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

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Report Highlights-- Cash ighlights April 30, 2018 Cash Handling at the County of Hawai`Ps Mass Transit Agency Background The County of Hawaii Mass Transit Agency's (Mass Transit) mission is to provide safe, clean, convenient transportation services for the residents and visitors to the County of Hawaii. In fiscal year 2016-2017, 639,000 passengers rode the bus and 148,000 used the shared ride taxi program providing Mass Transit with approximately $1.2 million in revenue. What was the purpose of this audit? This performance audit was undertaken to evaluate if Mass Transit's internal controls were adequate to reduce the risk of fraud and mishandling of cash receipts and to identify potential areas for improvement. The audit also looked at cash receipt transactions to ensure that receipts were deposited timely and intact. We initiated the audit, as we believe cash receipts are an inherently high- risk process. In addition, Hawaii County Council passed Resolution 218-17 (June 23, 2017) requesting an audit of Mass Transit's cash handling procedures. Mass Transit's cash handling process was inadequate and ineffective to ensure that revenue is properly controlled and deposits are timely and accurate. Specifically, we found that cash was not physically secured, incompatible duties were not segregated, independent monitoring was insufficient, and cash was not deposited timely. We also found that Mass Transit sold taxi coupons, bus tickets, and bus passes using purchase orders outside of the County's contracting process. In January 2018, we conducted a surprise cash count. We counted nearly $30,000 in bus fare revenue, some of which had been there since July 2017. Due to the numerous internal control weaknesses, an ineffective bus cash receipting system, and the inconsistencies found during our count, we could not determine if all the cash paid by the bus riders was included in our count. We were unable to determine if money had been lost or misappropriated. We also reviewed December 2017 cash receipts and found that all money that was receipted - was recorded and deposited. However, we could not determine if all money was receipted. Management has generally agreed with the comments and recommendations in this report. Their complete response to this audit can be found on page 29: Management Response. To enhance Mass Transit's ability to collect all revenue from the sale of taxi coupons as well as bus fares, tickets, and passes, we offer 30 recommendations to Mass Transit management and staff. These recommendations include updating the bus cash handling system and prioritizing cash handling internal controls. Some of these internal controls include physically safeguarding cash and cash equivalents, segregating duties, monitoring, and implementing and enforcing policies and procedures. A complete list of our recommendations can be found on page 24: What do we recommend? This audit was conducted in accordance with general accepted government auditing standards.