Citywide Cash Handling Procedures Performance Audit

Citywide Cash Handling Procedures Performance Audit March 2010 Office of the Auditor Audit Services Division City and County of Denver Dennis J. Gallagher Auditor

The Auditor of the City and County of Denver is independently elected by the citizens of Denver. He is responsible for examining and evaluating the operations of City agencies for the purpose of ensuring the proper and efficient use of City resources and providing other audit services and information to City Council, the Mayor and the public to improve all aspects of Denver s government. He also chairs the City s Audit Committee and oversees the City s Comprehensive Annual Financial Report (CAFR) The Audit Committee is chaired by the Auditor and consists of seven members. The Audit Committee assists the Auditor in his oversight responsibilities of the integrity of the City s finances and operations, including the integrity of the City s financial statements. The Audit Committee is structured in a manner that ensures the independent oversight of City operations, thereby enhancing citizen confidence and avoiding any appearance of a conflict of interest. Audit Committee Robert Bishop Maurice Goodgaine Jeffrey Hart Timothy O Brien Dennis Gallagher Robert Haddock Bonney Lopez Audit Staff John Carlson, Deputy Director, JD, CIA, CICA Nancy Howe, Internal Audit Supervisor Rebecca Corral, Senior Internal Auditor, CFE Freddie Martin, Staff Internal Auditor, CICA You can obtain copies of this report by contacting us at: Office of the Auditor 201 W. Colfax Avenue, Dept. 705 Denver CO, 80202 (720) 913-5000 Fax (720) 913-5026 Or view an electronic copy by visiting our website at: www.denvergov.org/auditor

City and County of Denver Dennis J. Gallagher Auditor 201 West Colfax Ave., Dept. 705 Denver, Colorado 80202 720-913-5000 FAX 720-913-5247 www.denvergov.org/auditor March 18, 2010 Honorable John Hickenlooper, Mayor City and County of Denver Dear Mayor Hickenlooper: Attached is the Auditor s Office Audit Services Division s report of their audit of the City and County of Denver s Cash Handling Procedures for the period ending December 31, 2009. The purpose of the audit was to determine whether internal controls related to cash handling practices were sufficient to adequately safeguard City revenues and change funds, and to determine whether City agencies are in compliance with the City s Fiscal Rules. Audit work identified several weaknesses in the City s internal control environment with regard to cash handling practices. These weaknesses hinder the City s ability to properly safeguard cash assets. If you have any questions, please call Kip Memmot, Director of Audit Services, at 720-913-5029. Sincerely, DJG/ect Dennis J. Gallagher Auditor cc: Honorable Members of City Council Members of Audit Committee Ms. Roxane White, Chief of Staff Mr. Claude Pumilia, Chief Financial Officer Mr. David T. Roberts, Chief Services Officer Mr. David Fine, City Attorney Mr. L. Michael Henry, Staff Director, Board of Ethics Ms. Lauri Dannemiller, City Council Executive Staff Director Ms. Beth Machann, Controller Mr. Steve Ellington, Director of Tax Compliance To promote open, accountable, efficient and effective government by performing impartial reviews and other audit services that provide objective and useful information to improve decision making by management and the people. We will monitor and report on recommendations and progress towards their implementation.

City and County of Denver Dennis J. Gallagher Auditor 201 West Colfax Ave., Dept. 705 Denver, Colorado 80202 720-913-5000 FAX 720-913-5247 www.denvergov.org/auditor AUDITOR S REPORT We have completed an audit of the City s Cash Handling Procedures for the period ending December 31, 2009. The purpose of the audit was to examine and assess internal controls related to cash handling and to determine whether City agencies are in compliance with City Fiscal Rules. This performance audit is authorized pursuant to the City and County of Denver Charter, Article V, Part 2, Section 1, General Powers and Duties of Auditor, and was conducted in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. The audit revealed several weaknesses in the City s internal control environment related to cash handling as well as deficiencies in reconciliation procedures that hinder the City s ability to properly safeguard assets. We extend our appreciation to the agencies and personnel who assisted and cooperated with us during the audit. Audit Services Division Kip Memmott, MA, CGAP, CICA Director of Audit Services To promote open, accountable, efficient and effective government by performing impartial reviews and other audit services that provide objective and useful information to improve decision making by management and the people. We will monitor and report on recommendations and progress towards their implementation.

