INTERNAL AUDIT DIVISION CLERK OF THE CIRCUIT COURT

Transcription

1 INTERNAL AUDIT DIVISION CLERK OF THE CIRCUIT COURT AUDIT OF CRIMINAL COURT CASH BOND PROCESS Ken Burke, CPA* Clerk of the Circuit Court Ex officio County Auditor Robert W. Melton, CPA*, CIA, CFE Chief Deputy Director Internal Audit Division Audit Team William J. McGuinness, Internal Auditor II Ronald M. Peters, CIA, CISA, Internal Audit Manager MAY 24, 2007 REPORT NO *Regulated by the State of Florida

2 May 24, 2007 The Honorable Ken Burke Clerk of the Circuit Court We have conducted an audit of the Criminal Court Cash Bond Process. Our audit objectives were to determine whether Bond funds are being released in the proper time frame; the disposition is in compliance with Court orders, laws, and regulations, and whether internal controls for the Cash Bonds process are adequate. We conclude that the Cash Bond process is in compliance with Court orders, laws and regulations, and except as noted in our report, the internal controls for the Cash Bonds process are adequate. Opportunities for improvement are presented in this report. We appreciate the cooperation shown by the staff of the Court and Operational Services Division during the course of this review. Respectfully Submitted, Robert W. Melton, CPA*, CIA, CFE Chief Deputy Director Internal Audit Division *Regulated by the State of Florida

3 INTRODUCTION Synopsis The Clerk's Office has adequately integrated the segment of the Cash Bond Process, received from the Sheriff's Office as of March 2006, into their daily operations. The process has adequate internal controls and is in compliance with legal requirements. Scope and Methodology We conducted an audit of the Criminal Court Cash Bond Process covering the Criminal Justice Center (CJC) Bond Department, the CJC Customer Service Department, Clerk s Accounting Department and the Clerk s interface with the Sheriff s Jail operations. Our audit scope included the evaluation of internal controls, compliance with internal policies and procedures and adherence with Court Orders and Florida State Statutes. The objectives of our audit were to: Determine whether Bond funds are being released by the Clerk s Office in the proper time frame and the disposition is in compliance with court orders, laws and regulations. Determine that the internal controls for the Cash Bonds process are adequate. In order to meet our audit objectives, we conducted interviews of department staff and management, and reviewed supporting documentation to obtain a clear understanding of the processes and procedures used for the Cash Bond operations. We tested, on a sample basis, Cash Bond recording, retention and distribution by the Clerk s Office. Our audit scope did not include a review of the Supersedeas Bonds process where funds are held in the Court Registry. We performed such other audit procedures as we considered necessary in the circumstances. Our audit was conducted in accordance with the International Standards for Professional Practice of Internal Auditing and, accordingly, included such tests of records and other auditing procedures as we considered necessary in the circumstances. The audit period was July 1, 2006 through January 19, However, transactions and processes reviewed were not limited by the audit period. Overall Conclusion The Clerk s Cash Bond process is in compliance with court orders, laws and regulations. Except for the Opportunities For Improvement noted in this report, the internal controls for the Cash Bonds process are adequate. Background The Clerk s Circuit Criminal Court Records Department is responsible for filing, processing and maintaining felony and misdemeanor cases as well as juvenile 2

4 INTRODUCTION dependency and delinquency cases. Defendants in these cases may be released from detention in the County Jail prior to their case being heard by the Court by posting a cash or surety bond at the Jail. On March 1, 2006, the Sheriff s Office turned over control of the cash bonds to the Clerk s Office. The Clerk s Accounting Department has control over the actual bond cash-on-hand, which is approximately $2 million. Staff of the Cash Bond Department at CJC handles the recordkeeping for the disposition of cash bonds in accordance with the Judges Court Orders, which includes the payment of fines and Court costs to the Clerk, restitution, reimbursement of law enforcement costs, etc. Such activity approximates $436,000 each month. 3

