Internal Audit Department Status Report to the Board of Supervisors
Description
EXHIBIT A IAD’S MONTHLY ACTIVITY REPORT FOR JUNE 2006 TO THE BOARD OF SUPERVISORS Recipient of the Institute of Internal Auditors “Award for Excellence” The Internal Audit Department is an independent audit function reporting directly to the Orange County Board of Supervisors. by the Director of Internal Audit Dr. Peter Hughes, MBA, CPA Certified Information Technology Professional (CITP), Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE) Assistance in assembling this report provided by: Eli Littner, Deputy Director, CPA, CIA, CFE, CFS, CISA Alan Marcum, Audit Manager, MBA, CPA, CIA, CFE Michael J. Goodwin, Audit Manager, CPA, CIA Autumn McKinney, Audit Manager, CPA, CIA, CGFM Board Date: July 25, 2006 Page A1 of 18 MONTHLY SUMMARY –JUNE 2006 Status Report to the Board of Supervisors by IAD JUNE AUDIT ACTIVITY: WE FINISHED 13 PROJECTS FOR THIS MONTH AS SUMMARIZED BELOW: We completed Audits: 1. Audit of County’s NSF Check Notification Process: Audit of Treasurer-Tax Collector, Auditor-Controller and selected departments/agencies’ notification processes for NSF checks, and a review of the planned process enhancements. No material or significant issues were identified. We identified 5 suggested recommendations for all depts./agencies to consider in a report issued countywide. 2. Social Services Agency: Audit of accounts receivable and collections processes. We identified 4 significant ...
Informations
| Publié par | Urne |
| Nombre de lectures | 103 |
| Langue | English |
Extrait
EXHIBIT A IAD’ S M ONTHLY A CTIVITY R EPORT FOR J UNE 2006 TO THE B OARD OF S UPERVISORS
Recipient of the Institute of Internal Auditors “Award for Excellence The Internal Audit Department is an independent audit function reporting directly to the Orange County Board of Supervisors.
Board Date: July 25, 2006
by the Director of Internal Audit Dr. Peter Hughes, MBA, CPA Certified Information Technology Professional (CITP), Certified Internal Auditor (CIA), Certified Fraud Examiner (CFE) Assistance in assembling this report provided by: Eli Littner, Deputy Director , CPA, CIA, CFE, CFS, CISA Alan Marcum, Audit Manager , MBA, CPA, CIA, CFE Michael J. Goodwin, Audit Manager , CPA, CIA Autumn McKinney, Audit Manager , CPA, CIA, CGFM
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MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD JUNE AUDIT ACTIVITY: WE FINISHED 13 PROJECTS FOR THIS MONTH AS SUMMARIZED BELOW: We completed Audits: 1. Audit of County’s NSF Check Notification Process: Audit of Treasurer-Tax Collector, Auditor-Controller and selected departments/agencies’ notification processes for NSF checks, and a review of the planned process enhancements. No material or significant issues were identified. We identified 5 suggested recommendations for all depts./agencies to consider in a report issued countywide. 2. Social Services Agency: Audit of accounts receivable and collections processes. We identified 4 significant issues and 3 control findings resulting in 7 recommendations to improve existing controls. 3. John Wayne Airport: Audit of JWA’s contract administration over two types of public works contracts. No material or significant issues were identified. We identified 26 control findings to enhance existing controls and processes. 4. Dana Point Harbor Department: We completed our limited review of lease revenue for Aventura Sailing Association and identified 4 control findings related to compliance with the lease agreement or improvements to internal controls. We issued 1 Report of Monthly Computer Assisted Audit Techniques for the Month of May 2006: 5. Auditor-Controller: up cate Payments to Vendors: We identified 1 duplicate payment • D li made to vendors for $7,680 that is being pursued by the Auditor-Controller. • Deleted Vendors: No findings.
