To View The Audit on Philadelphia Prison System FY 05 and 06

OFFICE OF THE
CONTROLLER
CITY OF PHILADELPHIA
PENNSYLVANIA
PHILADELPHIA
PRISON SYSTEM
AUDITOR’S REPORT
FISCAL YEARS
2006 and 2005
Alan Butkovitz
City Controller
INTRODUCTION
September 28, 2007
Leon A. King II, Esquire
Commissioner
Philadelphia Prison System
7901 State Road
Philadelphia, PA. 19136-3407
We have examined the financial affairs and operations of the Philadelphia Prison System
for fiscal years 2006 and 2005 pursuant to the requirements of Section 6-400 (c) and (d) of the
Philadelphia Home Rule Charter. A synopsis of the results of our work is provided in the
executive summary to the report.
We discussed our findings and recommendations with your staff at an exit conference and
included your written response to our comments as part of the report. Our recommendations
have been numbered to facilitate tracking and follow-up in subsequent years. We believe that, if
implemented by management, these recommendations will improve internal controls and the
effectiveness and efficiency of your department’s operations.
We would like to express our thanks to you and your staff for the courtesy and cooperation
displayed toward us during the conduct of our work.
Very truly yours,
ALAN BUTKOVITZ
City Controller
cc:
Honorable John F. Street, Mayor
Honorable Anna C. Verna, President
and Honorable Members of City Council
Members of the Mayor’s Cabinet
PHILADELPHIA PRISON SYSTEM
EXECUTIVE SUMMARY
Why The Controller’s Office Conducted the Examination
Pursuant to the requirements of Section 6-400 (c) and (d) of the Philadelphia Home Rule Charter, we examined the
financial affairs of the Philadelphia Prison System (PPS) as part of our audit of the City of Philadelphia’s (City)
basic financial statements. The focus of our examination was limited to determining if department management
had suitably designed and placed in operation internal controls and complied with any laws and regulations related
to its revenue and expenditure activity.
What The Controller’s Office Found
We noted that deficiencies continued to exist in the manner that PPS handles and accounts for revenues
generated from coin operated lockers located at its various prison facilities for the convenience of
visitors. Lockers have no counting devices that aid in verifying how much money should have been
collected and deposited; each facility retains the money collected, in some instances, without an adequate
accounting of the funds; and generally, each facility designates only one individual to collect the money,
instead of more appropriately two.
Other conditions requiring management’s attention at PPS include the following matters:
• With respect to a private maintenance vendor at the Curran-Fromhold and the Riverside Correction
Facilities, procedures for processing payments to the vendor, managing maintenance supplies, and
handling scrapped assets need to be modified. In some instances, the procedures have weaknesses
that place the PPS at high risk for incorrect payments to the vendor and/or for misappropriation of
City assets.
• PPS does not follow best-practice procedures that are considered appropriate for reducing the risk of
errors that can occur when the payroll is prepared. Specifically, there are no spot-checks of data
entry by reference to time clock cards or daily attendance sheets, and prior to distribution of
paychecks, no one scans them for unusual amounts.
• Annual employee performance evaluations are not always being prepared for PPS employees.
Failure to prepare evaluations could have negative effects for both management and employees.
PPS did take corrective action on a prior year finding involving bank deposits for its Custodial-Fund. As
we previously suggested, management employed use of a signature log to establish a chain of custody for
these deposits.
What The Controller’s Office Recommends
The Controller’s Office has developed a number of recommendations to address the findings. The
recommendations can be found in the body of the report.
CONTENTS
Page
INTRODUCTION
BACKGROUND
Overview .........................................................................................................................1
Prison Organization ...........................................................................................................1
Financial Resources ...........................................................................................................2
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS ..........................................................3
FINDINGS AND RECOMMENDATIONS
REPORTABLE CONDITIONS
Revenues from Coin-Operated Lockers Are Still Handled Inappropriately......................5
OTHER CONDITIONS REQUIRING MANAGEMENT’S ATTENTION
Improvements Needed For Better Accountability over Prison Maintenance Costs .......... 6
Key Procedures to Ensure Payroll Accuracy Are Not Performed .....................................9
Annual Employee Evaluations Are Not Always Prepared ................................................9
CORRECTIVE ACTION TAKEN ON PRIOR YEAR FINDINGS
Audit Trail to Establish Custody of Custodial Fund Deposits Is Now
In Place .......................................................................................................................10
APPENDIX I: PHILADELPHIA PRISON SYSTEM ORANIZATION CHART ...........11
AGENCY RESPONSE
Leon A. King II, Esquire, Commissioner ..................................................................12
INTRODUCTION
BACKGROUND
Overview
The Philadelphia Prison System (PPS) was established as a separate department under the
managing director by Executive Order 5-88 (April 6, 1988).1 Its reported mission is to provide a
secure correctional environment that adequately detains persons accused or convicted of illegal
acts; to provide programs, services, and supervision in a safe, lawful, clean, humane
environment; and to prepare incarcerated persons for reentry into society.