TABLE OF CONTENTS EXECUTIVE SUMMARY 1 Finding: Internal Controls Related to Cash Handling are Insufficient to Ensure Cash is Adequately Managed and Safeguarded 1 INTRODUCTION & BACKGROUND 2 SCOPE 3 OBJECTIVE 3 METHODOLOGY 3 FINDING 4 Internal Controls Related to Cash Handling are Insufficient to Ensure Cash is Adequately Managed and Safeguarded 4 Change Funds Do Not Reconcile to Amounts in Treasury s Record 4 Citywide Internal Controls are Insufficient to Safeguard Cash 5 RECOMMENDATIONS 8 APPENDICES 9 Appendix A Treasury s Change Fund Procedures 9 AGENCY RESPONSE 12

EXECUTIVE SUMMARY Internal Controls Related to Cash Handling are Insufficient to Ensure Cash is Adequately Managed and Safeguarded Audit work revealed significant weaknesses with citywide cash handling practices as well as with the City s overall internal control environment which hinder proper reconciliation of change funds and create unnecessary risk related to the City s ability to safeguard its cash assets. We counted a sample of change funds representing nearly 60% of the City's entire change fund population and reconciled the amounts counted to the amounts recorded by the Treasury Division. Our audit work revealed eight out of ten agency funds (80%) did not reconcile to amounts recorded by Treasury. The differences ranged from $24 to $1,615 over and from $80 to $1,979 short. We identified several causes for the lack of reconciliation such as inaccurate data maintained by Treasury and inadequate change fund reporting practices. Additionally, we identified significant deficiencies with cash handling practices which negatively impact the City s internal control environment. Specifically, we noted inconsistent policies and procedures across the City, agencies with poor controls over access to cash, inadequate segregation of duties, lack of management oversight, and insufficient security measures. This condition results in a lack of accountability for City cash assets, which increases risk of misappropriation and improper accounting. In order to increase City agencies accountability for change funds, we recommend Treasury and the Controller s Office strengthen change fund reconciliation procedures, reporting requirements, and current Fiscal Rules. P a g e 1 Office of the Auditor

INTRODUCTION & BACKGROUND The City and County of Denver has numerous functions and responsibilities that require it to exchange cash with members of the public. For example, City agencies: Accept payment for court fees, parking tickets and other traffic violations; Accept payment for permits and licenses; and Manage machines such as bill changers and copy machines in City buildings. In order to carry out cash transactions with citizens and businesses, City agencies with such responsibilities must maintain sufficient cash levels on hand. To do this, agencies maintain change funds. Change funds refer to the bills and change kept in a cash register or cash drawer to make change when citizens or businesses use cash for a transaction. Additionally, change funds are comprised of the backup cash that agencies maintain to replenish cash registers, cash drawers and cash machines as needed. To adequately protect the City s cash, agencies must secure not only the cash kept in cash registers, cash drawers or cash machines, but also the backup cash used to make more change. The City s Treasury Division within the Department of Finance maintains a list of agencies with change funds. This list includes the agency, the change fund amount, the location of the change fund, and the change fund custodian. According to the Change Fund records auditors obtained from Treasury in 2009, the City maintained over $143,000 in approximately 104 change funds throughout the City. Audit work included sampling approximately 60% of the entire City change fund as shown in the following chart: Source: City change fund record. City and County of Denver P a g e 2

The City s Fiscal Accountability Rules provide agencies with the primary guidance on cash handling. Table 1 Fiscal Accountability Rules SCOPE Fiscal Rule Number Title 2.2 Reconciliations 2.4 Separation and Rotation of Duties 2.5 Supporting Documentation 2.6 Cash, Receipts and Deposits This audit examined cash handling practices in place during the fourth quarter of 2009. In order to test change funds against the City s recorded change fund amounts, auditors utilized the City s change fund list effective December 31, 2009. OBJECTIVE The overall objective of this audit was to evaluate the City s cash handling practices on a sample basis, to determine whether internal controls were sufficient to ensure: Adequate safeguarding of cash to protect against fraud and misuse of City funds; Adequate physical security of cash; Adequate safety and security for City personnel responsible for handling cash in a public environment; Revenues and change funds reconcile to the City s recorded amounts, and Compliance with applicable City Fiscal Accountability Rules. METHODOLOGY We utilized multiple methodologies to achieve the audit objectives. These methodologies included, but were not limited to the following: Conducting interviews with City personnel regarding their cash handling policies, procedures and practices; Conducting surprise cash counts at multiple City agencies representing approximately 60% of the City s change funds (see chart in the Introduction & Background section); Reconciling change funds and cash revenues; and Determining compliance with the City s Fiscal Rules regarding separation and rotation of duties, reconciliation procedures, and cash handling. P a g e 3 Office of the Auditor

