Internal Audit Department FINAL REPORT. August 2011

Transcription

1 Internal Audit Department FINAL REPORT August 2011 Case Rewards Program Imprest Cash Fund Shortage Community Services Business Center Sarasota Board of County Commissioners Mark R. Simmons, CIA, CFE - Director, Internal Audit Mandi Someson, CPA Sharelle Turner, CFE, CPA, CFF

2 TABLE OF CONTENTS AUDIT REPORT Summary 3 Background 4 Procedures Performed 4 Findings 5 Timeline 8 Actions Planned or Taken 9 Report Distribution 9 Exhibits A Documents Listing B Certificate and Receipt of Imprest Funds C from the Fund Custodian to the ERC Chair on December 17, 2008 D Duplicate Reimbursements - Gift Card Receipts and Activations E Gift Cards Awarded Before Gift Cards Were Purchased F-1 Eighty Two (82) NOW Award Receipts that Appear to be Signed by the Fund Custodian F-2 Three (3) NOW Award Receipts With No Signature on ERC Chair/Vice Chair Signature Line F-3 Six (6) QSA Award Receipts With No Signature on ERC Chair/Vice Chair Signature Line F-4 One (1) QSA Award Receipt that Appears to be Signed by the Award Recipient G-1 Eleven (11) Unprocessed NOW Award Receipts that Appear to be Signed by the Fund Custodian G-2 Two (2) Unprocessed NOW Award Receipts With No Signature on ERC Chair/Vice Chair Signature Line G-3 One (1) Unprocessed QSA Award Receipt With No Signature on ERC Chair/Vice Chair Signature Line H Dates the ERC Chair Worked from January 1, September 30, 2009 I Award Receipts 0which the Fund Custodian Confirmed as Having Her Handwriting on the ERC Chair/Vice Chair Authorization Line J Timeline of Key Events K QSA Award Receipts for Recipients Not On ERC Newsletters L-1 Award Receipts that Appear to Be Photocopies L-2 Two (2) Award Receipts Without Award Recipient Signatures, Also Not Signed by the ERC Chair

3 Exhibits L-3 Two (2) Award Receipts to a Recipient Dated a Year Apart Redeemed Within a Month and With Award Receipts Not Signed by the ERC Chair L-4 One (1) Award Redeemed More Than One Year After the Award Date L-5 One (1) Award Receipt with Misspelled Recipient Name L-6 Two (2) Award Receipts to the Same Recipient Whose Name Appears to be Spelled Differently L-7 Two (2) Awards to a Recipient Redeemed on the Same Day but Submitted Separately for Reimbursement L-8 Two (2) Award Receipts to a Recipient Awarded January 16, 2008 and May 1, 2008 Redeemed Separately on June 4, 2008 and May 12, 2008 M Image of Cancelled Check and Endorsement N from the Fund Custodian to Executive Director, Community Services and the Chief Financial Planning Officer on February 18, 2011 O Inconsistent Recipient Signatures and the Related Signature Samples from Human Resources Files

4 Summary The funding for purchasing the gift cards was discontinued during the 2009 calendar year. The County s Policy 17.2 Petty Cash and the Certificate and Receipt of Imprest Funds form signed by the Fund Custodian state that the funds should have been accounted for and immediately returned when no longer required. The imprest fund was not closed by the Fund Custodian as of or prior to the date of the surprise cash count performed on February 16, At the time of the cash count, the Fund Custodian should have had cash, gift cards, or documentation of awards and gift card receipts to support the $1,000 fund balance. There was no cash and there were no gift cards to support the fund at the time of the surprise cash count. All supporting documentation was gathered for further analysis as discussed herein. We reviewed all supporting documentation available, including documents submitted for reimbursement and other documents that were kept by the Fund Custodian, and were not able to balance the imprest fund. At a minimum, cash of $405 is not accounted for at all, and abnormalities were noted in the documentation that was provided. Abnormalities noted in the documentation that was provided included the following: The same gift cards were submitted for reimbursement twice, once based on the gift card receipt, and again based on the gift card activation. This happened for ten (10) of the NOW award gift cards with a total impact of $50. Dates that the gift cards were given to the award recipients preceded the dates the gift cards were purchased in thirty three (33) instances totaling $165. The ERC Chair or Vice Chair was to sign all Award Receipts as authorization. In one hundred six (106) instances totaling $650, this procedure was not followed. o In ninety three (93) instances totaling $465, the writing on the authorization line is the Fund Custodian s writing. o In twelve (12) additional instances totaling $165, the ERC Chair/Vice Chair signature line was blank. o In one (1) additional instance for a $20 award, the award recipient appears to have erroneously signed on the ERC Chair signature line. It was common for an employee to receive multiple awards over the course of the program. For several of these recipients, the signature on the Award Receipts did not appear to be consistent. We have included copies of those receipts and sample signatures from Human Resources files as Exhibit O should the County elect to perform further investigation. QSA award recipients were all to be listed on ERC s recognition newsletters. A total of $120 was reimbursed related to six (6) QSA award recipients that were not included in the newsletters. Of the six (6), five (5) had Award Receipts that were not signed by the ERC Chair or Vice Chair. Other abnormalities are detailed in the Findings section of this report. The Fund Custodian attributed some abnormalities to errors she had made. These errors are detailed in our Findings. The Fund Custodian was interviewed at the time of the surprise cash count by two (2) individuals from the Office of Financial Planning. Sharelle Turner and Mandi Someson later interviewed the Fund Custodian on June 1, Inconsistencies were noted between information obtained in the two (2) interviews and in the documentation. 3

