Internal Controls: Theft Prevention Ashley Kennedy

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1 I. Introduction a. Theft does happen, and you can be blamed for it b. Identify the key things that can happen and implicate you for theft II. Procedures a. Defining Policies versus Procedures b. Need to follow policies and procedures c. Necessity for updates d. Ensure they are complete and simple enough for anyone e. Forms included f. Requires a second person for review III. Purpose of Procedures a. Setting the purpose for your policy and procedures i. What do the policies and procedures apply to 1. The policies and procedures in this section apply to all financial processes of the Municipal Court s office. ii. Order clerk to follow procedures 1. Failing to comply with all aspects of these policies or procedures may result in employee discipline as defined in the City personnel policy and procedure manual. 2. The employee of the court is responsible for all cash and is subject to discipline and/or termination for violating these policies. iii. What is expected of clerks 1. Employees are expected to read this information, understand this information, and follow the procedures established herein. Employees are expected to ask the Municipal Court Administrator for assistance or training on any policy or procedure not understood. IV. Defining Responsibilities a. Assignment and Release of Cash Drawers i. Clerk responsible for verifying balance of drawer at start of shift 1. In the event of an overage or shortage, do the procedures establish that the drawer balanced at the start of the shift ii. Clerk responsible for signing off that drawer was correct at start of shift iii. Clerk responsible for signing off when drawer released b. Payment Receipts i. What is a clerk required to show on a receipt ii. Policy for hand-written receipts c. Money Logs i. Is there a log to sign off on? 1 P a g e

2 ii. Are these logs used, maintained, and kept for a reasonable period of time d. Change Orders i. Do you have a paper trail for change orders ii. Does it take two people to complete a change voucher iii. What is required to be included on a change voucher e. Cash drops i. How is this completed ii. Are the instructions clear and easy to follow iii. Does it require two people iv. What is included in the cash drop 1. Paperwork 2. Funds 3. Receipts v. What is used for the drop 1. Envelope 2. Sealed money bag vi. Where is the drop made 1. To another person 2. To a cash drop-box 3. Are two people there f. Deposit Instructions i. How often ii. Is business day defined in the policy iii. What paperwork is required 1. Sample forms included in procedures 2. Credit card system reports 3. Online payment reports 4. Collection agency payment reports 5. Court software report iv. What information is required on the papers v. Reconciliation 1. Overages/Shortages vi. Two people? g. Reconciliation i. Are you required to reconcile outside of the daily deposit ii. Looking for daily/weekly/monthly/quarterly/yearly balances 1. Credit card system reports 2. Online payment reports 3. Collection agency payment reports 2 P a g e

3 4. Court software report 5. Bank statement versus court software iii. Does your system and the finance department reflect the same total? V. Segregation of Duties a. Do the definitions of duties segregate who is responsible for what? b. Is it always the same person? i. Does that person have someone double-checking them? VI. Depositing Funds a. How do your deposits get to the bank b. What is the procedure if the deposit at the bank does not balance c. How is change requested VII. Overages and Shortages a. Do you have an entire section on this? b. Who is held responsible c. How do you report this d. What happens if you make a mistake entering a payment (over/under) who corrects it in the system or voids it for re-entry? VIII. Reporting and reconciling a. Do you have all of the expectations clearly established for this i. Reporting and reconciling daily deposit ii. Weekly/monthly/quarterly/yearly reconciliation b. Do you have listed out in clear detail every time you are required to reconcile c. Who is responsible to reconcile i. Should not only be the boss should be everyone d. Two people IX. Criminal Sanctions a. Class C Misdemeanor i. Less than $50 1. Fine of no more than $ No jail time b. Class B Misdemeanor i. Between $50 and $500 OR ii. A stolen driver s license or other identification card 1. Fine of no more than $2, Up to 180 days in jail c. Class A Misdemeanor i. Between $500 and $1, Fine of no more than $4, Up to 1 year in jail 3 P a g e

4 d. State Jail Felony i. Between $1,500 and $20, Fine of no more than $10, Between 180 days and 2 years in jail e. 3 rd Degree Felony i. Between $20,000 and $100, Fine of no more than $10, Between 2 years and 10 years in jail f. 2 nd Degree Felony i. Between $100,000 and $200, Fine of no more than $10, Between 2 years and 20 years in jail g. 1 st Degree Felony i. Over $200, Fine of no more than $10, Between 5 years and 99 years in jail 4 P a g e