5 Our audit disclosed certain policies, procedures and practices that could be improved. Our audit was neither designed nor intended to be a detailed study of every relevant system, procedure or transaction. Accordingly, the Opportunities For Improvement presented in this report may not be all-inclusive of areas where improvement may be needed. 1. Bail Bond Information Contained On The Public View Web Site Record (CJIS Bond Profile Data) May Not Be Accurate And Thus Misleading To The Public. The Public View information of Criminal Cash and Surety Bonds is not adequate for a citizen's use when more than one bond is posted for the same criminal case. When this situation occurs only one bond is displayed on the Web Site. Compounding this missing information is the notation on the Records Main Menu screen, for the Bond Profile Data, referring to a Next Page Button that does not appear on the case detail screen. The button is supposed to be on the case details screen so that the citizen-viewer may see additional bond data. Information presented on the County Web Site must be accurate and agree with data held on the Criminal Justice Information System Application that is the Clerk s Public Record for the data. Potentially, concerned citizens and other interested parties may be mislead by the presented information appearing on the Public Web Site if more than one bond was posted for a particular criminal case. This less than full disclosure may lead to unclaimed Cash Bonds. The Clerk s Bond Department Management was not aware of the Public View Web Site information error. The cause of the information problem is an Information System Department issue in the development of the Public Access Web Site for the Bonds. We Recommend management contact the Information Technology (IT) Department requesting changes to the Public View Web Site system to disclose all criminal cash and surety bonds in the Bond Profile Data by providing, among other things, the Next Page Button when needed. The Public View Web Site was accurately providing bond data. The Next Page Button is used for name searches only. The verbiage has been changed to read When requesting a name search, multiple pages of information may be returned. Click the NEXT PAGE button to display additional records until your name search is completed. When requesting a search by case number or bond number the specific search data appears. 4

6 2. An Unresolved Balancing Adjustment Of $2,440 Is Being Carried On The Clerk s Accounting Department Cash Appearance Bond Report. On May 1, 2006, the opening balance of the Cash Appearance Bonds report that represents the Cash Bonds held by the Clerk s Office did not agree with the ending balance of the day before, April 30 th. Investigation and comparison work performed by Clerk's Accounting staff was unsuccessful and the reason for the out-of-balance situation was not determined. As a result of this out-of-balance situation, an artificial Cash Bond number and amount for $2,440 was entered into the Report's database as a reduction (debit) to the total amount of Cash Bonds held by the Clerk. Possible application run errors must be resolved to ensure the integrity of the output that is Public Record information. In addition, since the unidentified difference could represent customer funds received and held by the Clerk s Office, but with the owner not being recorded, the difference must be resolved. This ending/opening balance disagreement appears to represent an application logic error that has to be resolved by the Information System Department. The effect for this type of application error is the possibility of the reoccurrence at any time. The risk related to the reoccurrence issue has been somewhat mitigated since the Clerk s staff indicated that no unresolved errors have occurred since May We Recommend management request IT Department s assistance with identifying the reason for the April 30, 2006 and May 1, 2006 out-of-balance situation. Also, we recommend management address the acceptability of allowing for artificial Cash Bond entries with no owner into this Report. The out of balance situation has been investigated and resolved. 3. Minor Security Issues Are Present For The Transportation Of Bond Cash From The Jail To The CJC Clerk s Office. Two members of the Clerk s Customer Service staff at the Criminal Justice Center transport the daily Cash Bond bank deposit from the County Jail to the second floor of the Criminal Justice Building without an armed guard escort. These deposits can exceed $20,000 in a given day. Neither the Sheriff s Corrections Officers nor the Court s Bailiffs at CJC are notified when this cash transport takes place. The route taken is reasonably secure from strong-armed theft of the deposit bag. At no point does the public have unfettered access to either the route or the immediate vicinity along the route. However, there are two minor physical weak points in the route that are offset by parallel security that is currently in-place. 5

