AUDITOR CONTROLLER FIRST AND FINAL CLOSE OUT FOLLOW UP AUDIT TAX REDEMPTION OFFICER RECORDS AND ACCOUNTS AS OF DECEMBER 31, 2015

Transcription

1 Attachment C, Board Date 07/12/16, Page 1 of 7 FIRST AND FINAL CLOSE OUT FOLLOW UP AUDIT O R A N G E C O U N T Y AUDITOR CONTROLLER I N T E R N A L A U D I T TAX REDEMPTION OFFICER RECORDS AND ACCOUNTS AS OF DECEMBER 31, 2015 Audit Number 1453 F1 (Reference 1515) Report Date: March 31, 2016

2 Attachment C, Board Date 07/12/16, Page 2 of 7 O R A N G E C O U N T Y AUDITOR CONTROLLER I N T E R N A L A U D I T Eric H. Woolery, CPA Orange County Auditor Controller Toni Smart, CPA Scott Suzuki, CPA, CIA Carol Swe, CPA, CIA, CISA Michael Dean, CPA, CIA, CISA Director, Internal Audit Assistant Director Senior Audit Manager Audit Manager 12 Civic Center Plaza, Room 200 Santa Ana, CA Auditor Controller Web Site

3 Attachment C, Board Date 07/12/16, Page 3 of 7 ERIC H. WOOLERY, CPA AUDITOR-CONTROLLER Transmittal Letter March 31, 2016 Audit No F1 (Reference 1515) TO: SUBJECT: Shari L. Freidenrich, CPA Treasurer-Tax Collector Tax Redemption Officer Records and Accounts, Original Audit No. 1453, Issued April 23, 2015 We have completed our First and Final Close-Out Follow-Up Audit of Tax Redemption Officer Records and Accounts. Our audit was limited to reviewing actions taken, as of December 31, 2015, to implement the four recommendations made in the original audit report. The results of our Follow-Up Audit are discussed in the attached Internal Auditor s Report. All four (4) recommendations from the original audit report have been implemented. As a result, this report represents the final close-out of the original audit. I submit an Audit Status Report quarterly to the Audit Oversight Committee (AOC) and a monthly report to the Board of Supervisors (BOS) where I detail any critical and significant audit findings released in reports during the prior month and the implementation status of audit recommendations as disclosed by our Follow-Up Audits. Accordingly, the results of this Follow-Up Audit will be included in future status reports to the AOC and BOS. Attachments Toni Smart, CPA, Director Auditor-Controller Internal Audit Division Other recipients of this report: Members, Board of Supervisors Members, Audit Oversight Committee Eric H. Woolery, Auditor-Controller Frank Kim, County Executive Officer Mark Denny, Chief Operating Officer Paul Gorman, Chief Assistant Treasurer-Tax Collector - Treasury Jennifer Burkhart, Assistant Treasurer-Tax Collector Tax and Central Collections Division JC Squires, Financial Manager, Treasurer-Tax Collector Kamal Singh, Remittance Processing Manager, Treasurer-Tax Collector Dan Puglia, Budget Manager, Treasurer-Tax Collector Patricia Hutt, Remittance Supervisor, Treasurer-Tax Collector Foreperson, Grand Jury Robin Stieler, Clerk of the Board of Supervisors Macias Gini & O Connell LLP, County External Auditor i

4 Table of Contents Attachment C, Board Date 07/12/16, Page 4 of 7 Audit No F1 (Reference 1515) As of December 31, 2015 Transmittal Letter i Internal Auditor's Report SCOPE 1 BACKGROUND 1 RESULTS 1

