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

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Taxi Coupons, Bus Tickets & Passes sold via purchase orders We reviewed 23 vendors and assessed if there were any outstanding balances, how long the balances were outstanding, when payments were made, and if payments were applied timely. We also verified Mass Transit's "balance sheet" to invoices, requisitions, and payment and recalculated the total ending balance. We found: • Twelve vendors had no outstanding balance as of March 2018. • Seven vendors owe Mass Transit a total of $29,809 for tickets that Mass Transit advanced. • Two vendors had an outstanding balance dating back to 2014 totaling $26,309. Mass Transit is currently working with Corporation Council and the Department of Finance to collect one of these accounts ($25,859). The second account ($450) remains outstanding. • Two vendors where Mass Transit's balance sheet was incorrect or supporting documentation was not included. o One vendor's balance sheet appeared to be missing a reoccurring invoice amount; however, the missing invoice amount was reflected in the ending balance. In addition, no invoices or requisitions for the monthly reoccurring charges were included in the supporting documentation. o One vendor's balance sheet's ending final balance did not recalculate and we could not determine the actual balance. Mass Transit was unable to provide additional supporting documentation to verify the correct balance. Why did this happen? mdl� Mass Transit did not prioritize cash handling internal controls The United States Government Accountability Office (GAO), Standards for Internal Control in the Federal Government ("Green Book") states that "[t]he control environment is the foundation for an internal control system. It provides the discipline and structure, which affect the overall quality of internal control. It influences how objectives are defined and how control activities are structured." The Green Book further states that without a strong "tone at the top", "the entity's risk identification may be incomplete, risk responses may be inappropriate, control activities may not be appropriately designed or implemented, information and communication may falter, and results of monitoring may not be understood or acted upon to remediate deficiencies." After a break-in in 2016, the Department of Finance (Finance) met with Mass Transit to discuss their cash handling procedures. Finance directed Mass Transit to safeguard their cash and reconcile each trip sheet by route. As a result, written cash handling procedures were developed in September 2016 and updated in November 2016 and some security measures were implemented (a safe was purchased and locking doors and security cameras were installed). Mass Transit received funding for an additional position to count bus fare cash Mass Transit Cash Handling Audit Results 118