Board Date: July 25, 2006
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MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD We completed 8 Follow-Up Audits: 6. Health Care Agency: 1 st Follow-Up Audit of contract administration and cash disbursements. Corrective action was taken on 5 of 8 recommendations. 7. Resources and Development Management Department/Planning and Development Services Function: 1 st and Final Close-Out Follow-Up Audit of budgetary controls over Building & Safety Fund 113. Corrective action was taken on 2 of 2 recommendations. 8. Social Services Agency: 1 st and Final Close-Out Follow-Up Audit of contract administration and cash disbursements. Corrective action was taken on 9 of 9 recommendations. 9. Resources and Development Management Department/ Ralph B. Clark Re ional Park Softball Com lex: 1 st and Final Close-Out Follow-U Audit of the Limited Lease Review of Ral h B. Clark Re ional Park Softball Com lex SCSA . Corrective action was taken on 6 of 6 recommendations. 10. John Wa ne Air ort/Parkin Conce ts Inc.: 1 st and Final Close-Out Follow-U Audit of the Limited Review of O eratin A reement with Parkin Conce ts, Incor orated for valet arkin services. Corrective action was taken on 5 of 5 recommendations. 11. John Wayne Airport/Vanguard Car Rental: 1 st and Final Close-Out Follow-Up Audit of the Limited Review of Lease Revenue for Vanguard Car Rental USA, Inc. Corrective action taken on 2 of 2 recommendations. 12. John Wayne Airport/Enterprise Rent-A-Car: 1st and Final Close-Out Follow-Up Audit of the Limited Review of Lease Revenue for Enterprise Rent-A-Car of Los Angeles. Corrective action taken on 4 of 4 recommendations. Board Date: July 25, 2006 Page A3 of 18 For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD 13. County Clerk-Recorder: 2 nd and Final Close-Out Follow-Up Audit of cash receipts and trust fund disbursements. Corrective action was taken on 7 of 7 of the recommendations remaining from the 1 st Follow-Up Audit.
Board Date: July 25, 2006 Page A4 of 18 For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
MATERIAL FINDING:
MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD
Department and Description
Board Date: July 25, 2006
None issued during June 2006.
Comments
For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
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MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD NON-MATERIAL FINDINGS
Department and Description Comments S COPE : Audit of NSF check notification process to determine if the County 1. DEPT: Treasurer Tax-Collector, departments/agencies receive timely notification, and if processes are in place to prevent Auditor-Controller, HCA, Clerk- the further acceptance of subsequent NSF checks from the same individuals. We also Recorder, IWMD participated in meetings for enhancing the NSF check notification process. C ONCLUSION : No material weaknesses or significant issues were noted. Some time lags TITLE: Audit of the County’s existed in the process from when the Bank first identifies a “returned item, such as an Non-Sufficient Fund (NSF) Check NSF check, to when department/agency cash receipting locations are notified. These lags Notification Process resulted from manual processing and sending documents via the U.S. Mail system. Each department/agency reviewed had a unique process in place for preventing acceptance of additional NSF checks depending on the nature of the payment and ability to pursue Audit No.: 2576 collections. The enhancements to the County’s notification process are expected to decrease the notification time lag by 4-5 working days . ISSUED: June 29, 2006 B ACKGROUND : The County receives approximately 500 returned checks per month. During the months of December 2004 and April 2005 (months when property tax payments are due), the County received approximately $3 million in total bank returned items, which mostly consisted of NSF checks. Effective June 26, 2006, the County implemented a more streamlined and automated NSF check notification process. T YPE OF R ECOMMENDATIONS : Our audit report did not contain formal recommendations. Instead, suggested recommendations were provided in a report issued to all Department/Agency Directors. Recommendations included ensuring dept./agency satellite locations are immediately notified of NSF checks; performing supervisory reviews of NSF check information; reviewing current policies and procedures for alignment with overall business objectives; providing training to cashiering staff, and incorporating the new returned item notification process into existing dept./agency procedures. Page A6 of 18 For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
Board Date: July 25, 2006
MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD Department and Description Comments 2. DEPT: Social Services Agency S COPE : Audit of controls and processes over accounts receivable and collections to determine if invoices and claims are recorded accurately, completely and timely as accounts receivables; if accounts receivable are monitored using reconciliations and aging TITLE: Internal Control Review reports; and if collection efforts on delinquent accounts are performed in accordance with of Social Services Agency established procedures and statutory requirements, including the writing off of Accounts Receivable and uncollectible debts. Collection Process C ONCLUSION : No material weaknesses were identified. Controls and processes were in place to ensure complete and accurate recording of accounts receivable, and that