The PPS operates five major correctional facilities — the Curran-Fromhold Correctional
Facility, the Detention Center, the House of Corrections, Philadelphia Industrial Correctional
Center, and the Riverside Correctional Facility2 — on State Road in Northeast Philadelphia, as
well as several smaller Alternative and Special Detention facilities in various locations of the
City. Each of the prison facilities is under the immediate direction of a warden, who is assisted
by one or more deputy wardens and support staff.
Prison Organization
The commissioner of the PPS, as executive director of the entire prison system, has
responsibility for fiscal control; for overall supervision of operations and coordination of
activities; for planning, development, and execution of policy; for administrative studies and
reviews; and for interaction with City and other government officials, the community, and public
and private agencies. The commissioner reports to the City’s managing director, who appoints
the commissioner, and a seven-member Board of Trustees whose members include the
commissioner of the City’s Department of Human Services (ex officio) and six citizens appointed
by the mayor.
As chief executive officer of the PPS, the commissioner has the assistance of four deputy
commissioners, a human resources manager, an administrative services director, a contract
administrator, and an information technology development group. Each of the deputy
commissioners has responsibility for one of four different areas — Policy Training and Special
Services; Administration, Operations, and Treatment. During the fiscal years under audit, the
PPS employed approximately 2,200 employees, most of which were appointed through the civil
service system. A complete organization chart of the PPS is presented in Appendix I.
1
Prior to April 1988, the PPS had been under the direction of the Department of Human Services (formerly, the
Department of Public Welfare).
2
The Riverside Correctional Facility is also known as the Women’s Correctional Facility.
1
INTRODUCTION
Financial Resources
Management has responsibility for establishing and maintaining controls to safeguard the
financial resources for which it is accountable. Safeguarding controls are designed to (1) prevent
or timely detect unauthorized acquisition, use, or disposition of assets, (2) ensure the reliability
of financial reporting and (3) to ensure compliance with applicable laws and regulations. During
fiscal years 2006 and 2005, management of the PPS was accountable for the following
appropriations, budgeted revenues, and assets:
Fiscal Year
Appropriations:
2006
Operating funds
Capital funds
Total Appropriations
2005
$ 186,663,381
7,980,000
$ 194,643,381
$ 179,975,799
11,165,000
$ 191,140,799
$
600,000
2,375,000
$ 2,975,000
$
$
$
Budgeted Revenues
Locally generated non-tax revenue
Revenue from other governments
Total Budgeted Revenues
600,000
5,285,000
5,885,000
$
Reported Assets (June 30)
Petty cash funds
Materials and supplies inventory
Personal property inventory
Fiduciary funds:
Prison Custodial Fund
Prison Industries Fund
Prison Inmate Welfare Fund
Total Reported Assets
19,000
1,524,949
7,659,707
1,719,852
955,178
1,228,116
$13,106,802
2
19,000
1,572,819
7,027,306
1,579,042
1,035,769
1,101,930
$12,335,866
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS
We annually audit the basic financial statements of the City of Philadelphia, Pennsylvania
as of and for its June 30 fiscal year end and issue a report thereon. Those statements include
financial transactions of various city departments and agencies. We conduct our audit in
accordance with auditing standards generally accepted in the United States of America and the
standards applicable to financial audits contained in Government Auditing Standards, issued by
the Comptroller General of the United States.
Internal Control Over Financial Reporting
In planning and performing our audit, we consider the City of Philadelphia’s centralized and
departmental internal controls over financial reporting in order to determine our auditing
procedures for the purpose of expressing our opinions on the basic financial statements and not
to provide an opinion on the internal control over financial reporting.