5 Background Sarasota County (the County) had several Employee Recognition Committees (ERCs). The ERC Committee for the Community Services Business Center (CSBC) facilitated programs that awarded employees of the CSBC in a variety of ways. Notably Outstanding Work (NOW) awards were on-the-spot awards presented to an employee by another employee within 24 hours of the event or accomplishment. A copy of the NOW award could be redeemed at any time for a $5 gift card. An inventory of these $5 gift cards was maintained to allow recipients to redeem the awards at any time. Quality Service Awards (QSAs) were presented quarterly to individuals or groups of employees who met selection criteria and were chosen by the ERC. QSA recipients received $20 gift cards that were given away at quarterly ceremonies. These gift cards were purchased for the specific recipients. An inventory of these gift cards was not maintained, the cards were purchased as needed. A petty cash imprest fund in the amount of $1,000 was established for the ERC to purchase the NOW and QSA award gift cards. An ERC member became custodian of the fund (Fund Custodian). Funding for the NOW and QSA awards was discontinued in 2009, however, the imprest fund was never closed. On February 16, 2011, two (2) individuals from the Office of Financial Planning conducted a surprise cash count of the imprest fund. At the time of that cash count, there was no cash and there were no gift cards. The Fund Custodian stated that the program was discontinued and all the funds were used. The individuals from the Office of Financial Planning, in the presence of the Fund Custodian, reviewed documentation provided by the Fund Custodian and attempted to account for the $1,000 fund but were unable to do so. All documentation related to the fund was gathered and provided to Internal Audit for further analysis and investigation. Procedures Performed During this engagement, we performed the following procedures which are documented in the workpapers included in the case file. Examined documents submitted for reimbursement of the imprest fund. Also examined other documents gathered at the time of the surprise cash count including items that were not submitted for reimbursement. Procedures were performed to: o Determine if the fund balance of $1,000 was supported by the documentation. o Identify anomalies. o Determine if the imprest fund was properly closed and returned to appropriate County personnel. Reviewed memorandum prepared at the time of the cash count, cash fund transaction history, correspondence, County policies and procedures on petty cash and purchasing cards, and other information. Compiled data in Excel spreadsheet of all transaction documents supporting activity of the fund and any abnormalities noted while reviewing the documentation. Analyzed the data compiled: o Sorted by gift card number to detect any duplicate reimbursements for gift cards. o Sorted awards by type, vendor and various dates. o Sorted data to match gift card receipts with Award Receipts that were found at the time of the cash count. 4

6 o Sorted by award recipient to identify individuals who received multiple awards and compared the award receipts for the same recipients for signature consistency. Reviewed: o Award Receipts for awards that were reimbursed. o Award Receipts obtained during the cash count for awards that were not reimbursed. Compared Listing of Award Recipients from the ERC Newsletters to the award recipients listed in the Award Receipts to determine if the recipients on the documents submitted for reimbursement were actual award recipients. Conducted interviews on May 25, 2011 and June 1, 2011 of the following employees: o Fund Custodian. o Executive Director, Community Services. o Individual whose Purchasing Card was used to purchase gift cards for the program. o ERC Chair. o ERC Committee Member Responsible for Producing the Quarterly Award Recipient Newsletters. Reviewed activity of Purchasing Card held by Fund Custodian from 2009 when the card was first used through April 27, Obtained the dates the ERC Chair was not working according to the County s Payroll Department report and compared her absences to the dates of award ceremonies to determine if the ERC Chair was not available to sign the Award Receipts. Documents reviewed and prepared are included in the workpapers. Findings While performing our procedures, we noted the following: Imprest Fund Not Closed and Returned County policy and the signed Certificate and Receipt of Imprest Fund required that the Fund Custodian return and close the fund when the purchase of gift cards for the program was discontinued in the The imprest fund was not closed by the Fund Custodian through the date of the surprise cash count which was performed on February 16, At the time of the surprise cash count, there was no cash and there were no gift cards. The Fund Custodian confirmed in the interview on June 1, 2011 that she did not take steps to close the imprest fund. (See Exhibits B & C) Lack of Documentation to Support Imprest Fund Balance We examined all documentation for the activity of the imprest fund including all documents obtained from the Imprest Fund Custodian that had not been processed or reimbursed. We were not able to find documentation to support $405 of the $1,000 imprest fund balance. In addition, in the documentation that was available, we noted unusual and inconsistent items described in this report. 5

