Internal Audit: Sonoma County. Sheriff s Special Appropriation. Auditor Controller Treasurer Tax Collector. For the Fiscal Year Ended June 30, 2013

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1 Auditor Controller Treasurer Tax Collector Internal Audit Sonoma County Sheriff s Special Appropriation For the Fiscal Year Ended June 30, 2013 At the request of the Sonoma County Sheriff s Office (Office) we performed an audit of the Sheriff s Special Appropriation (Special Appropriation) for the period July 1, 2012 through June 30, 2013 and determined that: The Office had in place an adequate system of controls to ensure compliance with Sheriff s Buy Money Guidelines. Although the Office maintained vouchers and other documents supporting authorized use of Special Appropriation, they were not submitted to the Auditor Controller Treasurer Tax Collector s Office (ACTTC) as required the Sections and of the Government Code. Audit No: 3495 Report Date: September 16, 2014 Audit Manager: Kanchan K. Charan, CPA, CGMA Audit Supervisor: Damian Gonshorowski, CPA, CGMA Auditor: Olga Gray, CPA, CGMA

2 Table of Contents Audit No For the Fiscal Year Ended June 30, 2013 Internal Auditor s Report Introduction & Background Objectives & Scope Procedures & Results Observations & Recommendations Attachment (Management Response Letter)

3 Introduction & Background Introduction We have completed an audit of (Buy Money) for the fiscal year ended June 30, We conducted our audit in accordance with the International Standards for the Professional Practice of Internal Auditing (Standards). These Standards require that we identify, analyze, evaluate, and document sufficient information and evidence to achieve our audit objectives. We believe that the evidence obtained provides a reasonable basis for the results, observations, and recommendations contained in our report. The purpose of this audit report is to furnish management independent and objective analyses, recommendations, and other information concerning the activities reviewed. The audit report is a tool to help management identify and implement improvements. We would like to thank management and staff for their time, information, and cooperation throughout the review. Background Section of the Government Code authorizes the County Board of Supervisors to establish a. The Sheriff may use the appropriation for expenses incurred in: (a) Criminal cases arising in the County (b) Preservation of peace (c) Suppression of crime. The Special Appropriation for fiscal year (FY) 2013 was $10,000, out of which approximately $13,000 (includes $3,000 from prior year) was expended. The Office uses the entire Special Appropriation as Buy Money. Although the law allows the Special Appropriation to be used for broader purposes as discussed above, the Office s internally developed guidelines restricts the use of the Buy Money primarily to buy controlled substances or pay informants in connection with criminal investigations. In emergency situations, authorized use is expanded to include travel or other expenditures. The funds purpose, authorized use, and administrative procedures are detailed in the Office s Buy Money Guidelines. All payments are made in cash. Audit No: 3495 Page 1

4 Objectives & Scope Objectives The primary objective of our audit was to determine whether: 1) The Sheriff s Office had an adequate system of controls in place to ensure that expenditures from the Buy Money fund were properly approved, supported, and in compliance with the buy money guidelines and the law. Scope The audit covered Buy Money disbursements for the period July 1, 2012 through June 30, The scope of our work included but was not limited to the following: o A preliminary survey to update our knowledge of the operating environment; identify changes in laws and regulations, systems, personnel and organization structure. o A risk analysis to identify significant risks of non compliance with policies, procedures or laws, loss or misuse of assets and inefficiencies in processes. o A review and evaluation of internal controls designed to ensure compliance with the above requirements and to adequately reduce the risk identified. o Tests of compliance to gain assurance that the internal control system is functioning as intended and is achieving its design objectives. o Follow up to determine the status of previous audit report findings and recommendations. Our audit included inquiry, auditor observation, and testing for assessing the adequacy of documentation and ensuring the compliance with California Government Code sections. Audit No: 3495 Page 2

5 Procedures & Results Procedures To achieve our audit objective we performed the following: 1. Reviewed documentation and discussed with Sheriff Personnel current Buy Money guidelines and procedures. 2. Tested Buy Money ledgers for accuracy and completeness based on transaction details. 3. Vouched claims for investigation Buy Money from financial system to the master ledgers. 4. Sampled disbursements and ensured that a voucher was competed and approved stating the purpose of the expenditure and a case number reference. 5. Sampled transfers from individual ledgers and traced to master ledgers as applicable. 6. Ensured that the Buy Money fund administration duties are adequately segregated. 7. Reviewed Buy Money fund reconciliations. Results Objective #1: Sheriff s Office has an adequate system of controls in place to ensure expenditures from the Buy Money are properly approved with appropriate supporting documentation. The Sheriff s Office had in place policies and procedures over the administration and use of the Buy Fund to reduce the risk of unauthorized use to an acceptable level. Based on the procedures performed as enumerated above, we determined that these policies and procedures were consistently applied during the audit period. Audit No: 3495 Page 3

6 Observations and Recommendations Observations Observation #1: The Sheriff s Office maintains a properly approved voucher and other supporting documents for each Buy Money transaction. These documents however, are never submitted to the ACTTC as required by the Government Code Section and Recommendation #1 The Sheriff s Office should submit vouchers and other supporting documents when requesting replenishment from the Auditor Controller Treasurer Tax Collector s Office. The reimbursement amount should not exceed the amount accounted for by vouchers submitted to the ACTTC. Audit No: 3495 Page 4

7 Administration Division 2796 Ventura Avenue Santa Rosa, CA Law Enforcement Division 2796 Ventura Avenue Santa Rosa, CA Detention Division 2777 Ventura Avenue Santa Rosa, CA Coroner 3336 Chanate Road Santa Rosa, CA ~onoma QCountp ~ bertf f's C!&f f tee STEVE FREITAS Sheriff-Coroner LORENZO DUENAS Assistant Sheriff Law Enforcement Division RANDALL WALKER Assistant Sheriff Detention Division September 8, 2014 Kanchan Charan, Audit Manager Audit Division Sonoma County Auditor-Controller-Treasurer-Tax Collector (ACTTC) RE: Audit No July 31, 2014 Internal Audit of Sheriff's Special Appropriations Dear Kanchan: We have received and reviewed the above-referenced audit report. In the report, you recommend that the Sheriffs Office submit vouchers and other supporting documents when requesting fund replenishment from the Office of the ACTTC. As the report references, to comply with Government Code Section and 29438, these documents should be submitted for each Buy Money transaction. Funding for Special Appropriations is approved by the Board of Supervisors through the County budget adoption process and is part of the Sheriffs Office baseline budget. As such, the Sheriff's Office does not request replenishment through the ACTTC or other County department as Buy Money transactions occur. Your staff has suggested that submitting copies of the ledgers to your Office on a periodic basis would satisfy the spirit and intent of the Government Code. We agree with your observation and the Sheriffs Office Investigations Bureau will begin submitting copies of the ledgers at mid-fiscal year and at the end of the fiscal year. Thank you for your observations. We appreciate the work your staff did to complete this report. Sonoma County Sheriff-Coroner cc Carlos Basurto, Investigations Bureau Lieutenant Steve Gossett, Narcotics Sergeant Heidi Keith, Administrative Services Director Christel Querijero, Administrative Services Officer Olga Gray, Accountant-Auditor