Pdf internal audit report cuyahoga county clerk of courts

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Internal Audit Report

Cuyahoga County, Ohio Department of Internal Auditing

Cuyahoga County Clerk of Courts January 1, 2011 ? December 31, 2012

Director of Internal Auditing: Valerie J. Harry, CPA

CUYAHOGA COUNTY DEPARTMENT OF INTERNAL AUDITING

INTERNAL AUDIT REPORT Cuyahoga County Clerk of Courts

Cover Letter

August 12, 2013

To: Ms. Andrea Rocco, Clerk of Courts and the current management of the Clerk of Courts:

The Department of Internal Auditing (DIA) has conducted an audit over the financial operations and general accounting of the Cuyahoga County Clerk of Courts1 (Clerk2) for the period of January 1, 2011 through December 31, 20123. The audit objectives were to determine whether controls in place are adequate to safeguard assets from abuse, errors, and loss; revenue transactions and department funds are properly supported, recorded and deposited in their entirety in a timely manner and in accordance with all governing laws and regulations; expenditures are properly approved, recorded and in accordance with all governing laws and regulations; the operations of the office are efficient and conducive to accomplish its mission; and that reporting information is timely accomplished, accurate and in accordance with all governing laws and regulations.

To accomplish our objectives, we focused on the operational controls of the Clerk, the major revenue and expenditure cycles as well as specific compliance mandates. Interviews with management and staff along with general walk-throughs of each revenue and expenditure cycle were conducted in order to document the controls in place. In addition, substantive testing methods included analytical procedures, tests of detail using sampling methods, as well as confirmation of transactions.

Our audit procedures disclosed many internal control weaknesses relating to the Clerk's organizational structure, revenue and expenditure cycles, asset safeguarding, recordkeeping, and reporting. Noncompliance with the Ohio Revised Code and Cuyahoga County Policies were also identified. This report provides the details of our findings.

We conducted this audit 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.

1 This Clerk of Courts internal audit report includes the criminal and civil divisions (which include microfilm, domestic relations, court of appeals, foreclosures, tort liability, consumer debt, and miscellaneous civil). Since auto title is no longer under the Clerk of Courts as of the date of this letter, we will issue a separate internal audit report over this agency at a later date. 2 For clarification, we will reference the Office of the Cuyahoga County Clerk of Courts as "Clerk" within this report; and we will reference the Clerk of Courts position as "Clerk of Courts" within this report. 3 We extended the audit period of reviewing various Proware system generated reports relating to the fines, fees and forfeiture revenue cycle to January 1, 2010 through December 31, 2012. All other testing areas remained as indicated from January 1, 2011 through December 31, 2012.

INTERNAL AUDIT REPORT Cuyahoga County Clerk of Courts Cover Letter Page 2 of 2

The Department of Internal Auditing would like to express our appreciation to the staff at the Clerk of Courts and interrelated departments that assisted throughout the process for their courtesy and cooperation during this audit. A draft report was provided to the Clerk of Courts and current Clerk of Court's management for comment and their responses are included.

Respectfully,

Valerie J. Harry, CPA

Valerie J. Harry, CPA Director of Internal Auditing

Cc: Audit Committee Matt Carroll, Chief of Staff Majeed G. Makhlouf, Law Director Cuyahoga County Council

Table of Contents

Description

Page

Background ..................................................................................................................................................1

Findings:

GENERAL INTERNAL CONTROL FINDINGS: Policy and Procedure Manual .........................................................................................................1 Automated Accounting System ......................................................................................................3 Communication and Reporting.......................................................................................................3 Business Hours................................................................................................................................5 Operational Efficiency.....................................................................................................................6 Computer Controls..........................................................................................................................7 Job Related Training........................................................................................................................7 Inventory ......................................................................................................................................... 8 Monitoring of Vehicle Usage ..........................................................................................................9 Information Technology ? Proware Reports...................................................................................9

GENERAL NON-COMPLIANCE FINDINGS: Safeguarding Personal Information ..............................................................................................11 Missing Records ............................................................................................................................12

