2010-01-AU Limited Scope Performance Audit of Department of Water Supply's Internal Controls for Cash Handling and Financial IT Systems

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CHAPTER 4: CASH HANDLING SYSTEMS Criteria: Internal Control Criteria — COSO Component No. 5: "Monitoring — Internal control systems need to be monitored — a process that assesses the quality of system performance over time. This is accomplished through ongoing monitoring activities, separate evaluations, or a combination of the two. Ongoing monitoring occurs during the course of operations, and includes regular management and supervisory activities as well as other employee activities. The scope and frequency of separate evaluations will depend primarily on an assessment of risks and the effectiveness of ongoing monitoring procedures..." FINDING Cash handling procedures for walk -in and mail -in Payments are not consistently formalized in writing or enforced in all offices of the Customer Service Branch. Each Cashier is assigned a separate "Cash Can" to provide change for customers making walk -in payments. At the beginning of the work day, each Cash Can contains $250. During the course of the work day, Cashiers place cash or checks received from walk -in customers into their assigned Cash Cans. Each Cashier is also given a unique ink stamp that indicates the date and the word "PAID" to use for stamping customer water bill stubs. Revised DWS policy and procedures dated June 29, 1999, Cashier Procedures, call for accountability by instructing Cashiers to be responsible for their assigned and lockable Cash Cans. The policy states: "Each cashier will be the only person authorized to access the contents of their cash can. Sharing of the cash can between two or more cashiers at the same time is prohibited. Cash cans may be transferred from one cashier to another only if both cashiers count and document the transfer on the `Cashier's Exchange Log'. Discrepancies should be reported to the District Supervisor immediately ". DWS Finance Division documentation dated October 29, 2009, titled "DWS Checks and Cash Receipts Control Recommendations for Change ", sets out recommended policies and procedures and indicates that several of the recommended changes had already been implemented. However, no written documentation communicating said changes to staff was provided to the auditors; and upon inquiry, the Assistant Controller stated that communication to staff was strictly verbal. Subsequently, a written communication titled "Revised Cashier Procedures" dated January 14, 2010, was distributed to DWS staff, but did not specifically address the exchanging or sharing of Cash Cans. The Assistant Controller indicated this was not necessary since the policy specifically instructs that any "Clerk Meter Reader assisting customers should direct payment collection to the Cashier'. 30