FINDING Internal Controls Related to Cash Handling are Insufficient to Ensure Cash is Adequately Managed and Safeguarded Audit work revealed significant weaknesses with the City s cash handling practices as well as with the City s overall internal control environment. Identified weaknesses hinder proper reconciliation of change funds and create unnecessary risk related to the City s ability to safeguard its cash assets. Change Funds Do Not Reconcile to Treasury Records Audit work included surprise physical cash counts at selected City agencies as shown in Table 2. We performed these counts without notifying the agencies beforehand in order to increase our ability to detect any potential instances of cash theft, to determine the accuracy and propriety of City revenues and change funds, and to directly observe whether internal control measures were implemented and appeared to be functioning. During our audit, we sampled and counted nearly 60% of the City's entire change fund. We then reconciled those amounts to the amounts recorded by Treasury. Audit work revealed eight out of ten agency funds (80%) did not reconcile to amounts recorded by Treasury. The differences ranged from $24 to $1,615 over and from $80 to $1,979 short. Agency Table 2 Change Fund Reconciliation Change Fund per Treasury Change Fund per Audit Difference Over/(Short) Public Works - Parking Management $800.00 $600.00 -$200.00 Clerk and Recorder $900.00 $800.00 -$100.00 Clerk and Recorder - Marriage License $200.00 $200.00 $0.00 Community Planning and Development $1,950.00 $1,870.00 -$80.00 Treasury - Cash Drawers $1,120.00 $1,000.00 -$120.00 Treasury - Vault $10,000.00 $11,615.00 $1,615.00 Denver County Court - Civil & General $200.00 $400.00 $200.00 Denver Public Library $6,567.50 $6,591.62 $24.12 DIA - Parking Permit Office $4,000.00 $4,000.00 $0.00 DIA - Ground Transportation and 8th Floor Vault $60,000 $58,021 $-1979.00 Total Change Fund $85,737.50 $85,097.62 -$639.88 Audit work revealed several causes for the lack of reconciliation: City and County of Denver P a g e 4

Treasury Data Appears Inaccurate. The data contained in Treasury's record does not appear to be accurate. Further, we found no indications The balance of the change fund should remain the same at all times, and should be equal to the amount authorized by the Treasurer. 1 Treasury investigated and reconciled change fund over and shorts with the respective agencies. Treasury s 2009 end of year balance did not reconcile to the amount recorded in the PeopleSoft general ledger for the year ended December 31, 2009. As a result, we could not determine the accuracy of the balance in the general ledger at year-end. Reporting Procedures are Inadequate. Fiscal Rule 2.2, "Reconciliations", requires all agencies to analyze and reconcile significant accounts at the end of each quarter. Due to the liquidity and ease of misappropriation, cash accounts should be reconciled with Treasury on at least a quarterly basis. However, Treasury only currently requires City agencies to annually certify the amount of their respective change funds. Additionally, we noted three agencies did not submit their annual certification documents and two agencies did not submit evidence to the Treasury Division to support change fund close outs. It appears that neither Treasury nor the Controller s Office followed up on these omissions. Further, we noted Treasury does not conduct surprise cash counts or other verification procedures to ensure amounts reported by agencies are accurate. As a result, Treasury is limited in its ability to ensure the accuracy of the change fund listing as well as the actual amounts of City change funds. Citywide Internal Controls are Insufficient to Safeguard Cash City Fiscal Rule 2.6 Cash, Receipts and Deposits currently allows each agency to establish their own cash handling policies and procedures. However, we found the following deficiencies in cash handling practices which negatively impact the City s internal control environment: Inconsistent Policies and Procedures Across the City. City Fiscal Rule 2.6 currently allows agencies to establish their own policies and procedures related to cash handling. However, audit work determined cash handling policies and procedures are inconsistent across City agencies. Specifically, we noted procedural discrepancies with respect to cash over and short management. Some agencies policies and procedures prescribe progressive discipline for cash over and shorts while others record overages and require the employee to pay back any shortages. We noted one agency s change fund was $80 short due to a cashier s shortage of that amount. The agency s current policy is to allow cashiers to pay back shortages over a period of time which is currently acceptable according to the Fiscal Rule. However, allowing employees to pay back cash shortages creates an environment conducive to theft as cashiers could see this policy as an opportunity to borrow funds from cash drawers as long as they pay it back. Borrowing City funds would constitute asset misappropriation. 1 See Reconciliation of Change Funds, #1 in Appendix A. Change Fund Procedures provided by Denver s Treasury Division. P a g e 5 Office of the Auditor