7 o The route takes the two Customer Service couriers into the CJC Building stairwell and second floor hallway, which have limited visibility. However, a person snatching the deposit bag must leave the building via a guarded door and would have to be visible to at least four Bailiffs. o When the couriers are inside the Jail's boundary, they are vulnerable to the public that have a reason to be admitted to the Jail grounds. However, a perpetrator would have to exit the Jail boundary via a guarded gate. When evaluating the security exposure for the transportation of cash, both the loss of the funds and the wellbeing of the staff must be formally addressed to ensure minimum risk is present. As a result of this weakness, minor undue risks are present that expose: (1) the Clerk s Office to the loss of cash in the possession of its staff, and (2) the well-being of the Customer Service staff that transport the cash. The Clerk s Office did not recognize the need to formally address these risks. The management of the Clerk's Customer Service Department discussed the security issue with the Jail s management. It was the Jail management s opinion that there was no risk to the Clerk s staff since the path is in secured areas. Since the analysis of the security issues were not formally documented in writing, we were unable to ensure that the two weaknesses we identified were discussed and appropriately addressed. We Recommend, regardless of the parallel security countermeasures to the cash transport weaknesses, additional security measures be considered, including the Jail s Correction Officers and the Court s Bailiffs being placed on notice that a large amount of cash is being transported through their respective facilities during the time frame. We agree. Security was discussed at the time the process was set up and it was determined that the area is well secured to and from the jail and the Criminal Justice Center. We will re-visit security measures with the Sheriff s Department in charge of security at CJC. 4. The Sheriff s Jail Personnel Are Making Manual Changes To The Daily Summary Report For Bonds Produced By The JIMS Application. Jail personnel are not properly controlling the cut-off time for Cash Bonds being released to the Clerk's Office. This causes Jail personnel to make manual adjustments to their daily JIMS Summary Report For Bonds that supports the Cash Bonds funds turned-over to the Clerk's Office. The manual adjustments made on 6

8 the Report are not present on the JIMS Bond Information transmission made to the Clerk s Office. This situation is an internal control weakness since the information, (1) on the funds turned-over report (unadjusted), and (2) on the transmission to the Clerk s Office, may not indicate the correct amount of funds being turned-over to the Clerk s Customer Service staff members for deposit into the Clerk s bank account. The manual adjustments to the Cash Bond amount listed on the JIMS report are an ongoing practice. In our testing of the Cash Bond Reconciliation process using October 2006 as the test month, 10 out of 22 days available had a manual cash bond adjustment made. In addition, the JIMS Application Summary Report For Bonds Report for the Jail sometimes contains incorrect Cash Bond Information that must be corrected by the Clerk s Bond Department. The incorrect information could affect several CJIS application data used by the Clerk and/or Courts. When an automated application output is used to generate reports and to upload information to other Clerk applications, the information on the database should be correct. Any adjustments to the input/output should be made through the application and not manual adjustments to the paper output reports. The Clerk's Accounting Department has implemented automated and manual processing steps to stop incorrect bond information from being posted to the Clerk's General Ledger Cash Account, the CJIS Bond Application and the Court Case Record. However, the manual change issue required the Clerk s Office to put in place additional manual and automated procedures to control the issue that the Sheriff/Jail internal control weakness has created. The Clerk s Office has discussed this manual change issue with the Jail s management. The Sheriff/Jail have not addressed or corrected this internal control issue in their process. We Recommend the Clerk formally address the issue to Jail management to direct their staff to make their timing adjustments on the JIMS Application so the JIMS Summary Report For Bonds reflects the correct information. Since the issue is outside of the control and authority of the Clerk s Office, the CJIS Bond department will have to accept manual changes on the JIMS Summary Report that affect bond amounts and information. We agree. We have previously discussed this procedure with Inmate records. The Jail has the responsibility to accept bonds and enter the data in the JIMS so the information interfaces with the mainframe. We have an agreed upon cut-off time. We will review our current procedures and discuss with Inmate Records. 7