5 Internal Auditor s Report Attachment C, Board Date 07/12/16, Page 5 of 7 Audit No F1 March 31, 2016 (Reference 1515) TO: FROM: Shari L. Freidenrich, CPA Treasurer-Tax Collector Toni Smart, CPA, Director Auditor-Controller Internal Audit Division SUBJECT: Tax Redemption Officer Records and Accounts, Original Audit No. 1453, Issued April 23, 2015 SCOPE We completed a First and Final Close-Out Follow-Up Audit of Tax Redemption Officer Records and Accounts. Our audit was limited to reviewing actions taken, as of December 31, 2015, to implement the four (4) recommendations from our original audit. BACKGROUND We conducted an audit of the Treasurer Tax-Collector Redemption Section pursuant to Section of the California Revenue and Taxation Code (R&T Code) for the purpose of evaluating the reliability and integrity of financial and operational tax redemption records and compliance with laws and regulations governing redemption activities. The R&T Code requires an audit at least once every three years of the records and accounts of the Tax-Collector relating to the performance of his/her duties as the Tax Redemption Officer. Our audit was conducted in accordance with professional standards established by the Institute of Internal Auditors. As part of obtaining reasonable assurance about the accuracy of redemption collection records and accounts, we performed tests of collection records, penalty and interest calculations, and account reconciliations. RESULTS Our First Follow-Up Audit found that the Treasurer-Tax Collector implemented all four (4) recommendations from the original audit. Because the four (4) recommendations were implemented, this report represents the final close-out of the original audit. Based on our First Follow-Up Audit, the following is the implementation status of the four (4) original recommendations: 1. Assessment Tax System Issue (Significant Control Weakness) We recommend the Treasurer-Tax Collector evaluate if mitigating measures can be performed to detect instances of processed refunds not issued by ATS. worked with Auditor-Controller Information Technology (A-C IT) to develop a program to detect instances of processed refunds that have not been issued. Audit No F1 (Reference 1515) Page 1

6 Internal Auditor s Report Attachment C, Board Date 07/12/16, Page 6 of 7 A-C IT performed a scan of all tax rolls in October 2014 (during fieldwork of original audit). Four (4) issues were noted and corrected including one (1) additional refund that had been processed in ATS but not issued. In September 2015, a daily program was implemented to detect any instances of refunds processed in ATS but not issued. No issues have been noted since the daily program was implemented. Since TTC created and implemented a daily program to detect instances of refunds processed in ATS but not issued, we consider this recommendation implemented. 2. Resolution of Suspense Account Items (Control Finding) We recommend the Treasurer-Tax Collector implement a review of suspense details to ensure timely monitoring and resolution of all suspense items. has created a weekly report within ATS to identify paid parcels with funds remaining in the suspense account that are over 14 days old. We reviewed the report dated January 2, This report showed four (4) paid parcels with funds remaining in the suspense account. Based on our review of the report and case data in ATS, three (3) refunds were issued within 60 days. For one (1) refund due where the original payment was from a money order, the Treasurer-Tax Collector sent a letter to the taxpayer within 60 days requesting proof of payment. Since the TTC has created a weekly report to identify paid parcels with funds remaining in the suspense account that are over 14 days old; and since the items tested were either refunded or researched within 60 days, we consider this recommendation implemented. 3. Short/Partial Payments of Taxes Due (Control Finding) We recommend that the Treasurer-Tax Collector work with County Counsel to determine if funds maintained in a suspense account result in the acceptance of short/partial payments subject to R&T 4143 and if further action by the Board of Supervisors is needed. obtained an opinion from County Counsel and determined that monies received and held in the 904 suspense account are not considered short/partial payments subject to the provisions of R&T Therefore, we consider this recommendation implemented. 4. Fee for Costs Incurred in Obtaining the Names and Last Known Mailing Addresses (Control Finding) We recommend that the Treasurer-Tax Collector work with County Counsel in determining a resolution of this issue, including analyzing if the County Ordinance needs to be amended or rescinded. Audit No F1 (Reference 1515) Page 2

7 Internal Auditor s Report Attachment C, Board Date 07/12/16, Page 7 of 7 confirmed with County Counsel that the County Ordinance, which currently sets the fee at $230, needs to be rescinded and replaced with a new Ordinance with the lower fee, as it is the actual cost of obtaining the names and last known mailing addresses as required by the R&T Code The agreement with the title company for providing the last known mailing addresses of parties of interest expired on December 31, The Treasurer-Tax Collector is in the process of completing a Request for Proposal to engage the services of a new title company. Once a new vendor is selected, the Treasurer-Tax Collector will request approval of the new fee with the Board of Supervisors and prepare a new ordinance. Since TTC has worked with County Counsel in determining a resolution of this issue, we consider this recommendation implemented. We appreciate the assistance extended to us by Treasurer-Tax Collector personnel during our Follow-Up Audit. If you have any questions, please contact me directly at (714) or Carol Swe, Senior Audit Manager at (714) Audit No F1 (Reference 1515) Page 3