5 The policies and procedures in this section apply to all financial processes of the Municipal Court s office. Employees are expected to read this information, understand this information, and follow the procedures established herein. Employees are expected to ask the Municipal Court Administrator for assistance or training on any policy or procedure not understood. Failing to comply with all aspects of these policies or procedures may result in employee discipline as defined in the City personnel policy and procedure manual. The employee of the court is responsible for all cash and is subject to discipline and/or termination for violating these policies. Assignment & Release of Cash Drawers Each clerk will be assigned to a money drawer and receipt printer at the beginning of his or her shift and will release the drawer at the end of his or her shift. o The clerk is responsible for: Verifying the balance of the drawer at the time the drawer is assigned. The amount of cash kept in the drawer will be set by the court administrator. o The balance will typically be $200.00; however, may be changed by the court administrator depending on the needs of the court If the drawer does not have the exact amount of funds that it is supposed to have, the clerk shall not accept the drawer. o A change voucher is considered cash for the purpose of counting the drawer.see change vouchers. In the event of any shortages or overages, the court will assume that the clerk began shift with the correct amount of funds in the drawer. The clerk shall initial in the money log that he or she received the cash drawer, with the correct amount of funds. This log shall include the date and time that the drawer was received refer to money log instructions. Keeping written receipts for every transaction the cash drawer is used for. Receipts should include: o The name of the clerk o The date of the transaction o The purpose of the transaction o The type of payment accepted o The amount of the transaction & balance remaining o The name of the person the payment is received from o The docket or case number pertaining to the transaction All of the above information may be supplied by an auto-printed receipt from the court software system or by a hand-written receipt from a City receipt book 5 P a g e

6 Completing a Cash drop at the end of each shift During the cash drop, all receipts and payments shall be removed from the drawer and logged.refer to cash drop instructions. Before releasing the cash drawer, the clerk shall verify the cash drawer has the correct balance. Typically $200, unless the court administrator determines a different balance based on the needs of the court. The clerk shall initial the money log that he or she released the cash drawer, with the correct amount of funds. This log shall include the date and time that the drawer was released refer to money log instructions. Money Log All Clerks will be responsible for completing the money log at the beginning and end of each shift. o The money log should include: Date Time Clerks initials Amount of money in the drawer Drawer number (as labeled on the drawer) Amount of change order, if one is requested Money logs shall remain in the money log binder for the entire month. At the end of the month the respective money logs will be filed with the closed citations for the month. Money logs will be kept for five years, or the same length of time that Municipal Court Records are kept prior to destruction. See attachment A for money log form Change Orders/Vouchers If a clerk needs change in his or her drawer, the clerk must complete a change order and change voucher form. o A change order form shall be attached to the money that the clerk needs changed and placed with your cash drop. o A change order shall be logged on the money log. o Change Orders Shall include the following information: Drawer # funds were taken from Date Time Clerk s Initials Amount taken from drawer Denominations needed A drawer would typically need the following denominations; however, this will vary daily: o 1 roll of nickels 6 P a g e

7 o 1 roll of dimes o 1 roll of quarters o 33 one dollar bills o 10 five dollar bills o 10 ten dollar bills o A Change voucher form shall be placed in the cash drawer to show the amount of money the drawer is short. o For drawer balancing purposes, a change order will be equivalent to having that specific amount of cash in the drawer. o A change voucher shall include: Drawer # Date Time Clerk s initials Amount of funds removed from the drawer and placed with change order Initials of the person who completes the change order Initials of the person who is assigned to the drawer at the time the change order is completed These initials verify that the amount placed in the drawer is the same amount as the change voucher. Completing Change orders & Vouchers o The court administrator or person designated by the court administrator shall complete all change orders. o The person completing the change order shall: Have the person assigned to the drawer cash the change voucher The person completing the change voucher shall initial on the voucher that the same amount of funds are given to the clerk as indicated on the change voucher The person assigned to the drawer shall initial that he or she received the same amount of funds as indicated on the change voucher A copy of both the change order and change voucher shall be stapled to the money log See Attachment B for change order forms and change voucher forms Cash Drop At the end of each shift, each clerk should complete a cash drop. The clerk shall remove all receipts and payments from the drawer, verify the drawer balance, and complete the money log as mentioned in the money log section of this document. To complete a cash drop the clerk shall: o Remove all receipts from the drawer o Remove all funds exceeding $200 o Complete a change order & voucher if necessary o Each clerk should turn in: 7 P a g e

8 2 copies of a daily cash report (for individual clerk only) The following fields on the daily cash report must be completed, and should be based on the payments the clerk received: o Cash o Check o Money Order o Charge The above four fields, when added together should match the balance on the daily cash report o Deposit Completed by (should be signed by clerk) o Date o Amount over or under The daily cash report should be labeled as follows, based on the payment receipts that the clerk has: o Deposit: $ for citations $ for warrants Total $ for deposit o Credit Card Charges $ for citations $ for warrants Total $ for deposit o Totals: Total for citations Total for warrants Total for all (this total should match the total on the daily cash report) All payment receipts These should be stapled to one copy of the completed & labeled daily cash report All money Money should be placed in a sealed envelope and attached to the paperwork. o Any change order paperwork should remain attached to the cash needing change After sealing the envelope, the clerk should sign his or her name across the seal. Report Payments & Receipts Any payments accepted for reports should be attached to the receipt and placed in the sealed envelope for the cash drop. o The entire cash drop should be turned into the person or location as designated by the Municipal Court Administrator 8 P a g e

