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

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In Brief Background 7 The County of Hawaii Department of Parks and Recreation's (P&R) maintains facilities throughout the island for events such as parties, luaus, reunions, graduations, concerts, etc. The public can rent these facilities for a security deposit and a user fee. Three offices maintain the reservation books including the Kona Permit Office, Hilo Main Office Administration, and the Recreation Division. In fiscal year 2014-2015, facility use permit revenue totaled $176,000 for the Hilo Administration, Kona Permit Office, and the Recreation Division. We reviewed 138 facility use permits from July through September 2015 at the Hilo and Kona locations. The Kona Imin facility was closed during this time for accessibility improvements; we therefore expanded our initial audit testing of the Kona facility use permits to include an additional nine transactions totaling $3,675 from June 2015. Why we did this audit This performance audit was undertaken to evaluate if the program's internal controls were adequate to reduce the risk of fraud and mishandling of facility use permit revenue and to identify potential areas for improvement. The audit also looked at facility use permit transactions to see if receipts were deposited timely and intact. We initiated the audit, as we believe cash receipts are an inherently high-risk process. What we found The County of Hawai`i's Department of Parks and Recreation's (P&R) facility use permits cash handling process lacks significant internal controls including adequate segregation of incompatible duties, independent review and monitoring, complete and accurate written policies and procedures, and adequate safeguarding of cash receipts. Due to these internal control weaknesses, as well as individual errors in the processing of transactions, our audit could not determine if all cash received was deposited. Management has generally agreed with the comments and recommendations in this report. Their complete response to this audit can be found on page 20: Management Comments. What we recommended The recommendations identify improvements for management to increase internal controls for facility use permits cash handling. Our audit report offers recommendations designed to address these issues through: • Segregate incompatible duties among those who perform accounting procedures or control activities and those who handle cash. • Implementing adequate ongoing monitoring of the design and operating effectiveness of the internal control system over cash receipting activities to ensure that revenue is complete. • Updating, strengthening, and enforcing cash handling policies and procedures according to best practices; and • Providing initial and on-going cash handling and internal controls training for all employees who handle revenue. These recommendations should be considered for all cash receipting locations.