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

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1. The oversight body and management should demonstrate a commitment to integrity and ethical values. 2. The oversight body should oversee the entity's internal control system. 3. Management should establish an organizational structure, assign responsibility, and delegate authority to achieve the entity's objectives. 4. Management should demonstrate a commitment to recruit, develop, and retain competent individuals. S. Management should evaluate performance and hold individuals accountable for their internal control responsibilities... 1.05 Tone at the top can be either a driver, as shown in the preceding paragraphs, or a barrier to internal control. Without a strong tone at the top to support an internal control system, 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. The Green Book describes the appropriate types of control activities that management should design: 10.03... Physical control over vulnerable assets Management establishes physical control to secure and safeguard vulnerable assets. Examples include security for and limited access to assets such as cash, securities, inventories, and equipment that might be vulnerable to risk of loss or unauthorized use. Management periodically counts and compares such assets to control records... The Green Book states that Management should implement control activities through policies: Principle 12 — Implementing Control Activities 12.01 Management should implement control activities through policies. Attributes The following attributes contribute to the design, implementation, and operating effectiveness of this principle: • Documentation of Responsibilities through Policies • Periodic Review of Control Activities 12.02 Management documents in policies the internal control responsibilities of the organization. 12.03 Management documents in policies for each unit its responsibility for an operational process's objectives and related risks, and control activity design, Mass Transit Cash Handling Audit Criteria 144