CLERK OF THE CIRCUIT COURT
OPERATIONAL SERVICES DIVISION
PRINTING AND MAIL SERVICES DEPARTMENT
REPORT NO. 2000-01
DATED: MARCH 30, 2000
The Clerk of the Circuit Court
Pinellas County, Florida
The Internal Audit Division has completed an audit of the Printing and Mail Services Department of the Operational Services Division.
The purpose of this audit was to: 1) determine the degree of compliance with management's prescribed policies and procedures, and applicable laws; 2) evaluate the completeness and effectiveness of those procedures; and 3) follow up on prior audit recommendations.
We examined the Operational Services Division's Mail and Printing Services. We reviewed billings, collections, work order processing, equipment maintenance, inventory controls, mail and courier services, and cost allocation report. In addition, we examined controls over Local Area Network (LAN) and Visual Basic software application. We reviewed compliance with management's written policies and procedures. We flowcharted document and information flow of Printing Services' work order process. We performed such other auditing procedures as we considered necessary in the circumstances. Our audit period covered July 1, 1999, through September 30, 1999.
The Printing and Mail Services are functions of the Operational Services Division. The Mail Services department provides postal and courier services for Pinellas County and court-related agencies. The Printing Services department provides professional printing, computerized typesetting, desktop publishing, quick-copy printing and various other binding services. In addition, the depot area is responsible for depot equipment and filling office supplies requests for all Clerk's departments. Equipment repair and maintenance contracts are also monitored through the Printing Services department.
The results of our review are shown below. They begin with an overall evaluation, followed by detailed discussions of the findings and recommendations with management's response.
We concluded that policies and procedures established by Printing and Mail Services' operations were adequate and generally complied with and provided an adequate internal control structure. The department is complying with applicable laws and regulations. However, internal controls could be strengthened over Mail Services' courier-transported cash, petty cash and postage stamp inventory. In addition, controls over Mail and Printing Services' monthly billings, work order processing, printing supplies inventory, equipment depot inventory, and LAN security need improvement. Our review disclosed the following items that should be brought to management's attention.
FINDINGS, RECOMMENDATIONS, AND RESPONSES
FINDING 1 - Evidence of preventative maintenance was not documented on daily logs.
Preventative maintenance is important in obtaining routinely high-level performance from the various equipment used by Printing Services. All equipment that contains moving parts should be kept free from paper dust, spray powder, dirt, and miscellaneous debris. Periodic maintenance is necessary in maintaining the maximum production output from printing equipment. The Printing Services department has a preventative maintenance schedule for Type A and Type B equipment with monthly and quarterly intervals. We reviewed daily logs for Type A equipment (#9275, #9869, and #9975) for evidence of the performance of preventative maintenance. Daily logs reviewed for July, August, and September, 1999 did not have evidence of preventative maintenance being performed. Preventative maintenance shall be performed at least once per month on the department's Type A equipment, which generates high volumes of output. Management was not examining daily logs for compliance with the preventative maintenance policy.
FINDING 2 - Controls over the printing supplies inventory need improvement.
Good internal controls require that perpetual inventory records agree with the physical count. We observed several printing supply items were denoted as having negative quantities on hand. Perpetual inventory variances were not documented and adjustments to agree the physical count were not made on a periodic basis. Management indicated that in some instances, negative balances represent item count of current year's usage: copy impressions, charge-back on preprinted forms, printing plate usage, binder usage, etc. Other items with negative balances indicated that supplies inventory was carried as negative quantities on hand. Procedures require a physical count of printing supplies be performed monthly. The production supervisor indicated that inventory variances were not adjusted because work orders in process were deducted from the perpetual inventory when the order was received. The deduction of work orders in advance of the job completion caused the perpetual inventory not to agree with the physical count. Therefore, negative balances maintained in the perpetual inventory records permitted management to accept unreasonable inventory balances without follow-up. The prior audit indicated that monthly supplies inventory was not being performed. Not being able to compare physical counts to perpetual inventory records is equivalent to not performing the monthly inventory.
FINDING 3 - Controls over work order processing need improvement.
The Printing Services department serves several entities throughout County government. A work order processing system was utilized to process requested orders. Work order numbers were assigned as the orders were received. In addition, the order requests were entered into the perpetual inventory system at that point. Good internal controls require timely, complete, and accurate data processing procedures. We noted the following for work orders processed in July and August, 1999:
3. Work orders entered into the system did not always appear on the report sent to Clerk's Finance Division for G/L postings. We noted a total of $176.80 that was not billed on the July and August reports prepared for G/L postings.
In the prior audit, we noted that the Senior Office Specialist was not familiar with cost codes. Printing Services just recently hired a new Senior Office Specialist; therefore, some coding errors were not detected early in the process. In addition, billing reports were not reconciled before the Monthly Billing Summary Report was sent to Clerk's Finance Division for posting collections; thus, causing undetected billing errors.
FINDING 4 - Controls over assets stored in the equipment depot need improvement.