collection Audit No. 2575 efforts are performed in accordance with established procedures. We identified four significant issues and three control findings resul ng in seven recommendations to ti improve the timeliness of establishing accounts receivable, the monitoring of accounts ISSUED: June 29, 2006 receivable through reconciliations and aging reports, ensuring proper authorization for writing off uncollectible debts, and reviewing the collections process to maximize efforts where collectibility is most likely. B ACKGROUND : Accounts receivables are established upon the expiration of public assistance benefits, or when it has been determined that an overpayment/overissuance of public assistance has occurred. SSA’s accounts receivable balance as of August 31, 2005 was approximately $19 million. SSA/Accounting/Collections is responsible for the collection of amounts due to the County. During the audit period, collections totaled $2,031,805. T YPE OF R ECOMMENDATIONS : Identify barriers that impact the timeliness of establishing accounts receivable; prepare aging reports to analyze delinquency patterns; reconcile accounts receivable records to VACS (computer system); ensure debt write-offs are authorized at appropriate management level; evaluate current processes concerning recoveries of debt to maximize collection efforts; evaluate other available options in the collection process. Page A7 of 18 For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
Board Date: July 25, 2006
MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD Department and Description Comments 3. DEPT: John Wayne Airport S COPE : At the request of JWA, we performed an audit to evaluate procedures, processes and internal controls related to the management of public works contracts. Our audit examined two types of public works contracts: Public Works contracts exceeding $75,000, TITLE: Audit of Public Works and Delivery Order contracts. We assessed JWA’s public works contract administration Contract Administration processes using a Business Process Maturity Model . C ONCLUSION : No material weaknesses or significant issues were identified. JWA’s Audit No. 2567 public works contract administration using the Business Process Maturity Model determined that the process for contracts over $75,000 is between Stage 3 Stabilized and Stage 4 Actively Managed. We assessed JWA’s contract administration for Delivery ISSUED: June 29, 2006 Order contracts at slightly under Stage 3 Stabilized . We identified 26 control findings to enhance controls and processes. By implementing the recommendations, JWA can achieve a hi her level of rocess maturit in ublic works contract administration. B ACKGROUND : As of July 27, 2005, there were ten active public works contracts over $75,000 with contracts ranging individually from $558,000 to $5,997,500 . A Delivery Order contract is an annual public works contract. The contract amount is not fixed, but there is a minimum of fifty thousand dollars ($50,000) and a maximum of one million dollars ($1,000,000). T YPE OF R ECOMMENDATIONS : Recommended process and controls include updating policies and procedures; establishing criteria for evaluating contractor bids; reconciling project financial reports; performing field inspections and supervisory reviews of inspection reports; documenting deviations to project plans and specifications; reviewing change orders; ensuring accuracy of contractor pay requests, and finalizing procedures for Delivery Order contract administration.
Board Date: July 25, 2006
For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
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MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD Department and Description Comments 4. DEPT: Dana Point Harbor S COPE : Limited review of lease revenue to determine whether the records of Aventura Department Sailing Association (Aventura), a sublease of T.B.W. Company dba Dana West Marina (TBW), adequately supported gross receipts remitted to the County. TITLE: Limited Review of Lease C ONCLUSION : We found that Aventura has retained sufficient documentation to Revenue for Aventura Sailing adequately support monthly gross receipts remitted to the County. No material weaknesses Association or significant issues were identified. However, we did identify 4 control findings related to compliance with the lease agreement or improvements to internal controls. Audit No. 2564 B ACKGROUND : The County of Orange entered into a 30-year lease agreement (Agreement) with T.B.W. Company dba Dana West Marina (TBW), dated October 21, 1975, for the operation of the Dana Point West Marina and other boat-related services ISSUED: June 7, 2006 located at Dana Point Harbor. TBW subsequently entered into a sublease with Aventura, dated June 5, 1996, for the operation of a sailing club. In 2004, Aventura generated over $662,000 in gross receipts and the County received approximately $36,000 in rent payments. The Lease Agreement with TBW expired October 31, 2005. The County has entered into a management agreement with TBW for the continued operation of the West Marina commencing on November 1, 2005. Effective June 1, 2005, the County of Orange entered into a separate lease agreement directly with Aventura. The new agreement establishes a minimum annual rent plus a percentage rent of 7.5% of gross receipts in excess of $750,000 per year. T YPE OF R ECOMMENDATIONS : Lease compliance regarding the use of cash registers and pre-numbered source documentation to record sales, and reporting of gift certificates and deposits.
