SAGINAW COUNTY DHS TABLE OF CONTENTS INTRODUCTION 1 SCOPE 1 EXCUTIVE SUMARY 1 FINDINGS AND RECOMMENDATIONS Cash Receipts County Petty Cash Reconciliation 2 Cash Disbursements Proper Documentation for Payments General Ledger Cash Balance on the DHS-206A Report 3 Modified Accrual Basis Balance Sheet Accounts Receivable Due from State 3 Employment Support Services Missing Documentation for Vehicle Purchases and Repairs 4 Vehicle Repair in Excess of Cap 4 Coordination with Michigan Works Agency 5 Client Processing Assignment of Cases to FIS/Jet and ES Specialists 5 CIMS/ASSIST CIMS Security Agreements 6 MA-010 Reconciliations Performed by FIM’s with FIS Status 7 Case Openings/Reopenings/Warrant Rewrites 7 Incompatible ASSIST Job Types 8 Payroll and Timekeeping Reconciliation of HR-332A (B) Turnaround Report 8 Payroll Certification 9 Procurement Card Sales Tax Charged 9 INTRODUCTION The Office of Internal Audit performed an audit of Saginaw County DHS for the period November 6, 2006 through January 14, 2008. The objectives of our audit were to determine if internal controls in place at the local office provide reasonable assurance that departmental assets are safeguarded, transactions are properly recorded on a timely basis, and policies and procedures of the ...
SAGINAW COUNTY DHS TABLE OF CONTENTS INTRODUCTION SCOPE EXECUTIVE SUMMARY FINDINGS AND RECOMMENDATIONS Cash ReceiptsCounty Petty Cash Reconciliation Cash Disbursements Proper Documentation for Payments General Ledger Cash Balance on the DHS206A Report Modified Accrual Basis Balance Sheet Accounts Receivable Due from State Employment Support Services Missing Documentation for Vehicle Purchases and Repairs Vehicle Repair in Excess of Cap Coordination with Michigan Works Agency Client Processing Assignment of Cases to FIS/Jet and ES Specialists CIMS/ASSIST CIMS Security Agreements MA010 Reconciliations Performed by FIM’s with FIS Status Case Openings/Reopenings/Warrant Rewrites
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Incompatible ASSIST Job Types Payroll and Timekeeping Reconciliation of HR332A (B) Turnaround Report Payroll Certification Procurement Card Sales Tax Charged
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INTRODUCTION
The Office of Internal Audit performed an audit of Saginaw County DHS for the period
November 6, 2006 through January 14, 2008. The objectives of our audit were to determine
if internal controls in place at the local office provide reasonable assurance that departmental
assets are safeguarded, transactions are properly recorded on a timely basis, and policies and
procedures of the Department of Human Services (DHS) are being followed. Saginaw
County DHS had 232 full time equated positions (FTE's) at the time of our review. Saginaw
County DHS provided assistance to an average 34,940 recipients per month during FY 2007,
with total assistance payments of $58,456,701 during that year.
SCOPE
Our audit was performed in accordance with Standards for the Professional Practice of
Internal Auditing issued by the Institute of Internal Auditors. We obtained descriptions of
significant systems operating at Saginaw County DHS, documented those systems, and
evaluated controls in each system. We tested the systems for compliance, where feasible.
Our audit included the following:
Cash Receipts
General Ledger
Sheet Safe and Controlled Documents
Direct Support Services
CIMS/ASSIST/LASR
Procurement Card
EXECUTIVE SUMMARY
Cash Disbursements
Modified Accrual Balance
State Emergency Relief
Client Processing
Payroll Review
Based on our audit, we conclude that the Saginaw County DHS internal controls need
improvement in order to provide management with reasonable assurance that assets are
safeguarded and transactions are executed in accordance with management’s authorization.
We found controls were adequate in the areas of Safe and Controlled Documents and General
Ledger. However, we found instances of noncompliance with DHS policies and procedures
and weaknesses in internal controls which are detailed below.
LOCAL OFFICE RESPONSE
The management of Saginaw County DHS has reviewed all findings and recommendations
included in this report. They indicated in a memorandum dated February 13, 2008 that they
are in general agreement with the report.
FINDINGS AND RECOMMENDATIONS
Cash Receipts
County Petty Cash Reconciliation
1.
Saginaw County DHS did not reconcile the county petty cash fund since April 2006. A
monthly reconciliation of the petty cash fund is recommended but a quarterly
reconciliation is required per accounting manual item ACM 4025, by someone other
than the custodian of the funds or the authorized signer.
