2022-04 Department of Water Supply Cash Handling Follow-up

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Chapter 2 Status of Recommendations Segregation of Duties Condition and Cause One employee had complete control over the cash handling process. The same employee had full administrative computer access to record/adjust transactions in the public utility billing system (PUBS) and the general ledger(GL), reconciled bank statements, and made daily bank deposits. Effect of the Condition The lack of segregation of duties made adjustments difficult to detect. Recommendation 1 "We recommend that Department of Water Supply management separate incompatible duties. One individual should not be in charge of all of these cash handling elements: physical custody of cash, depositing cash, recording/adjusting transactions in the system, and reconciling the bank statements. If duties cannot be sufficiently segregated, mitigating controls, such as removing administrator computer access rights to the cash receipting system and/or a lower level of detailed supervisory review, could be implemented." Department Action To meet this recommendation, in 2017, DWS reassigned duties to segregate incompatible duties over: • Physical custody of cash • Receipting cash transactions • Reconciling cash receipts • Reconciling monthly bank statements • Recording/adjusting transactions in the systems • Making daily bank deposits • Investigating variances Audit Activity To verify status, we observed cash receipting, reconciliation, and safeguarding practices and found no exceptions. We found various staff performed different functions to ensure adequate segregation of duties for those responsible for handling cash (i.e., cashiers/customer service representatives, supervisors, clerks, accountants, and management). Status: Implemented Status of Recommendations 8