Poor Controls over Access to Cash. Audit work identified three agencies with poor controls over cash register access. Specifically, we noted instances where cashiers could access each others' registers since access keys work for all registers. Additionally, we noted an instance where responsibility for a cash register was not assigned to one specific person. Instead, all employees in the division could access the register. When we conducted our surprise count of this register the cash drawer was approximately $36 short. We also noted several registers where the control key was left in the key slot on the outside of the register. The control key should be accessible to management only as it allows access to daily sales data. Leaving the control key in the register can result in unauthorized access to sales data and subsequent theft of the associated revenue. Absent additional sales verification procedures, management would not be able to detect or deter such theft. Fiscal Rule 2.6 requires agency heads to implement proper security and internal controls over access to cash drawers. Without proper internal controls, there is a lack of accountability for cash overages and shortages and an increased risk of loss due to asset misappropriation. Lack of Segregation of Duties. We identified one agency with a decentralized cash management structure. In this agency, division managers are responsible for their respective change funds, including creating and sending deposits to the centralized cash handling office. However, we noted that several division managers within this agency do not count and balance revenues and change funds from bill changers and copy machines before the deposit is prepared, contrary to Fiscal Rule 2.6 which states all monies shall be counted and balanced. Instead, division managers place monies in a deposit bag without performing an initial count and send it to the centralized cash handling office. Additionally, once the deposits are received in the central office, the cash handling administrator opens all of the deposit bags, counts the funds, and consolidates them into one deposit. We also noted there was no additional verification count conducted by a supervisor on the deposit amount. Since division managers do not count and reconcile revenues and change funds and there is no independent count of the entire deposit, it is not possible to determine whether division managers or the cash handling administrator could be responsible for any cash shortages and overages. Furthermore, the cash handling administrator is also responsible for making daily deposits and recording the revenue amounts in the accounting records. Fiscal Rule 2.4 establishes separation and rotation of duties as the basis of a good internal control system which acts as preventative and detective measures. This rule further outlines the responsibilities of the Agency to properly segregate job duties so that one person does not have control over an entire fiscal activity and assign responsibilities in a manner which encourages checks and balances. City and County of Denver P a g e 6

Lack of Oversight of the Cashiering Function. We noted eight of the ten agencies tested (80%) do not conduct surprise counts of cash drawers, deposit amounts, or change funds. We also noted 90% of the Agencies do not have The Association of Certified Fraud Examiners 2008 Report to the Nation Stated that Implementation of Surprise Audits, and Job Rotation and Mandatory Vacations Reduced Median Fraud Losses by 66% and 61%, Respectively. 2 policies and procedures in place which require rotation of cash handling duties in accordance with Fiscal Rule 2.4 which states, Rotation of duties is an additional deterrent to fraud. The rule also outlines Agencies responsibility to develop a plan which addresses periodic rotation of job duties as well as mandatory vacations in order to detect and deter improprieties such as misappropriation of cash. Lack of Physical Security Measures. Audit work determined certain agencies do not have adequate security controls in place. Due to the inherent risk associated with cash and because these agencies interact with the public, these weaknesses increase the risk for the City as well as for City employees. During our testing at the ten agencies, we noted the following deficiencies: At three agencies, security cameras were not directly positioned on the cash handling area, inhibiting agencies ability to effectively monitor the cash handling area; Some agencies do not have security cameras in cash handling areas; Two agencies do not have a locked door to the cash handling area; One agency allows members of the public into the cash handling area to conduct research of public records. There is no oversight of these individuals, who can remain in the area for some time; and One agency had over $600,000 in deposits that were not secured in a safe or lockbox. Instead, the deposits were placed in an open bin underneath a cashier s desk which was easily accessible by other employees and potentially to the public. Fiscal Rule 2.6 requires all cash, receipts, and deposits be secured at all times. A lack of security measures such as cameras, locked cash handling areas, and secured deposits increases risk of theft by either employees or the public and places City employees at risk of harm from criminal activity. The establishment and adjustment of the Fiscal Rules are under the authority of the Department of Finance. Additionally, the Department has oversight responsibility of the City s change funds. Consequently, the Department is in the best position to strengthen citywide controls related to cash handling. The Department made an effort to tighten controls when the Treasury Division developed cash handling procedures. However, these procedures were of limited use as they were not distributed to agencies. The Finance Department can ensure Fiscal Rules and other forms of guidance including 2 The Association of Certified Fraud Examiners 2008 Report to the Nation on Occupational Fraud and Abuse http://www.acfe.com/documents/2008-rttn.pdf pg. 37; accessed February 5, 2010. P a g e 7 Office of the Auditor

