2017-02 Performance Audit Report: Cash Handling at County of Hawai'i's Department of Water Supply

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Audit Objectives The Office of the Legislative Auditor's fiscal year 2016-2017 annual audit plan included a performance audit of the County of Hawai`i's Department of Water Supply's (DWS) cash handling and receipting process. The objectives of the audit were to evaluate if internal controls over water receipts at the Hilo office are preventing, detecting, and deterring fraudulent transactions, whether these internal controls are following best practices, and if receipts are deposited timely and intact. Audit Scope and Methodology To accomplish our objectives, we: • Developed an understanding of the policies, procedures, processes, and document flows; • Compared DWS Hilo office's water receipts cash handling procedures, practices, and performance measures to recommended industry best practices; • Assessed compliance with DWS's cash handling policies and procedures, County of Hawai'i Code, County of Hawai'i Charter, and State of Hawai'i Revised Statues; • Analyzed water receipts by comparing revenue data and adjustments extracted from the County of Hawai`i's Public Utilities Billing System (PUBS) with the Hilo office's daily packet of water receipts and supporting documents; • Corroborated information through interviews with appropriate personnel, reviewed documentation and performed testing of documentation and controls; and • Reviewed additional documentation (i.e., daily packet contents, adjustment reports, debit/credit memos, cashiers copy of original deposit slip, Bank of Hawai'i deposit tag, Bank of Hawai'i statements, Account Clerk cash receipt reports, cash receipts general ledger, Bank of Hawai'i reconciliation and General Cash receipts reconciliation, etc.) as needed. During the course of our audit, we assessed internal controls relevant to the audit objective. This included a review of applicable policies and procedures, cash handling standards, and interviews with knowledgeable staff as well as water receipts for the Hilo office from November 2015 through December 2015 and May 2016 through June 2016. The Waimea, Kona, and Ka'u offices were not included in our audit scope because all work is reviewed and final cash receipting system reports are posted through the Hilo office. We also relied on computer generated data that is tested annually by the external auditors. We determined that the data used from these reports were sufficiently reliable for our intended purposes. DWS Cash Receipts Audit Objective, Scope &Methodology 12