping
ovemight. Clerks should count their change fund at the beginning and end of their shift to verify amount is
correct (preventive)-and-needs-to be documented m-tlieir daily closeoutwork papers.
OFFICE
OF
THE
COUNTY
AUDITOR
ElVA FUENTES
INTER.'lAl AUDIT SUPERVISOR
November 17,2014
Background
JP4 is located in the city of Port Aransas, Texas. Judge Neblett has been the justice of the peace since January 3,
1993. Judge Neblett has managed an average budget of$ 161,121 and has two full time employees: administrative
secretary and a court clerk. The average overall collections for the past five years are $ 244,102. From the date
of the last audit in 2009, cases filed declined by 48.3% and cases disposed declined by 39.65% in comparison to
FY2013. Office of Court Administration (OCA) data is not complete for this court; last report submitted to OCA
was in May 2014. As a result of the decline in court activity, overall collections declined by 39% and revenues
have declined by 21 % from 2009 in comparison to FY2014
This office has had turnover in the last couple of years. The court clerk position has had a new hire each year.
There were two new temporary hires in the current year and two new temporary hires in the prior year.
The new Odyssey software was implemented in June 2012. All files from the FullCourt (previous software) were
converted to the new Odyssey software. This software has many of the same capability as FullCourt as to OCA
reporting, Omnibase reporting, Linebarger collections, etc.
Page 1
The last audit of this office was the investigative audit of December 9, 2009. This audit revealed seventeen
[mdings: six fraudulent [mdings, eight weakness in internal controls, and three general findings. These [mdings
contributed to the theft of $ 85,532 by the administrative secretary. The case was prosecuted by the district
attorney's office and the employee was convicted in 2014. Loss due to this theft was costly to the county and the
taxpayers. In addition, the county insurance costs increased for five years due to the county being considered a
risk.
Conclusion
During this cash audit, a total of fourteen [mdings were noted: eleven weaknesses in internal controls; one was
non-compliance in OCA reporting, and two general [mdings. The internal control weaknesses include: lack of
management review/supervision, administrative secretaIy has full control of office operations, lack of separation
of duties, daily closeout documentation not retained, administrative secretary maintains key to clerk's cash box.
passwords are shared, untimely deposits, untimely receipts, administrative secretary does not follow required
Odyssey deposit procedures, monies not kept in safe overnight, and safe which is in need of repair or replacement.
Other [mdings were change fund not utilized and money order and check were not restrictively endorsed.
Internal controls help to ensure compliance with laws and regulations, as well as to help safeguard county assets
against waste, loss, and misuse. The level of internal controls has weakened even further since the theft audit. It
clearly indicates a disregard to compliance of audit recommendations, laws and regulations, and county policies.
Red flags on top of the already severely weak internal controls are the drastic decline in overall collections and
revenues corresponding to the decline in cases filed and cases disposed since the last audit five years ago.
The [mdings in this cash audit have set the tone for the environment ofthe office. This situation places the county
at an extraordinary risk for history to repeat itself and the county to suffer another substantial loss. A full audit
will be scheduled in the near future.
A complete and detailed explanation of each of the [mdings as well as recommendations for improvement is
presented in the section, Opportunities for Improvement, which immediately follows this page. Several of the
[mdings require management's attention and a written response is necessary in order to evaluate compliance with
your action plan in the future.
We would like to express our sincere appreciation in providing our office full access and cooperation in order to
complete this audit.
cc:
Page 2
Page 3
Adequate and continuous supervision is a critical component to the prevention offraud Supervisors are
responsible for maintaining operating levels, meeting or exceeding goals and objectives and
implementing changes. Some examples of documentation to have on hand to show that monitoring is
being performed are:
1) What evidence exists that supervisory review has occurred? Where in the process does a supervisor
sign offand how often? What do they sign offon? i.e., timesheets, petformance reports, exceptions, etc.?