training are adequate to help agencies with cash handling responsibilities and can also enhance oversight activities of cash handling policies, procedures and practices. We offer the following recommendations to assist in strengthening this oversight and guidance. RECOMMENDATIONS 1. In order to increase City agencies accountability for change funds, we recommend the Treasury Division require agencies to certify that a cash count is performed in addition to certifying change fund amounts on a quarterly basis. We recommend the Division investigate any discrepancies in the quarterly amounts reported by agencies. Additionally, we recommend the Division: conduct surprise cash counts of all agency change funds throughout the year, require documentation of any overages, shortages, close-outs, and work with agencies to periodically analyze the appropriateness of the amounts of such funds. 2. In order to increase accountability and uniformity of policies and procedures citywide, we recommend the Controller s Office review City Fiscal Rule 2.6 and amend the language to address deficiencies in accountability. Specifically, we recommend the Fiscal Rule require agencies to perform periodic surprise cash counts. Additionally, the Rules should not allow cash shortages to be repaid by the employee. With respect to proper management of change funds, we recommend The Controller s Office adopt Treasury s Change Fund Procedures and incorporate the documentation into Fiscal Rule 2.6. 3. We recommend the Department of Finance review agencies decentralized cash handling practices and ensure agencies institute proper reconciliation procedures of revenues and change funds in compliance with Fiscal Rule 2.6. We also recommend that Finance strengthen segregation of duties in centralized cash handling offices by requiring a secondary count and verification of daily deposits as well as the associated change fund. 4. Additionally, the Department of Finance, working with city agencies, should ensure appropriate security measures are clearly identified and utilized. These measures should include accurately positioning security cameras, securing cash handling areas with locked doors, prohibiting public access to cash handling areas, and properly securing deposits. Further, Treasury, in conjunction with the Controller s Office, should provide training to agencies regarding basic cash handling control practices including related security measures. City and County of Denver P a g e 8

APPENDICES Appendix A Treasury s Change Fund Procedures CHANGE FUND P ROCEDURES OVERVIEW: City agencies which accept cash receipts, such as fees and fines from the public, must have cash available to make change. These procedures are intended to direct agencies in managing change funds and include the following: 1. The establishment of or an increase in the amount of a Change Fund. 2. The abolishment of or a decrease in the amount of a Change Fund. 3. Custodial and Alternate responsibilities. 4. Security of the Funds 5. Reconciliation of change funds It is the responsibility of each agency head to appoint a custodian for each location where a change fund is maintained, and an overall custodian and contact person for the agency. It is the responsibility of the City Treasurer to approve or disapprove of any change fund requests. All agencies must ensure that adequate internal controls regarding separation and rotation of duties are in place in accordance with Fiscal Accountability Rule 2.4 Separation and Rotation of Duties for guidance. Change funds should not be confused with or used as Petty Cash Funds which are defined as: A fund established to allow cash payment for small, incidental expenses of nominal amounts. For more information regarding Petty Cash Funds see Fiscal Accountability RULE 3.2 PETTY CASH AND IMPREST FUNDS Establish or Increase Change Funds 1. The Agency Head will fill out the Change Fund Request Form and send it to the Treasury Cashiering unit with the following information: a. Department /Agency name b. Amount of request c. Date by which cash is needed d. Name and phone number of Change Fund Custodian e. Purpose of the new fund, or reason for increase/decrease of an existing fund f. The exact location of the change fund The request should be made no less than 1 week prior to the date the funds are required. 2. The Treasury Cashiering unit will submit the request to the Treasurer for approval. 3. If the request is approved, the Treasurer will so indicate on the Change Fund Request Form and sign and date the approval. The custodian will be contacted when the change is available to pick up. P a g e 9 Office of the Auditor