Board Date: July 25, 2006
For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
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MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD Department and Description Comments 5. DEPT: Board of Supervisors S COPE : The monthly CAAT Routines are automated queries applied to large amounts of electronic data searching for specified characteristics. We currently perform 5 CAATs TITLE: Monthly Report on routines utilizing selected payroll and vendor data. Depending on the nature of the CAAT, Computer-Assisted Audit we perform them monthly, annually, or as necessary. Techniques (CAAT) for the Month of May 2006 C ONCLUSION : • Duplicate Payments to Vendors: 1 duplicate payment for $7,680 was identified in the Audit No. 2518-Q May 2006 data and is being pursued by the A-C. We perform this analysis monthly to identify duplicate payments made to vendors. We analyzed 16,968 invoices paid in May ISSUED: June 26, 2006 2006 amounting to $362,804,279. • Deleted Vendors: No findings. B ACKGROUND : The CAATs differ from our traditional audits in that the CAATs can query 100% of a data universe whereas the traditional audits typically test but a sample of transactions from the population. The resulting matches identified by the CAATs are subjected to further review and analysis by the Internal Audit Department. We then forward any resulting findings to the A-C, HR, or CEO/Purchasing for their review and concurrence, and subsequent correction/recovery. We also work with these departments to identify internal control enhancements with the purpose of preventing future occurrences of the type of findings identified by the CAATs. T YPE OF R ECOMMENDATIONS : No recommendations given.
Board Date: July 25, 2006
For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
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MONTHLY SUMMARY JUNE 2006 Status Report to the Board of Supervisors by IAD Department and Description Comments 6. DEPT: Health Care Agency S COPE : 1 st Follow-Up Audit of HCA’s contract administration and cash disbursements to determine the implementation status of recommendations made in our original aud eport it r dated October 20, 2005. In that audit, we identified 1 significant issue and 4 control TITLE: Follow Up Audit of findings resulting in 8 recommendations. Internal Control Review of Contract Administration and Cash C ONCLUSION : 5 recommendations were full im lemented 2 were artiall im lemented Disbursements (Original Audit and 1 was in rocess of im lementation. HCA is taking corrective action to address the 2530) remainin recommendations. B ACKGROUND : The original audit assessed controls and processes over cash Audit No. 2532 disbursements made to human services contractors and the fiscal monitoring process for validating contractor expenditures. HCA had approximately 414 human services contracts with a budget totaling approximately $180 million . HCA/Contract ISSUED: June 12, 2006 Development & Management Division develops, solicits, negotiates, and administers contracts with external providers of alcohol, drug abuse, mental health, public health, and medical services; analyze contractor invoices; and authorize payments for disbursement by the Auditor-Controller. HCA/Contracts perform on-site reviews of contractors, and for some contracts, they use external CPA firms to perform fiscal monitoring. T YPE OF R ECOMMENDATIONS : Perform timely Annual Site Visits and Fiscal/Administrative Reviews; improve documentation of site visits and fiscal reviews; ensure timely adjustments are made when contractor actual costs are less than the monthly contract provisional payment amount; strengthen controls to ensure timely contractor payments; update policies and procedures based upon current practices.
Board Date: July 25, 2006
For a copy of the complete audit report that contains the audit objective, scope, findings, recommendations, and management’s response, contact the Internal Audit Department’s website at http://www.ocgov.com/audit/
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