2016-01 Performance Audit Report: Cash Handling at County of Hawai'i's Department of Parks and Recreation

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This situation has resulted from supervisors not receiving training to identify incompatible duties or to implement compensating controls. As a result, inadequate segregation of duties could make fraud detection difficult and management may not timely detect and correct errors and irregularities during the normal course of business. Independent monitoring is insufficient When processing a facility use permit, the Clerk performs all the cash receipting functions from start to finish and has access to the cash receipts. (See above for more detail on segregation of duties.) When duties cannot be segregated, compensating controls should be considered. Compensating controls can be preventative, detective, or monitoring activities. An independent, supervisory -level employee who does not have custody, record keeping, authorization, or reconciliation responsibilities for the process should perform these duties. Because of insufficient training, there were many problems that went undetected and therefore, work was not reviewed for completeness and accuracy. Specifically, we observed the following: Management at the Department of Parks and Recreation should perform additional monitoring of cash handling to ensure all revenue is complete and timely. • Cash receipts are not reviewed or monitored by an independent person. Since duties are not adequately segregated, this review is imperative to ensure all revenue is collected and deposited in a timely manner. • There is no review or approval of voided or waived permit transactions. The Clerks review their own work and revise any errors before printing out the permits. No justification or independent approval was provided for voids or waived fees. • Surprise cash counts are not performed at the Hilo office. The Clerk was the only person performing the initial and end of day cash count to reconcile to the $100 authorized balance. At Kona, non -surprise cash counts were performed before and after the clerk goes on vacation and some unannounced counts are performed. • There is no independent review of the general ledger revenue reconciliations performed by the accountant at Hilo. Currently, the accountant is the only employee that reconciles and reviews revenue posted on the treasury receipts to the accounting system. As a result, errors may not be detected timely. The supervisor was unaware that the accountant was reconciling the current month's entries one to two months after closing. If adjustments were needed; they would not be posted in the current period, if at all. • The accountant at Hilo does not perform a complete reconciliation of the revenue general ledger. Only Hilo's and Kona's revenue are reconciled. Entries posted to the account by the Recreation Division are not included in the reconciliation. As a result, the Recreation Division's accounts were included in the facility use permit revenue account. Cash Handling for Facility Use Permits: Audit Results 18