Page 4
Separation ofduties may be incorporated into the job descriptions. The main point of this is to heighten
awareness of those positions that have full control ofa transaction. Key duties and responsibilities that
show a separation ofduties are:
a. Having the custody of assets, having authority to perform the transaction, having the
responsibility to record the transaction and having the responsibility to reconcile or approve the
transaction cannot be performed by the same individual. In small offices where an employee is
out sick or on vacation and one individual has to perform all duties then a review has to be
completed by upper level management or upon return of the absent employee. Deliberate
procedures must be in place in such situations.
b. The process ofreceiving assets and issuing assets has to be carefully monitored. For example a
JP clerk who receives payments should not be responsible for issuing refunds without having
another person involved in the process.
There is a memo issued to staff written by the administrative secretary prescribing procedures and job
duties but there is no indication or reference of management approval.
Recommendation: It is imperative that management comply with prior audit recommendations and county
policies. Management should be more involved and ensure that supervisor is appropriately supervising staff and
complying with management approved procedures and county policies.
14-03 Lack of Separation of Duties
This office has been reduced to one staff at various times of the year due to turnover. There is no
evidence that management has reviewed any of the daily operations because there is no documentation
retained of closeout (Refer to 14-04).
Since this is a small staffed office, it is important that management closely monitor all aspects of the daily
operation.
Recommendation: Duties and responsibilities involving transactions and events should be separated among
different employees with respect to assessing fines/fees, adjusting fmeS/fees, collecting and receipting payments,
and maintaining custody of the cases. The fewer actions performed by a single employee the greater the
separation of duties, thus the more effective the internal controls are (preventive control). When staff is reduced,
management's close control and documented review becomes critical (detective control).
Page 5
Recommendation: That Odyssey reports for closeout and deposit procedures be retained for record. Proper
documentation must be kept on file as it provides an adequate trail for review by management and auditors. In
addition, it is recommended that a simple calculator tape of the counted monies be attached to each clerks
Odyssey Deposit Report with the initials of the supervisor on the tape indicating they verified all monies
including change fund were counted by the clerk (preventive).
14-05 Supenisor Maintains Key to Clerk's Cash Box
It was observed that the Administrative Secretary had the key to the clerk's cash box.
Recommendation: Each clerk keep their cash box key in their possession at all times once it is assigned to them.
The internal control standard #1 control environment is where the environment is set to be committed in adhering
to the organization's policies and procedures and its ethical and behavioral standards. Management must see to it
that employees are well acquainted with county and departmental policies and procedures that pertain to their job
responsibilities.
14-06 Password Integrity Compromised
Per the Nueces County Network Communications Policy, Violations and Prohibited Used, 3.2.2., it is
strictly prohibited to "adopt the identity of another person on any electronic message, attempting to send
electronic mail anonymously, or using another person's password."
During interview with the clerk, it was disclosed that the supervisor knows her Odyssey log-in passwords.
As a result, the integrity ofthe audit trail and the accountability of the system have been compromised.
It was further noted that the clerk has only been with the department only a couple of weeks. She was a
transfer from another department. Clerk indicated that she shared her login password with her previous
supervisor also.
Recommendation: Management ensures supervisors and employees are following the Nueces County Network
Communications Policy and that they each have proper access (with their own sign in) in effort to perform job
duties without compromising internal controls. Management may contact Information Technology to request
password change for clerk's log-in passwords.
Page 6
Attachment I of the Fraud Policy states under Control Procedures - 2) Timeliness and Performance Standards
states:
All transactions and other significant events are to be promptly recorded, clearly documented and
properly classified Documentation of a transaction or event should include the entire process or life
cycle ofthe transaction or event, including:
a. The initiation or authorization ofthe transaction or event
b. All aspects ofthe transaction while in process
c. The final classification in summary records
Recommendation: Daily closeout procedures must be followed and deposits prepared in a timely manner. All
payments should be deposited in accordance with County and state statutes (Local Government Code 113.022 and
Code of Criminal Procedures 103.004). It is imperative that management comply with prior audit
recommendations and county policies.
14-08 Odyssey Deposit Procedures not Followed
This office does not follow the Odyssey procedure to document that a deposit has been processed. Staff
had copies ofthe procedures on hand that were provided to all JP staff at the Odyssey training. Following
this procedure is an important tool for deposit analysis. The Odyssey Deposit report is one in which the
supervisor can use for verifIcation against the actual deposit form.