FINDINGS RELATED TO INTERNAL CONTROLS OVER THE REVENUE CYCLE: Cash and Physical Security Controls .............................................................................................13 Voids .............................................................................................................................................16 Bank Reconciliations .....................................................................................................................17 Bond Forfeitures ...........................................................................................................................19

NON-COMPLIANCE FINDINGS OVER THE REVENUE CYCLE: Fines, Fees and Forfeitures Testing ..............................................................................................20 Deposit of Public Monies ..............................................................................................................22 Poverty Affidavits for Expunged Cases .........................................................................................23

FINDINGS RELATED TO INTERNAL CONTROLS OVER THE EXPENDITURE CYCLE: Monthly Disbursements................................................................................................................24 Posting of Vouchers ......................................................................................................................25 Disbursement of Checks ...............................................................................................................26 Authorizing and Reconciling Disbursements ................................................................................27 Chargeback Monitoring ................................................................................................................27 Furlough Leave..............................................................................................................................28 Employee Compensation ..............................................................................................................29 Attendance Records......................................................................................................................30

NON-COMPLIANCE FINDINGS OVER THE EXPENDITURE CYCLE: Witness Voucher Payments ..........................................................................................................30 Leave Approval..............................................................................................................................31

Table of Contents (Continued)

FINDINGS RELATED TO INTERNAL CONTROLS OVER REPORTING: Unapplied Deposits and Bonds .....................................................................................................32 Accounts Payable and Receivable.................................................................................................33

NON-COMPLIANCE FINDING RELATED TO REPORTING: Unclaimed Funds ..........................................................................................................................35

FINDINGS RELATED TO PLANNED AUDIT PROCEDURES NOT ABLE TO PERFORM: Judge Selection Process ................................................................................................................36 Bond Company Confirmations ......................................................................................................36

Management's Response...........................................................................................................................39

Cuyahoga County Clerk of Courts Page 1

Background

Mission Statement:

"The Clerk of Courts will perform all statutory duties relative to: the filing, preservation, retrieval and public dissemination of all applicable court documents and records pertaining to the Common Pleas Court's General and Domestic Relations Divisions and the Court of Appeals, Eighth Appellate District; collect, hold in trust and disburse monies paid therewith; in a secure, timely and cost effective manner." The General Division of the Clerk of Courts is further divided into Criminal and Civil Departments. All Clerk of Courts' divisions use Proware as their case management software.

The Department of Internal Audit (DIA) was contacted in early January 2013 by the then interim Clerk of Courts, Andrea Rocco, to discuss a potential audit of the criminal and civil divisions of the Cuyahoga County Clerk of Courts Office. Prior to Ms. Rocco being named interim Clerk of Court, the former Clerk of Courts, Gerald Fuerst, retired after 37 years in office. Ms. Rocco has since accepted the position of Clerk of Courts. Ms. Rocco expressed her interest at a meeting held on January 17, 2013, in having an internal audit conducted by the DIA. The scope and time frame of the audit were agreed upon and the DIA began the audit on January 30, 2013.

Our audit procedures disclosed many internal control weaknesses relating to the Clerk of Courts' organizational structure, revenue and expenditure cycles, asset safeguarding, and recordkeeping. Noncompliance with Cuyahoga County Policy and the Ohio Revised Code were also identified. This report provides the details of our findings. The most significant findings can be found on Page 13 ? Cash and Physical Security Controls, Page 16 ? Voids, Page 20 ? Fines, Fees and Forfeitures Testing, and Page 32 ? Unapplied Deposits and Bonds.

Findings

GENERAL INTERNAL CONTROL FINDINGS

Policy and Procedure Manual

Written policies and procedures ensure consistency in the operations of an agency. Existence of codes of practice and other regulations or guidance regarding acceptable practices, conflicts of interest, or expected standards of ethical and moral behavior, and their communication throughout the organization is an essential part of a policy and procedure manual. Furthermore, a policy and procedure manual assures consistency in day-to-day operations. Formalized procedures reinforce management's expectations for the agency.

The Clerk does not have a policy and procedure manual for either the criminal or civil divisions because it wasn't in their practice to develop such a system of controls and a standard level of guidance. They also do not have internal codes or other forms of guidance regarding acceptable practices, conflicts of interest, or ethical and moral behavior.

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