The Printing Services department has an equipment depot section where assets are examined before they are moved to another cost center, repaired, or sent to surplus. Perpetual inventory records should be properly maintained to safeguard assets stored in the equipment depot. The custodian was not keeping reliable records of assets stored in the depot area. In addition, assets missing or unaccounted for were not reported to law enforcement officials as required by County purchasing policy. We reviewed controls over assets stored in the equipment depot and noted the following:
Perpetual inventory records compared to other asset records:
1. We compared three asset inventory systems (Depot's perpetual inventory records (FOCUS), Pinellas County (PC) Purchasing Tangible Asset system, and Clerk's Administration) against each depot item. We noted that the depot's records (FOCUS) vs. PC Purchasing tangible asset records were 37 vs. 7 that did not agree; and depot's records (FOCUS) vs. Clerk's Administration records were 40 vs. 10 that did not agree.
Perpetual inventory records (FOCUS) compared to depot assets:
2. Three of seven assets selected from the depot's perpetual inventory record (FOCUS ) were not located. In addition, five of the seven perpetual inventory records tested did not reconcile to other record keeping systems for the same assets.
Depot assets compared to all asset records:
3. Ten of 13 depot assets selected from the depot storage vault did not agree with all records of depot inventory. Note that only 2 of 13 depot assets were missing from the depot's perpetual inventory record.
4. We noted 13 of 21 pieces of equipment stored outside the depot vault that did not agree with all records of depot inventory. Note that 8 of the 21 depot assets were missing from the depot's perpetual inventory record. Also, these depot assets were not stored in a secured area.
Since the custodian is responsible for keeping records of equipment under the Depot's control, the records maintained should be accurate and complete. A physical inventory should be reconciled to the (FOCUS) perpetual inventory record maintained by the equipment depot custodian.
FINDING 5 - Courier logs were not always audited quarterly.
Clerk's procedures require quarterly audits of courier logs. The prior audit indicated that reviews of courier logs were not always in compliance with policy. As of September 30, 1999, we noted that the 3rd quarter courier logs due for audit had not been performed. The Senior Office Specialist kept courier logs until requested by the Operational Services Division. The Operational Services Division's custodian had not requested courier logs for the 3rd quarter audit. We verified with Operational Services that this audit had not been performed.
FINDING 6 - Security over keys and cash equivalent items needs improvement.
Good internal controls require cash and cash equivalent items to be secured in locked areas at all times. In addition, access to those items should be restricted to designated employees. The cabinet used to store the petty cash, postage stamps, and courier-transported cash was not locked during business hours. In addition, we observed the box where keys were stored was also left opened. All employees had access to these items, because the supervisor did not restrict access, thus, security was weakened.
FINDING 7 - Monthly audits of postage inventory were not documented.
We established with management that postage stamp inventory should be audited each month. The postage stamp log did not evidence that monthly audits were performed. Monthly audits would allow the timely detection of errors. The log only indicated the "balance brought forward." Notation of "balance brought forward" is not the same as a physical count notation.
FINDING 8 - Controls over the issuance of postage stamps were not adequate.
Established procedures require requesting parties to complete a postage requisition for postage stamp orders. For the months of July and August, 1999, we noted ten postage orders were filled without a signed requisition form. Several postage stamp orders were taken by phone without follow-up requisition forms; therefore, documented authorization for postage stamps orders was not obtained. In addition, there were 19 postage issuance forms that were not signed by the Mail Services custodian. The custodian was utilizing two forms to complete each postage stamp order, therefore, making the process inefficient.
FINDING 9 - Source documentation for July's postage charges was lost.
Charges from metered postage were summarized on paper tapes and entered into the billing application each day. At the end of the month a report was generated of billing charges. All public records should be retained throughout the assigned retention periods. Source documentation of metered postage was missing for July 1 through July 15, 1999. These records were misplaced with management's attempts to resolve July's billing problems.
FINDING 10 - Computer-generated billing reports were not always accurate.
Good internal controls require balancing procedures be established to ensure accuracy of computer-generated reports. We reconciled billing reports generated from the postage software application in July, 1999. We noted two department billings, #47 and #73, that were dropped from Clerk's Finance Division's "postage distribution report". The items noted consisted of 140 items totaling $49.72. The computer programmer indicated that the error was caused by a computer logic error which excluded the two department numbers noted. In addition, the Office Specialist was not reconciling reports prior to submitting billing invoices.
FINDING 11 - LAN security controls need improvement.
In our review we used certain standards for review of LAN security controls:
3) The LAN Administrator maintained a list of software; but it did not reflect all software loaded on the workstations reviewed. In addition, the list was not completed as designed; spaces provided for persons loading and removing software was not completed properly. This form should be completed as designed to provide an adequate history of software loaded and removed from workstations.
4) We reviewed the Z and C directories for software loaded on the workstations; several items listed could not be traced to software and licenses. Several items could not be identified as software or data files by the LAN Administrator.
Representatives from the Printing Services department were not attending the monthly LAN Administrator meetings regularly. Therefore, the LAN Administrator was not receiving sufficient training to carry out all the responsibilities of the job.
1. Internal procedures will be implemented to ensure use of the inoculant program to scan all accepted disks as a precautionary measure against a system virus.
2. A request will be made to MIS to password protect the LAN server as recommended.
3. A request will be made to the have the systems inspected and documentation rectified.
4. All operating systems and software programs are accounted for either by license or purchase order as required.
Audit performed by:
Billye M. Wilcox, Sr., CPA
Chief Deputy Director
Internal Auditor Division
Karleen F. De Blaker
Clerk of the Circuit Court
Ex Officio County Auditor
NUMBER OF TIMES THIS PAGE HAS BEEN VISITED :