Administrative secretary made a decision to not follow this procedure without management approval.
Recommendation: That the Odyssey Deposit procedures be followed for consistency in reporting for all JP
offices.
Page 7
What physical controls are in place to protect assets? Who has the keys to the vault and is access to the
vault limited? Is money left on top ofdesks unattended?
Restrictions on access to resources will depend upon the vulnerability of the resource and the perceived
risk ofloss, both ofwhich shall be periodically assessed (preventive).
Periodic comparison shall be made between the resources and recorded accountability of the resources
to reduce the risk of unauthorized use or loss and protect against waste and wrongful acts. The
vulnerability and value of the county resources shall determine the frequency of this comparison
(Detective).
14-10 Cash Boxes Not Kept In Safe Overnight
Currently, both staff member keep their cash box in their locked drawer at their desk overnight. This
office does have written office policies which addresses this issue. #6 -Cash in Office states, "All monies
located in any desk are to be limited to county funds only. All payments cash or otherwise, are to be
locked securely in the safe when not in the direct care of staff. Monies should be locked up anytime when
left for extended periods of time, inclusive of lunch and office closure. Payments receipted are the
responsibility of receiving clerk until deposited."
Recommendation: That all monies be kept in safe overnight. Locking money bags can be ordered from treasury
for which each employee can lock it and place it in the safe at night.
14-11 Safe In Need of Repair or Replacement
The safe is in an adequate location. Currently, the handle comes off but combination is still needed to
access it.
Recommendation: The safe is in poor condition needs to be replaced in order to better safeguard monies.
Page 8
Compliance Finding
14-12 Office of Court Administration (OCA) Reports are Past Due
Section 71.035(b) of the Texas Government Code (GC) states that "The council may require a state
justice, judge, clerk, or other court official, as an official duty, to comply with reasonable requirements
for supplying statistics pertaining to the amount and character ofthe civil and criminal business transacted
by the court or other information on conduct, operation, or business of his court or the office of the clerk
of his court that is within the scope of the functions of the council". In addition, Section 171.2 of the
Texas Administrative Code (TAC) states that "District clerks, county clerks, justice of the peace,
municipal judges shall submit a summary-level court activity report each month to the Office of Court
Administration (OCA) using the methods required by this chapter no later than 20 days following the end
of the month reported".
In preparing audit reports, it is standard to provide background information including revenues, budget
and statistical information of the office being audited. According to the OCA reporting website, the last
report submitted to OCA was in May 2014.
Recommendation: That the office file reports immediately to become in compliance with GC 71.035(b) and
TAC 171.2. The Odyssey system has the capability and procedures are in place to expedite this reporting. It is
management's responsibility to ensure required reporting is submitted in a timely manner.
Other Findings
14-13 Change Fund Not Utilized
This office does not use the change fund. They only give change if they have it in their till. Defendants
are asked to bring exact monies. Turning away defendants because they do not have the exact payment
amount may discourage them from coming back. Therefore, a collection effort has failed. A long term
consequence is lower collections and revenues.
Excess cash on hand can lead to possible misuse, loss, or theft.
Local Government Code Section 103.902 states, "On the recommendation of the county auditor, the
commissioners court may increase or decrease the change fund at any time".
If this office chooses to not utilize the change fund, then they need to inform the county auditor.
Recommendation: If this office chooses to not utilize the change fund, then the county auditor will recommend
to the commissioners court that the change fund be turned in.
14-14 Money Order and Check not Restrictively Endorsed
The administrative secretary had one check in her till that was not restrictively endorsed. There was one
money order dated 9/11114 which was unreceipted (Refer to 14-09) and it was not restrictively endorsed.
Recommendation: That all checks and money orders be immediately restrictively endorsed upon receipt.
Page 9
OFFICE
D I A N A ROSAS,
OF
COUNTY
M A M .