WE RECOMMEND that Saginaw County DHS perform quarterly reconciliations of the
county petty cash fund by someone other than the custodian or the authorized signer.
Note: Corrective action taken while the auditor was on site. The reconciliation was
completed for the month of December 2007.
Cash Disbursements
Proper Documentation for Payments
2. Saginaw County DHS did not have original invoices to support payments made and did
not stamp all supporting documents “PAID” when payment was made. Two out of 115
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payment documents tested did not have original invoices and one payment was not
stamped ”PAID”, and initialed and dated by the fiscal clerk as required by Accounting
Manual Item 410. Having original invoices and canceling the payment documents helps
reduce the risk of duplicate payments being made.
WE RECOMMEND that Saginaw County DHS have original invoices to support
payments made and stamp all payment documents as “PAID”.
Note: Corrective action was taken while the auditor was on site. The fiscal clerk
stamped all documents ”PAID”.
General Ledger
Cash Balance on the DHS206A Report
3.
The beginning cash balance on the Saginaw County DHS Monthly Financial Report
(DHS206A) for the month of November 2007 did not reconcile to the ending cash
balance on the October 2007 DHS206A report as required by Accounting Manual Item
502. Posting all entries to LASR and printing the DHS206A at the end of the month
will ensure the balances are correct. We found that printing the DHS206A report prior
to all the journal vouchers being posted created the cash balance difference.
WE RECOMMEND that Saginaw County DHS perform monthly reconciliations of the
ending and beginning cash balances.
Note: Corrective Action Taken while auditor was on site
Modified Accrual Basis Balance Sheet
Accounts Receivable Due from State
4.
Saginaw County DHS did not reconcile between the Accounts Receivable Due from
State: State Emergency Relief (078011); Emergency Services (078017); and Other
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Administrative (State) (078036) pending file accounts with the total for those accounts
on the Modified Accrual Basis Balance Sheet. Accounting Manual Item 402.3 requires
that a reconciliation of these accounts be performed each month. Reconciling these
accounts monthly will ensure that State reimbursements received are properly
documented and recorded.
WE RECOMMEND that Saginaw County DHS reconcile the Accounts Receivable
Pending File to the Modified Accrual Basis Balance Sheet figure each month and
resolve any discrepancies.
Note: Corrective action has been taken to resolve the differences.
Employment Support Services
Missing Documentation for Vehicle Purchases and Repairs
5.
Saginaw County DHS did not have all the necessary case documentation for a vehicle
repair or purchase on file. In 4 of the 14 cases we reviewed, the Support Service
Determination and/or Education Plan Approval (DHS4749) form was not completed.
The Program Eligibility Manual (PEM) Item 232 indicates the DHS4749 is necessary
to document the reason for the service being requested and to document approval of the
request.
WE RECOMMEND that Saginaw County DHS complete all necessary forms and
invoices to document vehicle purchases and repairs.
Vehicle Repair in Excess of Cap
6.Saginaw County DHS did not ensure vehicle repair payments did not exceed $900 for a
12 month period and that original invoices are used to support payment requests.
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During our review we noted one vehicle repair payment for $1,023. The Program
Eligibility Manual Item 232 states vehicle repairs are limited to $900 in a 12 month
period.
In addition, one case reviewed did not have an invoice in the case record or in the fiscal
office to document a vehicle repair. Instead, an estimate for the repair was submitted to
the fiscal office to support the payment.
WE RECOMMEND that Saginaw County DHS ensure vehicle repair payments do not
exceed $900 for a 12 month period and that original invoices are used support payment
requests.
Coordination with Michigan Works Agency
7.
Saginaw County DHS did not coordinate with the local Michigan Works Agency
(MWA) to ensure that both DHS and the MWA were not paying for the same item or
service for clients who applied for them. Coordination is necessary to ensure that
duplicate payments are not made between agencies. We found 7 out of 14 (50%) cases
reviewed did not contain the MIS system form that is used for coordinating payments
between DHS and MWA.
WE RECOMMEND that Saginaw County DHS coordinate with the local MWA to
ensure that the two agencies are not providing duplicate services for clients.
Client Processing
Assignment of Cases to FIS/JET and ES Specialists
8.
The Saginaw County DHS did not use the ASSIST system to assign new customers to
Family Independence Specialists, Job Employment and Training, and Eligibility
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Specialists. Rather, the local office is assigning cases based on a rotation log instead of
using ASSIST to assign the case to a worker. ASSIST User Manual Item 300 details the
procedures to be used for case assignment using ASSIST. Use of the manual worker
rotation log instead of the case assignment function in ASSIST is an inefficient use of
DHS resources.