9 Deposit Instructions The court administrator, or person designated by the court administrator, shall complete a deposit each business day of the court. o For the purpose of this section only, a business day is defined as any day Monday through Friday that the local banks are open. Weekends and bank holidays are not defined as a business day. When completing a deposit, the following things should be completed: o A cover sheet Two copies should be completed. One will be provided to the finance department with the daily cash logs and receipts; the other will be attached to the 2 nd copy of the daily cash logs and filed in the municipal court files. The cover sheet should include: Date Clerk Creating Deposit Completed Line for each clerk daily cash report Totals for the following: o Cash o Check/money order o Credit cards o Citations o Warrants o Grand total GL code s for the finance department & total that should be applied to each divided by deposited funds and charged funds See Attachment C for a cover sheet form Credit Card Report A credit card report for the dates of the deposit should be attached to both the deposit paperwork for the finance department and the deposit paperwork to be filed in the court. The total charges on the credit card report should match the total charges on the deposit paperwork. A deposit slip The white copy should be attached to the money and placed in the money bag The yellow copy should be attached to the cover sheet for the finance department. A copy of the deposit slip should be placed with the copy of paperwork filed at the municipal court. Bank Receipts After the deposit is taken to the bank, the receipt from the bank should be attached to the deposit paperwork for the finance department and a copy of that receipt should be placed with the deposit paperwork to be filed at the municipal court. 9 P a g e

10 Deposit Spreadsheet The person completing the deposit shall enter the following information on the deposit spreadsheet: o The grand totals of each column o The date payments were made o The date the deposit was taken to the bank Attachment A Municipal Court Money Log 10 P a g e

11 Drawer #: Cash Drawer Assigned Balance: $ Date: _ Time: Clerk s Initials: Cash Drawer Released Balance: $ Date: _ Time: Clerk s Initials: Drawer #: Cash Drawer Assigned Balance: $ Date: _ Time: Clerk s Initials: Cash Drawer Released Balance: $ Date: _ Time: Clerk s Initials: Change voucher for: $_ Change voucher for: $_ Drawer #: Cash Drawer Assigned Balance: $ Date: _ Time: Clerk s Initials: Cash Drawer Released Balance: $ Date: _ Time: Clerk s Initials: Drawer #: Cash Drawer Assigned Balance: $ Date: _ Time: Clerk s Initials: Cash Drawer Released Balance: $ Date: _ Time: Clerk s Initials: Change voucher for: $_ 11 P a g e Change voucher for: $_

12 Attachment B Change Orders & Vouchers Change Order Cash Drawer #: Date: Time: Amount: $ Clerk: Denominations Needed: Roll of Nickels Roll of Dimes Roll of Quarters One Dollar Bills Change Voucher Cash Drawer #: Date: Time: Amount: Clerk: Voucher Cashed Funds verified by: Person completing voucher: Date: Time: Five Dollar Bills Person assigned to drawer: Ten Dollar Bills Date: Time: Twenty Dollar Bills Total $ amount: *This form should be attached to cash and included with your cash drop *This form represents cash. This form should be placed in the drawer if you remove money for a change order and this form shall be removed from the drawer when the change order is completed. Change Order Cash Drawer #: Date: Time: Amount: $ Clerk: Denominations Needed: Roll of Nickels Roll of Dimes Roll of Quarters One Dollar Bills Change Voucher Cash Drawer #: Date: Time: Amount: Clerk: Voucher Cashed Funds verified by: Person completing voucher: Date: Time: Five Dollar Bills Person assigned to drawer: Ten Dollar Bills Date: Time: Twenty Dollar Bills Total $ amount: 12 P a g e *This form should be attached to cash and included with your cash drop *This form represents cash. This form should be placed in the drawer if you remove money for a change order and this form shall be removed from the drawer when the change order is completed.

13 Attachment C Date: Deposit Cover Sheet Clerk: Dates of daily cash reports: Line #1 Date of cash report: Clerk s name on cash report: Line #2 Date of cash report: Clerk s name on cash report: Line #3 Date of cash report: Clerk s name on cash report: Line #4 Date of cash report: Clerk s name on cash report: Line #5 Date of cash report: Clerk s name on cash report: Line #6 Date of cash report: Clerk s name on cash report: Grand Totals: 13 P a g e