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

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■ Budgetary review responsibilities — Revenue collections and accounts receivable should be monitored in a timely manner. Both actual and budgeted or forecast revenues should be monitored. Any significant variance of actual from the forecast or budgeted revenues should be investigated thoroughly. ■ Compliance - Governments should ensure their revenue control and management policy and procedures are in full compliance with any federal, state, local or other applicable laws, or requirements. The Committee of Sponsoring Organizations (COSO) provides an integrated internal control framework and guidance that consists of five interrelated components, which are control environment, risk assessment, control activities, information and communication, and monitoring. Component No. 3 Control Activities Control activities are the policies and procedures that help ensure managements directives are carried out. They help ensure that necessary actions are taken to address risks to the achievement of organizational objectives. Control activities occur throughout the organization at all levels and in all functions. They include a range of activities as diverse as approvals; authorizations; verifications; reconciliations; reviews of operating performance; security of assets; and segregation of duties. 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 procedures. Internal controls deficiencies should be reported upstream, with serious matters reported to top management and governmental leaders. Hawai"i Revised Statutes (HRS) Title 6. County Organization and Administration, 54. Water Systems, Part III. Hawaii County Board of Water Supply establishes the requirements of accounts, revenues, and expenditures: X54-58 Accounts, revenues, and expenditures. The board of water supply shall maintain proper accounts in such manner as to show the true and complete financial status and the results of management and operation. The accounts shall be kept so as to show all costs of maintenance, extension and improvement, all operating expenses, all expenses of the board and the amounts paid or set aside for depreciation, insurance, pensions, interest, sinking funds, and reserves. DWS Cash Receipts Audit Criteria 124