Our consideration of the Philadelphia Prison System’s (PPS) internal control over financial
reporting was limited to determining if its internal control components for revenue, payroll, and
other expenditure activity were suitably designed and placed in operation during fiscal years
2006 and 2005. Our work identified that revenues generated from coin operated lockers at the
PPS are not being controlled to ensure all amounts received are being appropriately accounted
for by PPS employees. We consider this condition to be reportable. Reportable conditions
involve matters coming to our attention relating to significant deficiencies in the design or
operation of the internal control over financial reporting that, in our judgment, could adversely
affect the PPS’ ability to initiate, record, process, and report financial data consistent with the
assertions of management in the financial statements. This reportable condition is more fully
described in the accompanying findings and recommendations section of the report.
3
www.philadelphiacontroller.org
C I T Y O F
OFFICE
P H I L A D E L P H I A
OF THE
CONTROLLER
A material weakness is a reportable condition in which the design or operation of one or
more of the PPS internal control components does not reduce to a relatively low level the risk
that misstatements caused by errors or fraud in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a timely period by
employees in the normal course of performing their assigned functions. Our consideration of the
PPS initial control over financial reporting would not necessarily disclose all matters in the
internal control that might be reportable conditions and, accordingly, would not necessarily
disclose all reportable conditions that are also considered to be material weaknesses. However,
we do not believe that the reportable condition described above is a material weakness.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the City of Philadelphia’s basic
financial statements are free of material misstatement, we perform centralized and departmental
tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements,
noncompliance with which could have a direct and material effect on the determination of
financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion.
Our consideration of the PPS’ compliance with certain provisions of laws, regulations and
contracts was limited to tests of revenue, payroll, and other expenditure activity during fiscal
years 2006 and 2005. Grant compliance was tested and reported on as part of our single audit in
accordance with Office of Management and Budget Circular A-133. Our departmental tests
disclosed no material instances of noncompliance or other matters by the PPS that are required to
be reported under Government Auditing Standards.
However, we noted certain other conditions that are not required to be reported under
Government Auditing Standards, but nonetheless represent deficiencies in internal control over
financial reporting, and/or economy or effectiveness issues that should be addressed by
management. These conditions are listed in the table of contents and included in the findings
and recommendations section of the report.
This report is intended solely for the information and use of the management of the City of
Philadelphia, the PPS, and City Council and is not intended to be and should not be used by
anyone other than these specified parties.
October 31, 2006
ALBERT F. SCAPEROTTO, CPA
Deputy City Controller
4
FINDINGS AND RECOMMENDATIONS
REPORTABLE CONDITIONS
Revenues from Coin-Operated Lockers Are Still Handled Inappropriately
In our prior report, we disclosed that PPS management permitted deviation from
established City procedures in the control of an estimated $35,000 in yearly revenues earned
from coin operated lockers installed at five of the inmate facilities. We reported that wardens at
each of the facilities had total discretion on how money collected from the lockers was used.
Most importantly, however, we reported that there was poor accountability over the funds,
making it easy to perpetrate irregularities. We observed, for instance, that: lockers had no
counting devices, which would be useful in determining how many coins should have been
collected and deposited; money collected from the lockers was retained by each facility, some of
which did not maintain an adequate accounting of the funds; and at each PPS facility, there was
generally only one individual given responsibility for collecting the coins from the lockers
instead of more appropriately two. We also learned and reported that sometimes the individuals
responsible for collecting the coin first deposited the money into a personal bank account before
subsequently withdrawing and submitting the purported collected amounts to the wardens.
Our current review disclosed that the PPS had made little improvement in the way it
handled money collected from the coin-operated lockers. Although PPS managers advised us
that they had applied to Finance for a specific sub-object code in which to account for the funds
in the City’s accounting system, through the end of our fieldwork nothing further had changed.
Recommendations:
We continue to believe that there needs to be more control and accountability over revenue
amounts generated from the PPS lockers, as well as how the money is being used. In our
opinion, amounts collected need to be deposited and accounted for through the City’s
Department of Revenue, in accordance with Finance Office Standard Accounting Procedure
(SAP) E-4281. We suggest that since PPS has already applied to the City’s Finance Office for a
specific sub-object code to account for the funds, it follow the process to finality.
We also continue to encourage PPS management to formally design, adopt, and follow
procedures that will better ensure an accurate and complete accounting over locker revenues.
Some of the more significant procedures that we recommend include the following:
•
•
•
Collecting locker coin revenues using a two-person team and a lock bag for each
facility;
Delivering bags of coins, for counting and deposit, to a branch location of the City’s
authorized bank;
Obtaining a validated deposit slip from the bank, which should then be affixed to a
standard Revenue Department “Deposit Summary” and taken to the cashier operations
(located in Municipal Services Building) for validation and data entry into the City’s
accounting system; and
5
FINDINGS AND RECOMMENDATIONS
•
At a subsequent date, reviewing the City’s accounting system to ensure the amounts
deposited with the bank and validated by the Revenue Department have been
accurately recorded [12303.01].
OTHER CONDITIONS REQUIRING MANAGEMENT’S ATTENTION
Improvements Needed For Better Accountability over Prison Maintenance Costs
PPS management should consider some changes that will improve accountability over City
resources associated with maintenance services performed by a private vendor at the CurranFromhold and the Riverside Correction Facilities.3 Our work suggests that changes are needed
in three key areas — the processing of monthly vendor invoices for maintenance supplies and
services; the managing of maintenance supplies inventory; and the handling of scrapped assets
removed from various maintenance-related projects. In our opinion, procedural weaknesses we
identified in each of these three areas, as discussed in the sections that follow, can place the PPS
at higher risk for incorrect payments and for misappropriation of City assets.
Processing Monthly Maintenance Invoices
Before approving vendor invoices for payment, City agencies need to perform three major
tasks: they need to compare the invoice to the underlying documentation; they must check the
invoice and underlying documentation for mathematical accuracy; and they should verify that the
goods and or services have actually been received. All of these procedures are necessary to
minimize the risk of incorrectly paying vendors.
Our observations and limited testing4 of procedures for processing payments to the
maintenance vendor suggest that PPS does appear to be performing most of the three major tasks
outlined in the above preceding paragraph. For instance, we saw evidence that the clerk
checking the vendor’s invoice thoroughly examines the underlying supporting documentation,
comparing the documentation to purchase orders and contract terms. The clerk also appears to
be checking vendor invoices and supporting documentation for mathematical correctness and
verifying that the goods and/or services had been received by examining receiving reports. If the
vendor work involves something capital in nature, the employee checking the invoice will
request assistance from the point person at the prisons who has operational oversight for the
contract. That individual will then physically inspect the work and provide approval.
3
On June 12, 2001, the PPS entered into a multi-million dollar contract with a private vendor engaged to perform
services and provide materials necessary to maintain the Curran-Fromhold and the Riverside Correction Facilities.
These services and the related materials pertain to preventive and unscheduled maintenance, as well as alterations to
a variety of systems, such as electrical, drainage, fire suppression, and electronic security at each of the two
facilities. Maintenance services include painting, carpentry, waste removal and disposal, pest control, water
treatment for the mechanical cooling and heating systems, lighting, and signage. The vendor has also been engaged
for architectural and structural maintenance, as well as for engineering services. From inception of the contract
through June 30, 2005, the PPS paid the vendor nearly $16 million. The contract continues to be renewed, even
currently.
4
We examined eight transactions, five that we randomly drew; and three, involving monthly maintenance services,
which we judgmentally selected.
6
FINDINGS AND RECOMMENDATIONS
However, we observed weaknesses that occur in procedures when the invoices submitted to
PPS for payments involve charges for vendor-employee work hours and/or certain supplies. For
instance, as to the work hours, we noticed that while the clerk makes sure hourly rates charged
by the vendor agree with the contract terms, there is no corroboration of the hours billed. The
vendor does not submit employee daily attendance sheets or time clock cards, and the clerk does
not subsequently request copies of such corroborative documentation. Consequently, the PPS
places itself at risk for not detecting errors or irregularities in the employee hours being billed.
With respect to supplies, we became aware of instances when these were billed to the PPS,
but could not be linked to a work order for a specific maintenance project, or to an item normally
carried in the supply inventory. By way of example, on two occasions, we noted that certain
reflective tape was purchased by the vendor and then subsequently billed to the PPS. When we
asked the clerk who had processed the invoice to link the tape to a particular work order or
supply item routinely carried as inventory, she was unable to do so. We were told supervisory
personnel of the vendor were permitted to order supplies that were not associated with a specific
work order or carried in the inventory, if, in their judgment, the item was necessary for some
miscellaneous task. As long as the item did not appear “too out-of-the-ordinary” or strictly
forbidden under terms of the contract, the clerk would allow it.
In our opinion, however, allowing the above-mentioned practice increases the risk of
improprieties. For example, the vendor’s supervisor could purchase items for personal use and
later present them for payment to PPS. Since the vendor’s invoices to the PPS are frequently
voluminous, the clerk reviewing it might easily overlook an inappropriate item, or conclude that
an item being charged is reasonably acceptable when in fact it is not.
Managing Maintenance Supplies Inventory
As part of its contract with the PPS, the vendor handling maintenance at the CurranFromhold and the Riverside Correction Facilities keeps an inventory of various supplies used in
its work at the two facilities. The supplies have been purchased with City money and therefore
actually belong to the PPS. Our site visit to the facility housing the supplies revealed a fairly
large warehouse fully stocked with items ranging from cleaning solvents to plumbing, electrical
and building materials.
Despite the extensive size of the inventory — about $876,000 according to the PPS — we
learned that the value of this inventory is not being reported to the Finance Director for inclusion
in the City’s Comprehensive Annual Financial Report. Moreover, the PPS does not adequately
oversee the inventory — by way of reviewing reports on inventory utilization, for example, or
conducting periodic physical inventories of the supplies on hand as required by the Philadelphia
Home Rule Charter.5 Failure to adequately oversee and monitor this inventory raises the level of
risk for improprieties.
5
See Section 6-102 of the Home Rule Charter.
7
FINDINGS AND RECOMMENDATIONS
Handling of Scrapped Assets
City agencies that have assets to be scrapped are required to follow the City Procurement
Department’s Directive #67 when disposing of such assets. The directive requires that agencies
notify the Procurement Department in a memorandum of the nature and location of the item(s) to
be scrapped, the condition of the item(s), along with a contact person and a telephone number.
Although Directive #67 is an official City policy, to which agencies must adhere, the PPS
has not developed internal procedures to ensure that the policy is always followed, especially at
the Curran-Fromhold and the Riverside Correction Facilities where assets to be scrapped may
occur during routine maintenance or major renovation work handled by the private vendor.
Indeed, the Controller’s Office has received anonymous allegations that the vendor’s employees
have removed discarded assets such as shower doors and aluminum light fixtures from the
inventory warehouse and sold them privately to scrap dealers.
Our review of the PPS contract with the vendor disclosed that it is silent on the topic of
items removed from a project site. Additionally, inquiries of both the vendor’s employees, as
well as those of the PPS, disclosed that there appears to be a breakdown in communication
regarding how to handle the disposal of assets removed from prison property. On a visit to the
warehouse holding the maintenance supplies inventory, for example, we observed numerous
televisions that had been removed from the Curran-Fromhold facility because they were replaced
with newer models. Inquiries of the vendor’s employees revealed that they were awaiting word
from PPS personnel as to what to do with the televisions. Our discussion with the PPS employee
responsible for coordinating the disposal of scrapped assets with the City’s Procurement
Department revealed she was unaware that the televisions sat in the warehouse. In fact, she told
us that unless someone contacts her about the removal of such items, she has no way of knowing
and, consequently, does not notify the Procurement Department as required by Directive #67.
When asked if she had been notified of the removal of the shower doors or aluminum light
fixtures, she responded no.
Because of higher audit priorities, we did not confirm the allegations regarding the shower
doors and aluminum light fixtures as described earlier. However, in our opinion, based on
inquiries and observations we made during this review, the risk of such scenarios is quite
possible due to the apparent failure of PPS management to design and implement procedures to
ensure compliance with the Procurement Department‘s Directive #67.
Recommendations:
To improve oversight of the outsourced contract for maintenance work at the PPS, we
recommend that management take the following steps:
•
Request that that vendor include corroborative documentation to support the labor hours
charged on periodic invoices for labor costs. Such documentation should include daily
attendance sheets or time clock cards. The PPS clerk responsible for checking these
invoices should (at least on a test basis) compare the hours billed to these time records,
and as always, the review should be documented [12305.01].
8
FINDINGS AND RECOMMENDATIONS
•
Require that the vendor link purchased supplies to either a maintenance work-order or to
a commodity regularly carried in the supplies inventory. In those instances when this
cannot be done, the vendor should be directed to supply adequate explanation to justify
the purchase. [12305.02].
•
Require that periodic physical inventories be taken of supplies purchased through the
contract and report the fiscal year-end balances to the City’s Procurement Department for
inclusion in the annual financial report. Preferably, the physical inventories should be
taken by PPS personnel [12305.03].
•
Require the vendor to provide management reports showing inventory usage by
commodity. PPS management should, in turn, review these reports for abnormal
utilization of supplies [12305.04].
•
Design and place into operation procedures to ensure compliance with the Procurement
Department’s Directive #67 dealing with the disposal of City assets [12305.05].
Key Procedures To Ensure Payroll Accuracy Are Not Performed
The PPS has not placed in operation best-practice procedures normally considered
appropriate for reducing the risk of errors that can occur when payroll clerks prepare the payroll.
More specifically, no one independent of the payroll preparation process at PPS periodically
spot-checks — by reference to time clock cards or daily attendance sheets — the accuracy of
data entry of employee work time into the payroll system. Additionally, the PPS does not
require that, prior to distribution of its paychecks, someone scan them for unusual amounts.
Although we did not find any discrepancies when we reviewed payroll transactions, our testing
was very limited. Because of the numerous prison employees and the variety of working
schedules, which involve special pay rates —such as shift differential and overtime rates — we
believe that the PPS is at a higher risk for errors occurring in its payroll, and therefore needs to
implement procedures designed to mitigate this risk.
Recommendations:
To lessen the chance of failing to detect errors that might occur during preparation of the
payroll, we encourage PPS management to require that someone, independent of payroll
preparation, spot-check data entry of employee work time by reference to time clock cards or
other attendance records [12305.06]. Additionally, we recommend that management adopt the
practice of having someone scan the bi-weekly payroll registers for unusual amounts
[12305.07]. Lastly, we suggest that individuals charged with performing any of these
procedures, in some manner, document that they have done them. Such documentation, for
instance, might consist of initialing and dating the clock cards or attendance records that have
been checked for data-entry accuracy, or keeping a log of signatures and dates showing who
performed the scan of payroll checks and when it was done [12305.08].
Annual Employee Evaluations Are Not Always Prepared
Civil Service Regulation 23.033 requires that annual performance evaluations be prepared
for all permanent civil service employees. For three of six employees we randomly sampled (50
percent), current annual performance evaluations were not prepared. For one of the selections,
9
FINDINGS AND RECOMMENDATIONS
the most current performance evaluation for the employee was dated in August 2001. The other
two evaluations were more recent, both having been prepared in August 2003.
Failure to complete performance reports, as required, deprives employees of the
opportunity to review and discuss their strengths and weaknesses in a timely fashion with
supervisors. It could penalize employees who may be entitled to performance bonus points on
promotional tests. Further, as an integral part of the City’s progressive discipline system, not
having up-to-date performance reports could weaken management’s position when dealing with
poorly performing employees.
Recommendation:
To comply with Civil Service Regulations and to ensure proper human-resource
management, we recommend that PPS prepare annual performance evaluations for all its civil
service employees [12305.09].
CORRECTIVE ACTION TAKEN ON PRIOR YEAR FINDINGS
As part of our work for this auditor’s report, we followed up on conditions brought to
management’s attention in our last report. We routinely monitor uncorrected conditions and
report on them until management takes corrective action or until changes occur that resolve our
recommendations.
Our follow-up has disclosed that PPS had taken corrective action in the area discussed
below, and we would like to acknowledge their efforts. The corrective action taken by
management has strengthened PPS’ internal controls and improved accountability over its assets.
We commend PPS on its efforts.
Audit Trail to Establish Custody of Custodial Fund Deposits Is Now In Place
In our prior year report, we commented about how corrections officers who picked up
sealed deposit bags from the cashiers did not sign a log stating that they had received the bags
from the cashiers. We advised PPS management that by failing to keep such a log,
accountability over the deposits was not fixed. Consequently, if deposits became missing, the
PPS would not have documentation acknowledging who had last custody of the funds. To
improve this situation, we recommended that PPS management employ use of a signature log to
serve as an audit trail and document the transfer of money between cashiers and the corrections
officers who are responsible for transporting deposits to the bank.
During our current work, we observed that PPS management had established a written
policy for handling custodial fund deposits and had instituted a signature log as we suggested
[12303.02].
10
APPENDIX I
11
RESPONSE TO AUDITOR’S REPORT
12
RESPONSE TO AUDITOR’S REPORT
13