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 management can better communicate its commitment to safeguarding its cash assets. Further discussion of financial IT system controls follows in Chapter 5. Criteria. Internal Control Criteria — ISA CA Security Policy: "The main goal of a corporate security policy is to protect data by defining procedures, guidelines and practices for configuring and managing security in the corporate environment..." Criteria. Internal Control Criteria — COSO Component No. 3: "Control activities are the policies and procedures that help ensure management's directives are carried out. They help ensure that necessary actions are taken to address risks to the achievement of organizational objectives..." FINDING Segregation of cash handling duties at District offices is not regularly monitored for proper controls. In the Hilo office, there are separate positions and duties for Cashiers and Customer Services Representatives. In the Waimea and Kona District offices, there are no Cashiers, but only Customer Service Representatives who are also assigned cashiering duties. While most of their duties are customer service related (including processing applications for new water meter sign -up, researching customer complaints, and handling water leakage reports), Customer Service Representatives in Waimea and Kona also perform cashiering duties, including walk -in cash handling and payment processing, balancing and reporting of transactions, and preparing of bank deposits. In addition, Meter Readers in Waimea and Kona cover for Customer Service Representatives during lunch hours or other absences. DWS management stated that cashiering and customer service duties are combined in Waimea and Kona to better utilize personnel, given the reduced volume of walk -in transactions processed by the District offices and the forwarding of all mail -in customer payments to the Hilo office for processing. This lack of segregated duties among the various personnel in the Waimea and Kona District offices poses financial and operational risks related to conflicts in asset custody and manipulation of accounting records, given their physical access to cash, access to various financial IT applications, and multiple authorization levels. The lack of segregated duties in the Hilo office also poses financial and operational risks, since the Customer Service Supervisor who covers for Cashiers has the authority to approve any adjustments to Cashier transactions. However, these inherent risks related to segregation of duties can be managed through the implementation and monitoring of additional cash 34