AUDITOR
ELVA F U E N T E S
FIRST A S S I S T A N T
I N T E R N A L A U D I T SUPERVISOR
DALE ATCHLEY, C P A
COUNTY AUDITOR
LISA DAVIS,
c.i.o.
EXECUTIVE A C C O U N T A N T
901 LEOPARD STREET RM 304
CORPUS CHRISTI, T X 78401
PHONE: (361) 888-0556 FAX: (361) 888-0584
November?, 2014
Bacl^round
Judge Robert Gonzalez has served as JP5-1 since he w ^ elected in 2001. He has served as presiding judge siace
2012. His average annual budget is $ 212,123. The judge currently has four full-time employees (including him)
and one temporary employee. The average annual amount collected by this court over the past five years is
$ 787,193. This average is high due to a large class action suit against Transunion involving 69,607 cases which
was filed in this court in FY2010. This suit brought in $1,740,175 in local revenues. Excluding this suit, the
average collections are $ 355,631.
Conclusion
The office follows daily closeout procedures and prepares daily deposits. A l l monies are promptly receipted.
Procedures are in place to ensure county monies are adequately safeguarded.
We found that one of the cierks had gift cards kept in her cash box. These gift cards we identified to be donated
by a local merchant for use as door prizes during the upcoming building Christmas party. The merchant has done
this for fhe past couple of years. Since these gift cards are not county property, it is considered commingling of
assets. They should be kept separatefromcounty monies.
We also identified three instances where internal controls were below minimum standards. Internal control
standards establish the minimum level of quality acceptable in business operations. Internal consols help to
ensure compliance with laws and regulations, as well as to help safeguard county assets against waste, loss, and
misuse. The internal control weaknesses present at the time of the audit were separation of duties regarding case
assignments, no printed documentation to verify that change fund is counted, and manual official receipts not
used in sequential order.
A complete and detailed explanation of each of the findings as well as recommendations for improvement are
presented in the section. Opportunities for Improvement, immediately follows this page. Several of the findings
require management's attention and a written response is necessary in order to evaluate compliance with your
action plan in the future.
We would like to express our smcere appreciation in providing our office full access and cooperation in order to
complete this audit.
Sincerely,
14-01
Recommendation: The gift cards should be removed from the clerk's cash box and county safe. Since the
merchant designated the gift cards for a specific purpose, we will not require these cards to go through
commissioner court for approval. Any future, if not for county purposes, should be kept apart from county
monies.
Separation of Duties
We observed that each court clerk has been designated to handle specific case types (Traffic, Juvenile,
and Civil). Each clerk has authority in their assigned case type to assessfines/fees,make adjustments, and
issue receipts. In other words, they have fiiU control of the cases. However, this seems to be the norm for
all JP offices.
Recommendation: Responsibilities and duties involving transactions and events should be separated among
different employees witii respect to assessing fines/fees, adjustingfines/fees,collecting and receipting payments,
and maintaining custody of the cases. The fewer actions performed by a single employee the greater Ihe
separation of duties,tiiusthe more effective the intemal controls are (preventive control). When staff is reduced,
managements close control and documented review becomes critical (detective control).
This office does not have any documentation on daily closeout work papers indicating that all monies
were counted. This office utilizes the Odyssey system by entering the starting balance (change fund) and
at the end of the day they count all monies including change fund. TTiis process is followed by most JP
offices we have visited. But the Odyssey system does not provide a detailed printout of counted monies.
Recommendation: That a simple calculator tape of the counted monies is attached to each clerks Odyssey
deposit report. The supervisor can then initial the tape so that they verify all monies including change fund were
counted by the clerk (preventive).
Monitoring
Attachment I of the Fraud Policy states under Monitoring states:
Adequate and continuous supervision is a critical component to the prevention of fraud. Supervisors are
responsible for maintaining operating levels, meeting or exceeding goals and objectives and
implementing changes. Some examples of documentation to have on hand to show that monitoring is
being performed are:
1) What evidence exists that supervisory review has occurred? Where in the process does a supervisor
sign off and how often? What do they sign off on? i.e., timesheets, performance reports, exceptions, etc. ?
14-04