a. The change must be picked up at the Treasury Cashiers. b. The custodian will count and verify the amount and sign and date the approved Change Request Form. c. The approved Change Request Form will be retained by Treasury. Treasury will make an entry to the their records, and forward a copy of the approved Change Request Form and any other appropriate documentation to the Controller s Office in order to book the transaction on the general ledger. 4. If the request is denied by the Treasurer, the Change Fund Request Form will be returned to the Agency Head, with the reason for the denial explained in writing. Abolishment of Change Funds 1. Prior to abolishing a change fund, the agency must reimburse the fund to the amount authorized by the Treasurer. 2. The agency must notify the Treasury Division in writing of its intent to abolish the change fund by filling out a Change Fund Request Form. 3. The request must include: a. The name of the current change fund custodian b. The location and amount of the change fund c. The reason for abolishing/decreasing the fund d. The amount of the reduction and the resulting balance to be maintained, if any e. The date the cash is delivered to the Treasury Division 4. The cash and the Change fund Request Form shall be delivered to the Treasury Cashiering unit who will verify the amount received and sign and date a copy of the Change Request Form for the agency. 5. The Change Request Form will be retained by Treasury. Treasury will make an entry in their records, and forward a copy of the Change Request Form and any other appropriate documentation to the Controller s Office in order to book the transaction on the general ledger.. Custodian and Alternate Responsibilities 1. The change fund custodian is designated by the agency head. In the event the custodian of the change fund permanently changes, the agency head shall ensure that the balance on hand is reconciled, reappoint a change fund custodian, and notify the Treasury Cashiering unit in writing immediately of the change including the name and contact information of new custodian. It is not necessary to inform Treasury in the event of a temporary change of the change fund custodian. 2. Whenever the custodianship of the change fund passes from one employee to another (either due to a permanent change in custodianship or a temporary change such as the scheduled vacation of the custodian), the departing custodian shall reconcile and record the balance on hand. This process should be documented with the signatures of both the departing and the new custodians shall certify the balance to be correct as of the date of the custodial change. This documentation should be retained by the agency. 3. Periodically, the change fund custodianship duties should be reassigned for no less than two consecutive weeks during the year and follow the procedures for recording a custodial change. City and County of Denver P a g e 10

4. The change fund (except as provided below) shall be counted and balanced at the end of each business day on which the fund is accessed. 5. The balance of the change fund should remain the same at all times, and should be equal to the amount authorized by the Treasurer. Security 1. During the working day, cash funds shall be kept in a file, desk drawer, safe, or cash drawer, and such container shall be locked at all times when the responsible person is not in attendance. 2. All cash on hand at the close of a work day shall be locked in a safe, metal file cabinet or desk. Amounts over $100.00 shall be stored in an adequate safe. 3. In the event of theft, the Change Fund Custodian s Supervisor, the police, and the Controller s Office shall be notified by telephone immediately. A Payment Request to reimburse the fund shall be submitted to the Controller s Office along with a copy of the police theft report. 4. Whenever a change fund is stored and accessed via a machine that converts paper currency to coins, the amount of the change on hand shall be counted and balanced whenever the machine is opened to replace accumulated currency with coins, or once per month, whichever is more frequent. Reconciliation of Change Funds 1. The balance of the change fund should remain the same at all times, and should be equal to the amount authorized by the Treasurer. 2. Any shortage which may occur will be made up by the agency, from its budget or, when appropriate, the agency may require the responsible employee to reimburse the fund for a shortage. In addition, standards should be developed by the agency that specify the number of shortages and a specified threshold dollar amount which shall be grounds to trigger disciplinary action. 3. At least once a year, the Treasury Division will send a memorandum to each agency head requesting the following information: a. Amount of the change fund on hand, by location b. Current custodian for each location c. Phone number of custodian for each location 4. The completed memorandum must be returned to Treasury Cashiering within two weeks. Treasury Cashiering will check the reported change fund for each location against its records. If there are any differences, a memorandum will be sent to the agency head. The agency head shall respond and take action as described above in the Reconciliation of Change Funds section of this document within two weeks in order to correct the discrepancy. 5. The change funds at any location may be audited by the Controller s Office or the Auditor s office at any time. P a g e 11 Office of the Auditor

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