7 Fund Reimbursed for Same Gift Card Twice When a gift card is purchased, Publix supermarket issues a receipt for payment and an activation receipt for the gift card. A receipt for the purchase of each gift card is submitted as part of the support to get the fund reimbursed. In comparing reimbursement package support, we noted ten (10) occurrences in which the gift card payment receipt and activation receipt were submitted for reimbursement effectively resulting in reimbursement of the imprest fund twice for the same gift card. (Exhibit D) The total impact is $50. Inconsistency in Documentation When a staff member receives an award, the staff member fills out a NOW or QSA Award Gift Card Receipt (Award Receipt). Some of these receipts had a date redeemed written on them. We verified with the Fund Custodian that the Date Redeemed or date hand written on the Award Receipt represents the date the staff member received their gift card. Of the four hundred thirty five (435) Award Receipts that documented the date that the gift cards were given away, thirty three (33) awards totaling $165 had dates that the gift cards were given away that were prior to the dates the gift cards were purchased (Exhibit E). We explored the possibility that the gift card receipts were attached to the wrong award document. Based on an analysis of the awards and gift card purchase data, we noted that in some instances, it was not possible that the gift card receipts were attached to the wrong transaction. There were no other transactions within the appropriate time frame that appeared to coincide with those gift card receipts. In other instances, we could not make a determination as to whether or not the receipts were mismatched. Lack of Approval by ERC Chair/Vice Chair Of the four hundred twenty four (424) Award Receipts that the imprest fund was reimbursed for, ninety two (92) gift Award Receipts totaling $565 did not bear the authorization signature of the ERC Chair or Vice Chair. On eighty two (82) of these Award Receipts, the Fund Custodian signed and approved in place of the ERC Chair. For further details see Exhibits F-1, F-2, F-3 & F-4. Of the two hundred nineteen (219) Award Receipts that were found but were not submitted for reimbursement, fourteen (14) gift Award Receipts totaling $85 did not bear the authorization signature of the ERC Chair or Vice Chair. On eleven (11) of these Award Receipts, the Fund Custodian signed and approved in place of ERC Chair or Vice Chair. For further details see Exhibits G-1, G-2, G-3. The ERC Chair stated that she did not recall authorizing the Fund Custodian to sign for her. Upon further investigation, we obtained payroll records for the ERC Chair (Exhibit H) and noted that the ERC Chair was working on all award ceremony dates and therefore appeared to be available to provide the authorization signatures. In the interview conducted on June 1, 2011, the Fund Custodian stated that she would never, never, never sign (the NOW or QSA Award Gift Card Receipt) for the ERC Chair as that was part of the controls. The Fund Custodian was shown examples of NOW Award Gift Card Receipts that had KS for DF on the ERC Chair/Vice Chair signature line and was also shown examples of NOW Award Gift Card Receipts that appeared to be signed by the Fund Custodian on the ERC Chair/Vice Chair signature line. The Fund Custodian confirmed that the writing and signatures on this was her writing and signatures. Specific instances reviewed by the Fund Custodian are included in this report (Exhibit I). 6