WE RECOMMEND that Saginaw County DHS use the ASSIST system to assign the
case worker.
CIMS/ASSIST
CIMS Security Agreements
9.
Saginaw County DHS did not have accurate, uptodate CIMS Security Agreements
(DHS3974) on file for 37 out of 231 employees who access the Client Information
Management System (CIMS), as required by LLetter 97063. Thirtysix of the
employees required a new agreement due to a name or CIMS status change and one
employee had a status code on the DHS3974 that did not agree with the status code
listed on the Operator Identification Report (PF011). An accurately completed Security
Agreement is necessary to document that the employee understands the responsibilities
associated with their CIMS access and that the supervisor approves the level of CIMS
access.
WE RECOMMEND that Saginaw County DHS ensure that all employees who have
access to CIMS have an accurate, uptodate Security Agreement on file.
Note: Corrective action was taken
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MA010 Reconciliations Performed by FIM’s with FIS Status
10. Ten Family Independence Managers (FIM’s) at Saginaw County DHS performed the
reconciliation of the Transaction Control Listing (MA010) for transactions performed
by their workers, although they had Family Independence Specialist (FIS) status on the
Client Management Information System (CIMS). FIS status would allow the FIM’s to
process transactions on CIMS with no independent review of the transactions.
In addition, the FIM’s are reconciling the ampersand cases to the case records without
documenting the reconciliation by signing and dating the report and by appropriate
written notations next to each reconciled transaction.
WE RECOMMEND that Saginaw County DHS either change the FIM’s status on CIMS
to inquiry only or have an independent person reconcile all transactions processed by the
FIM’s on CIMS.
WE ALSO RECOMMEND that Saginaw County DHS properly document the
ampersand case reconciliation on the MA010.
Case openings/reopenings/warrant rewrites
11. Saginaw County DHS did not reconcile a sample of case openings/reopenings and
warrant rewrites on the Transaction Control Listing (MA010) to the case file
documentation as required by the Primary Internal Control Criteria for Local Offices.
Instead, only the ampersand cases are being reconciled to the case documentation by the
FIM’s. Reconciling the case openings/reopenings and warrant rewrites against the case
will substantiate the reason for the transaction.
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WE RECOMMEND that Saginaw
County DHS reconcile
a sample of case
openings/reopenings and warrant rewrite transactions to comply with the Primary
Internal Control Criteria.
Incompatible ASSIST Job Types
12. Saginaw County DHS did not properly separate the duties of case registration and case
openings and maintenance. We noted two employees had ASSIST job types that were
incompatible. One office supervisor and FIM had job types 360 (Registration) and 240,
270, 280 (Case Opening and maintenance). These job types allow these employees to
register cases and open them on ASSIST and perform file maintenance on CIMS. The
Primary Internal Control Criteria for Local/District Office Operations state that no one
person shall have both the 240/270/280 or 360/370 job types.
WE RECOMMEND that Saginaw County DHS either change or customize the job types
of these employees so that they are not able to register and open cases.
Payroll and Timekeeping
Reconciliation of HR332A (B) Turnaround Report
13. Saginaw County DHS did not reconcile the turnaround HR332A to the original HR
332A report a week after payroll was run. The Primary Internal Control Criteria for
Local/District Office Operations recommends that the local office reconcile the
turnaround report to verify that the actual time reported agrees with the time that was
originally submitted.
WE RECOMMEND that the Saginaw County DHS reconcile the turnaround HR332A
report to the original HR332A report.
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Payroll Certification 14. Saginaw County DHS did not establish adequate control over the payroll certification and review process. The time keepers at Saginaw County DHS certified the payroll on the Data Collection Distribution System (DCDS) before the payroll was reviewed and approved by management responsible for certifying the payroll. The Primary Internal Control Criteria for Local/District Office Operations requires that the payroll be certified on DCDS after the authorized certifier reviews and approves the Time and Attendance Summary Report (HR332A). WE RECOMMEND Saginaw County DHS certify the payroll on the Data Collection Distribution System (DCDS) after the authorized certifier has reviewed and approved the payroll.
Procurement Card
Sales Tax Charged
15.Saginaw County DHS did not always follow established policy in making purchases
with the procurement card. Our review identified 1 out of 12 (8%) procurement card
transactions where sales tax was paid on office supplies and food items. The
Procurement Card Program Manual states that the State of Michigan is sales tax exempt
and vendors are to be provided the tax exempt number.
WE RECOMMEND Saginaw County DHS comply with the Procurement Card Program