9 5. The Clerk s Office Maintains Two Different Cash Bond Applications Which Are Not Reconciled. The Clerk s Office is maintaining two cash bond applications with similar information that are not in agreement with each other. Each of the applications act in part as an inventory for the amount of Cash Bonds held by the Clerk's Office. One application, the Open Cash Bond Report, is maintained by the CJIS Cash Bond Department and the other, the Court Registry/Trust Collection Balances, is maintained by the Clerk's Accounting Department. There is no reconciliation performed between these two applications. The Clerk s Accounting Cash Bond database and report was created in March 2006 as part of the Cash Bond process assumed from the Sheriff Jail function. It was not plausible at that time to change the CJIS Bond Application to support the internal control needs for overseeing and recording cash received from the Jail. Clerk s Accounting Management did consider performing a reconcilement of the two similar databases, but did not have the automated tools to perform the task. A manual reconcilement based on the number of bonds would be very time consuming. When the Clerk is using two different applications and databases with simpler information for the Cash Bond function, key data elements should be in agreement (i.e., bond number, bond amount, bonds listed on the database, etc.). Although, our audit did not uncover any operational errors caused by different key information discrepancies on the applications, this problem could occur. The two Cash Bond Databases each contained cash bonds totaling $1.9 million consisting of 2700 transactions. Internal Audit Utilities audit software (ACL) was used to compare the information on the two databases (as of January 19/20, 2007). The raw dollar difference between these two reports was approximately $99,000, including timing differences. The ACL techniques identified the differences existing between these two reports databases, as follows: o There were seven cash bonds amounting to $1,674 on the Bond Department Report that were not on the Account Department Report. o There were 24 cash bonds with zero balances on the Bond Department Report that were not on the Account Department Report o There were 610 cash bonds amounting to $170,656 on the Bond Department Report that were not on the Account Department Report. We distributed the list of bond items that need to be investigated to each department for resolution. Management has resolved the differences and is processing the corrections. 8

10 We Recommend management complete processing the adjusting entries to the application data. In the future, regular reconciliations should be performed between the applications. We also recommend, as part of the CJIS II Project, the functionality of the current two applications be combined into one application using the same database. We agree. The difference between the two data bases has been resolved. We will perform regular reconciliations between the applications. There is only one official Bond Application and that is in the Bond System utilized by the Circuit Criminal Court Records Department. The other system is an accounting application set up for the purpose of processing bond monies by the Accounting Department. 6. A Request For An IT Application Change That Affects Efficiency And Exposure In The Process Was Not Submitted By The Clerk s Office In A Timely Manner. A required key production time-saving change and control issue was not given to the IT Department in a timely manner by the Clerk's Administration Office. Clerk s Accounting Department submitted a Request For Data Processing Service on April 21, 2006 to the Clerk's Office for approval. The change request was not sent to IT by the Clerk s Office until September 24, 2006, a time-lag of five months. This request would have eliminated the need for: (1) Clerk's Accounting to issue checks for the "fee transaction" on the individual bonds being released, and (2) CJIS Customer Service FRS staff from processing the related daily checks. We could not find any documented reason why the Administration Office did not approve the request in a timely manner. This hold-up increased the workload for both of these departments. With approximately 700 checks being issued for this purpose each month (741 checks were issued during October 2006), significant operational time would be saved and the inherent risk of issuing checks would be eliminated. Management has stated that the application change is scheduled to be put into production by February 27, We Recommend management complete the implementation of the change. All future requests for justified application changes to automated applications that will improve operations should be processed in a timely manner. Reasons for delays should be documented. The data processing request was signed and submitted to the IT Department to implement the change after careful review of required procedures by the Criminal 9

11 Court Customer Service Department, Circuit Criminal Department and the Accounting Department. The Executive Director signed the data processing request when this co-coordinated effort was completed and internal processes were complete. 10