2018-01 Performance Audit Report: Cash Handling at County of Hawai'i's Mass Transit Agency

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parties for the performance of any function or activity with the County must be authorized and approved by the mayor, corporation counsel, and the finance director. Most vendors do not pre -pay for bus tickets, passes, or taxi coupons, instead they submit a purchase order and Mass Transit later sends an invoice or statement. Since payment is frequently made more than 30 days after invoice, this results in an outstanding accounts receivable balance. Hawaii County Code Sections 18-90, 18-91, and 18-92 establishes Mass Transit's fare structure. There is no criterion to allow for billing of charges or accounts receivable. • One vendor brings Mass Transit a check when they require taxi coupons. The vendor then sends a Fax requesting the amount of coupons needed and the amount is deducted from the balance of the payment received. At least once, the balance was negative with the vendor owing the County more money than they paid. • Discount ranging from five to 10% was given to vendors on top of the pre -sale discount ticket price. Hawaii County Code Section 18-90 establishes the rates for full and pre -payment fares. There is no criterion to allow for an additional discount. • Written statements proclaim an 18% interest rate will be applied to purchase orders outstanding more than 45 -days. We did not find any instances where the interest was applied on outstanding balances. • There is no process to ensure collection of outstanding accounts receivable balances. Typically, the only statement sent to vendors is the initial invoice or statement. • At least one vendor reassigned non -transferable taxi coupons. Mass Transit's website states that coupons are non -transferable and non-refundable. In addition, Mass Transit's cash handling policies state that no refunds or exchanges are allowed unless authorized by the Administrator. We found no record of authorization. Cash was not deposited timely As mentioned above, the Government Finance Officers Association (GFOA) establishes best practices for general revenue controls. These best practices include daily processing and timely deposit of receipts, ideally within 24 hours of receipt; County policy requires all revenue to be deposited within two working days. We found: • When the Account Clerk is absent from work, no other employee performs the Account Clerk's job duties. Consequently, deposits are not made timely. Furthermore, having another employee periodically perform someone's job duties allows for the potential of irregularities to surface. Contracted bus service providers submit their bus revenue to Mass Transit up to three months after collection. Mass Transit Cash Handling Audit Results 114