8 Inconsistent Recipient Signatures One hundred and forty eight (148) award recipients received more than one award. Many of these award recipient signatures appeared to be inconsistent from one Award Receipt to another. We obtained and reviewed samples of these recipients signatures from Human Resources files. While we are not qualified to perform handwriting analysis, we have included award receipts and sample signatures from Human Resources for eighty five recipients in Exhibit O, should the County wish to do further investigation. Fund Custodian Not Aware of County Policies and Procedures for Petty Cash The Fund Custodian and the ERC Chair stated that they did not receive instructions or policies related to the Imprest Fund and their responsibilities related to the fund. The County has Policy and Procedures governing petty cash funds, 17.2 Petty Cash. QSA Gift Card Recipients Excluded from Award Newsletters All $20 QSA award recipients should be on the ERC newsletters according to the Fund Custodian, ERC Chair, and ERC Committee Member who prepared the letters. We noted that of the fifty one (51) QSA awards that were submitted to reimburse the fund, six (6) QSA awards were not listed on the ERC newsletters. Of the six (6) awards not listed, five (5) also did not have the ERC Chair authorization signature on the Award Receipts. See Exhibit K. Several $5 NOW awards were also not included in the ERC newsletters. However, $5 awards were also made randomly at the ceremonies (attendee names were drawn) and these recipients were not included in the newsletters. We could not determine if the $5 awards excluded from the newsletters related to the random awards. Violation of Purchasing Card Policy Gift cards are not permitted to be purchased under the County s Purchasing Card Policies. The Fund Custodian stated that she received verbal authorization to use a Purchasing Card to obtain the gift cards. There is no documentation of this authorization. The Fund Custodian asked another employee to obtain gift cards for the program using their Purchasing Card. The Purchasing Card was used to purchase $1,180 in gift cards for the NOW and QSA awards. Other Abnormalities In addition to the items noted above, we identified other abnormalities. See Exhibit L. Of the three hundred seventy three (373) NOW awards that the imprest fund was reimbursed for: Two (2) Award Receipts appear to be photocopies of other receipts to the same award recipient (Exhibit L-1). One (1) Award Receipt appears to be a partial photocopy of another award receipt to the same recipient. Also, this receipt was not redeemed until ten months after the noted award date (Exhibit L-1). Two (2) Award Receipts did not include the award recipients signatures and also were not signed off and approved by the ERC Chair (the Fund Custodian s signature was on the ERC Chair signature line). (Exhibit L-2) Two (2) Award Receipts to the same recipient dated approximately a year apart were redeemed within a month. The older award was redeemed last. Also, both Award Receipts were not signed off and approved by the ERC Chair (Exhibit L-3). One (1) award was redeemed more than one year after the award date per the Award Receipt (Exhibit L-4). One (1) Award Receipt, that is to be completed by the award recipient, has the recipient s first name Martha misspelled Marth (Exhibit L-5). Two (2) Award Receipts for the same award recipient, where the recipient s name appears to be spelled differently in the section that the recipient completes (Exhibit L-6). Two (2) Award Receipts to the same recipient were redeemed on the same day, but were included in separate reimbursement requests almost two weeks apart (Exhibit L- 7). 7

9 Two (2) Award Receipts to the same recipient included award dates of January 16, 2008 and May 1, 2008 and were redeemed separately on June 4, 2008 and May 12, 2008 for the same type of gift card which were on-hand since It appears unusual that the awards would be redeemed separately (Exhibit L-8). Inconsistencies Noted During Interviews On February 16, 2011, at the time of the surprise cash count, the Fund Custodian stated that she had not cashed the last check issued to her in September 2008 for $250 to reimburse the fund. The check was cashed. An image of the cancelled check with the endorsement from the Wachovia website is included as Exhibit M. In the interview conducted on February 16, 2011, the Fund Custodian stated that she had not brought the cash box or any records over with her from Twin Lakes when she relocated to the Admin Building. Later that day, the Fund Custodian produced a box of documents. During the interview conducted on June 1, 2011, the Fund Custodian stated that she maintained a copy of all documents relating to the fund and had not left any documents related to the fund behind at a former location, and specifically, she had not left anything at Twin Lakes. The Fund Custodian made comments during the interview conducted on June 1, 2011 that may warrant additional investigation. When asked if the County were to take this (case) further, would they find that she was having financial issues such as paying personal credit cards late, the Fund Custodian said No and said that if there were issues, it would not be anything a few hundred dollars would fix and began crying. The Fund Custodian stated that her husband was laid off in 2009 (February or March) for six months and that she worked two jobs for a year. The Fund Custodian also made comments about how she could not believe how much she was going through related to a cash fund that was of such low dollar value. The Fund Custodian stated that she managed over $1,000,000 in contracts and got put on administrative leave over the petty cash count. During the interview on June 1, 2011, the Fund Custodian could not explain why the fund did not balance or some of the other unusual items discussed. The Fund Custodian stated that she believes one of the individuals performing the surprise cash count was out to get her and did not supply Internal Audit with all the documents the Fund Custodian had produced. Memorandum from the two individuals performing the surprise cash count indicate that the documents were viewed in the presence of other employees including the Executive Director, Community Services and the Fund Custodian who could not reconcile the fund to the documentation. An from the Fund Custodian sent to the Executive Director, Community Services and the Chief Financial Planning Officer on February 18, 2011 requesting records states in part, all documents and paperwork that were placed in a cardboard box by (individual performing cash count) this afternoon in Rm 573 at the County Administration Office in the presence of you and reviewed in the presence of her staff member (other individual performing cash count) from the office of financial planning. This supports that the documents were viewed in the presence of several County personnel during the cash count and initial attempt to reconcile the fund and were not in the sole possession of one individual at the time of the cash count. (Exhibit N) Timeline A timeline of key events has been included as Exhibit J. 8

10 Actions Planned or Taken To be addressed by County personnel. Exhibits to Report Exhibits to this report are too voluminous to distribute in printed form, therefore, exhibits will be made available upon request. Report Distribution Sarasota Board of County Commissioners Terry Lewis, County Administrator William Little, Community Service Executive Director & Acting Procurement Officer David Bullock, Deputy County Administrator 9