BOARD OF COUNTY COMMISSIONERS

AUDIT OF IMPREST FUNDS

CLERK OF THE CIRCUIT COURT

FINANCE DIVISION

REPORT NO. 98-11

DATED: July 23, 1998

The Clerk of the Circuit Court

Pinellas County, Florida

The Internal Audit Division has conducted a review of imprest petty cash and change funds.

PURPOSE

The purpose of this audit was to 1) identify the physical existence and location of petty cash and change funds, 2) determine whether petty cash and change funds are authorized, 3) ascertain whether imprest funds are maintained in accordance with policies and procedures as prescribed by the Clerk of the Circuit Court and the Board of County Commissioners (BCC).

SCOPE

Our review included performing surprise cash counts of petty cash and change funds at all locations in existence as of September 30, 1997. We asked management to identify all petty cash and change funds under their administration. We observed the physical security and record maintenance of the petty cash and change funds. We confirmed that the petty cash and change funds were properly authorized.

BACKGROUND

Petty cash funds are maintained by various County offices and agencies to provide a convenient and economical method to make small purchases. Change funds are maintained by various County offices and agencies to provide change as a result of various transactions. These funds are maintained on an imprest basis. Imprest funds are maintained at a specific monetary level and expenditures are reimbursed.

Maintenance of these imprest funds is the responsibility of the custodians. All petty cash disbursements are to be for official county purchases. Notification of a custodian change, creation of a new fund, or a change in the cash amount are to be sent to the Chief Deputy Director of the Finance Division, Clerk of the Circuit Court (Finance Division). Requests for the creation of an imprest fund needs to be approved. If the fund is less than $200.00, the Chief Deputy Director of the Finance Division has been delegated the authority by the BCC to approve its creation. Establishment of petty cash funds exceeding $200.00 need to be approved by the BCC. Increases to existing funds which do not cause the fund to exceed $200.00 may be approved by the Chief Deputy Director of the Finance Division. Increases to existing funds which cause the fund to exceed $200.00 require approval by the BCC.

As of September 30, 1997, there were 81 petty cash funds totaling $22,550 and 27 change funds totaling $23,105 listed on the subsidiary ledger.

INTRODUCTION

The results of our review are shown below. They begin with an overall evaluation, followed by a detailed discussion of the findings and recommendations with management's responses.

OVERALL EVALUATION

The Internal Audit Division has conducted a review of all imprest change and petty cash funds maintained by agencies and departments of the County. We have concluded that the policies and procedures used to guide the activities provide adequate control. Our review disclosed certain matters which, if addressed, would result in improved operations.

FINDINGS, RECOMMENDATIONS and RESPONSES

FINDING 1 - Policies and procedures are not available for change funds.

The Finance Division has a policy and procedure manual covering the accounting system for the Board of County Commissioners. The manual does not have a policy for change funds. The Finance Division has a policy entitled "Handling of Petty Cash" that they somewhat apply to change funds. The manual should provide guidance for establishing, reconciling, increasing or closing a change fund, handling changes in custodians and locations, and of course recording cash overages and shortages. A policy would help with resolving some of the findings presented later in this report.

FINDING 2 - Policies and procedures do not require that petty cash funds be periodically reconciled.

The Finance Division's "Handling of Petty Cash" policy does not require that petty cash funds be periodically reconciled to their authorized amounts. We found that 31 percent of the fund custodians surveyed indicated that their imprest fund was not reconciled by anyone other than themselves. To reduce the possibility of fraud and error, procedures should be established to ensure that reconciliations are conducted and that the reconciliations are periodically checked by another authorized individual.

FINDING 3 - Descriptive information contained in the subsidiary ledger is not reliable.

We found that 43 percent or 46 of the 106 records reviewed required that the information regarding division name, department name, location of fund, primary or alternate custodian needed to be updated. Two funds listed on the subsidiary ledger were not available for inspection.

FINDING 4 - Change and petty cash funds are not being maintained at their authorized amounts.

We found that 39 percent or 42 of the 108 cash funds reconciled to the subsidiary ledger had variances when compared to their on-site cash count results. Variances totaled $496.46. Overages should be deposited to the appropriate revenue account. Shortages not covered by insurance should be charged to the appropriate fund after approval of the appointing authority. Funds no longer in existence should be deleted from the subsidiary ledger.

FINDING 5 - The fund amounts listed on the subsidiary ledger do not agree with the results of the confirmations.

The Administrative Office of the Courts claims to have closed the $100.00 Family Law Division petty cash fund. This fund is listed as being in the possession of the named custodians on the Finance Division's subsidiary ledger.

The Court and Operational Services Division of the Clerk of the Court asserts that the change fund located at Probate Court Records has a balance of $400.00. The Finance Division's subsidiary ledger states that $450.00 is the appropriate change fund balance.

FINDING 6 - Two change funds were increased without proper approval.

Nine petty cash or change fund account balances were identified during the 1996-97 fiscal year as being increased. Increases to existing funds which do not cause the fund to exceed $200.00 may be authorized by the Chief Deputy Director of the Finance Division. Two funds, both at the Parks Department, neither of which exceeded $200.00, were increased without receiving proper authorization.

Audit performed by:

Audit supervised by:
Approved: