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American Samoa Government

VIEWS: 12 PAGES: 15

									Department of Homeland
       Security
   OFFICE OF VITAL
     STATISTICS
    Cash Collections
   Final Report, June 2011


     American Samoa Government
     Territorial Audit Office
     Robert P. Dantini, CPA, Territorial Auditor
     E-mail 1dawg@comcast.net
     P 684.633.5191
                                          Office of Vital Statistics
                                                   Cash Collections




TABLE OF CONTENTS



I.    Executive Summary....................................................................................... 0

II.    Background.................................................................................................. 5

III. Objectives, Scope, and Methodology ........................................................... 6

IV. Detailed Findings and Recommendations .................................................... 7

V.     Management’s Response .......................................................................... 11

VI. Corrective Action Plan....................................................................................

VII. Territorial Audit Office Contact Information .....................................................




                                                               i
I. EXECUTIVE SUMMARY

We conducted an unannounced cash count at the Office of Vital Statistics on October
19, 2010.

The audit determined whether the Office of Vital Statistics; (1) complied with existing
policies and procedures on cash collections, and (2) cash receipts and petty cash
transactions were complete, accurate, adequately documented, recorded, and deposited
timely and intact.

Based on interviews and observations of the Office of Vital Statistics staff as well as
examination of the available books, records, and documents, we found that all cash
counted was complete, accurate, recorded, and posited timely and intact.



Summary Findings:

Audit Objective: Does the Office of Vital Statistics comply with Department of
Treasury’s approved policies and procedures on cash collections and are those policies
and procedures adequate?


       Finding #1
        The American Samoa Government’s Administrative Code does not
          adequately establish the Department of Treasury’s sole authority for
          establishing financial rules, policies, and procedures. In our opinion, Treasury
          should have sole authority for establishing financial policies, procedures and
          all other internal controls for ASG.
          Neither Treasury nor Office of Vital Statistics have implemented or updated
           current policies and procedures over cash collections
          There is presently no formally established method to efficiently disseminate
           policies and procedures developed by Treasury to the rest of ASG.




                                                                             Page 1 of 15
Audit Objective: Are cash receipts and petty cash transactions at the Office of Vital
Statistic complete, accurate, adequately documented, recorded, and deposited timely
and intact?


       Finding #2
        Daily cash collections are not deposited to ASG Revenue Division in a timely
          manner.
        One of the cash collections reviewed showed that an off-island personal
          check was included.
        OVS does not maintain a log of unused cash receipt numbers that were
          issued from Treasury. Such log would reduce the risk of collected cash not
          being recorded.



Audit Objective: Are there adequate safeguards to ensure accuracy of the cash intake
at the Office of Vital Statistics?


       Finding #3
        Incompatible cash receipting duties are not segregated and multiple cashiers
          have access to collected cash that is not properly safeguarded.

       Finding #4
          Cash receipts and change funds are not adequately safeguarded during the
           days’ business activities.




                                                                         Page 2 of 15
Summary Recommendations:

Audit Objective: Does the Office of Vital Statistics comply with Department of
Treasury’s approved policies and procedures on cash collections and are those policies
and procedures adequate?
       Recommendation #1
        Update the American Samoa Administrative Code to clarify that Treasury
          Department has sole authority to establish financial policies, procedures and
          internal controls for all divisions of ASG and require a formal approval
          process and methodology to ensure comprehensive and coordinated
          management and dissemination of such policies, procedures and controls. It
          should be noted that the Governor’s Office is drafting proposed
          legislation, at the time of this writing, to address this finding.
       The Director of Treasury should:
          Formally develop a system for establishing, approving and indexing uniform
           policies, procedures and internal controls for all offices, agencies and
           departments within ASG.
          Update comprehensive written policies and procedures over cash collections.
           It should be noted that Treasury has drafted comprehensive policies
           and procedures over cash collections but the Treasurer has not yet
           formally approved them.
          Ensure that policies and procedures are reviewed periodically according to a
           predetermined schedule and updated if needed. Changes in policies and
           procedures should be vetted, formally approved by the Treasurer, dated and
           disseminated to all ASG departments, offices and agencies.


Audit Objective: Are cash receipts and petty cash transactions at the Office of Vital
Statistic complete, accurate, adequately documented, recorded, and deposited timely
and intact?
       Recommendation #2
       We recommend the Office of Vital Statistics:

          Transmit each days cash collections to ASG Revenue division in a timely
           manner (daily).
          Prohibit acceptance of personal checks drawn on an off-island bank account.
          Maintain a log of all pre-numbered books of manual receipting forms issued
           from Revenue division to ensure that all transactions can be accounted for.
           This log will reduce the risk of theft due to unrecorded cash collections.




                                                                          Page 3 of 15
Audit Objective: Are there adequate safeguards to ensure accuracy of the cash intake
at the Office of Vital Statistic?
       Recommendation #3
       The Directors of Treasury and Homeland Security should:
          Ensure adequate segregation of duties over cash collections, receipting, daily
           balancing and transmittal to Treasury. These duties should be performed by
           separate individuals to strengthen accountability and prevent the risk of a
           cash theft from going undetected. Additionally, only one person should be
           allowed access to the day’s collected cash prior to daily balancing of cash to
           receipts and transmittal.


       Recommendation #4
       The Director of Treasury should:
          Purchase an electronic cash register for the Office of Vital Statistics’ cash
           collections.
          Assess the condition and need of cash registers in all cash collection areas
           within ASG since many other departments face the same issue.




                                                                            Page 4 of 15
II. BACKGROUND


We conducted an unannounced cash count at the American Samoa Department of
Homeland Security, Office of Vital Statistics (OVS) on October 19, 2010. The collection
consist of charges for requested copies of birth certificates, marriage license, death
certificates, and identification cards.

The Office of Vital Statistics (OVS) is currently under the control and supervision of the
Director of the American Samoa Department of Homeland Security per ASCA Section
4.0330 – section 2. It states that OVS is responsible in accurately maintain registers of
all marriages, divorces, births, deaths, and adoptions, and such other registers as the
Governor or his authorized representative may from time to time designate. In addition,
upon request furnish certified copies of such documents and issued marriage licenses
per ASCA section 4.1110. All services provided has a different fee assessed by this
Office based on the schedule of fees provided.

The OVS Laws and Policies requirements for issuance of Birth Certificate or Birth
Certificate requests is over 18 years of age can release to the owner of the birth
certificate. Under 18 years of age can only be release to the natural parents or legal
guardians. A valid state/immigration or passport, or military or American Samoa
Government identification card must present for verification. For off-island requests
personal checks are not accepted , only money orders or cashier’s checks when birth
request are requested from off-island (United States or Foreign Countries).

The OVS daily cash collection is deposited directly to ASG Treasury, Revenue Division.
The transmittal letter, copies of the receipts and cash are forwarded to Revenue Division
for deposit. The Revenue Division then verifies the deposit and issues a deposit receipt
as proof of deposit on a daily basis.




                                                                             Page 5 of 15
III. OBJECTIVES, SCOPE AND METHODOLOGY


OBJECTIVES
The audit was designed to address the following objectives:
       1.   Does the Office of Vital Statistics comply with Department of Treasury’s
            approved policies and procedures on cash collections and are those policies
            and procedures adequate?
       2.   Are cash receipts and petty cash transactions at the Office of Vital Statistic
            complete, accurate, adequately documented, recorded, and deposited timely
            and intact?
       3.   Are there adequate safeguards to ensure accuracy of the cash intake at the
            Office of Vital Statistics?


SCOPE OF OUR WORK
To conduct this limited scope review, we performed an unannounced cash count at the
Office of Vital Statistics (OVS) on October 19, 2010.


METHODOLOGY
To answer the audit objectives, we reviewed documents and controls relevant to the
cash collection at OVS. To evaluate the cash receipting operation, we conducted
surprise cash counts, reviewed existing cash collection policies and procedures, related
accounting, deposits, and receipting reports, verified cash receipts, interviewed the
cashier, and evaluated the physical security of collected cash.
Our limited scope financial audit was performed in accordance with generally accepted
governmental auditing standards established by the Comptroller General of the United
States.




                                                                             Page 6 of 15
 IV. DETAILED FINDINGS AND RECOMMENDATIONS


Audit Objective: Does the Office
of Vital Statistic comply with         Finding #1
                                       As previously mentioned in prior Territorial Audit
Department      of     Treasury’s      Office audit reports, the American Samoa
approved policies and procedures       Government’s Administrative Code does not clarify
on cash collections and are those      the Treasurer’s sole authority for establishing
policies     and      procedures       financial rules, policies, procedures and internal
adequate?                              controls.

 The American Samoa Code Chapter 5, Section 4.0506 and Chapter 10, Section 4.1001
 (a) and (g) authorizes the Department of Treasury to adopt rules to further the purposes
 of its powers and duties.

 Chapter 10, Section 4.1002, (1) authorizes each agency to “adopt rules of practice
 setting forth the nature and requirements of all formal and informal procedures available,
 including a description of all forms and instructions used by the agency;”

 This language has been interpreted to mean that individual departments can establish
 their own financial rules, policies and procedures. This can create contradictory policies
 if departmental policy or procedure is in conflict with Treasury’s established policies.

 Treasury’s financial policies and procedures have evolved over time and have not been
 given priority attention until recently.

 Development of entity-wide, uniform financial policies and procedures should be the
 responsibility of the Director of Treasury. The Treasurer should have sole authority for
 establishing and promulgating all financial policies, procedures and internal controls for
 ASG. Establishment of uniform policies, procedures and internal controls enables
 accountability over transactions.

 We found that the Office of Vital Statistics has not finalized their cash collection policies
 and procedures. Current department specific policies are in draft form.

 Best practices recommend that every government document its accounting policies and
 procedures. Long-term benefits of having an updated accounting policy manual include
 safeguarding assets, assigning accountability and providing consistent rules. A well-
 designed and properly maintained system of formally approving and documenting
 accounting policies and procedures establishes accountability. It also serves as a useful
 training tool for staff and facilitates the audit process. In other words, fund custodians
 and cashiers will better understand their duties and responsibilities. This is particularly
 important if there is turnover of key staff.

 Policies should clearly explain the procedures to be followed, establish authorized forms,
 control of forms and identify who is authorized to carry out various tasks. These
 elements are imperative to establish and maintain accountability.



                                                                                 Page 7 of 15
RECOMMENDATION #1
      We recommend that the Governor’s Office develop and propose
       legislation to clarify that the Treasurer has sole authority to establish
       financial policies, procedures and internal controls for all operating
       divisions of ASG and establish a formal approval process and
       methodology to ensure comprehensive and coordinated management
       and dissemination of such policies, procedures and controls. It should be
       mentioned that, at the time of this writing, the Governor’s Office is
       preparing proposed legislation to address this issue.

      We further recommend ASG Treasury formally develop a system for
       establishing and approving uniform policies and procedures for all cash
       collections within ASG. These policies and procedures when approved,
       should be numbered, dated and, communicated. In this manner, control is
       able to be uniformly established by Treasury over all ASG offices,
       departments and agencies.

      We further recommend that the Director of Treasury update written
       policies and procedures over cash collections. Revenues should be
       properly controlled and safeguarded. Failure to have the appropriate
       controls in place over cash receipting increases the risk that cash could
       be misappropriated. It should be noted that, at the time of this writing,
       Treasury is in the process of drafting and vetting updated policies
       and procedures for cash collections. This “drafting” has been in
       process for nearly a year. Until the draft is finally approved by the
       Treasurer, there is no formal accountability assigned over personnel
       handling cash transactions.

Written policies, procedures and internal controls should be reviewed periodically
according to a predetermined schedule and updated if needed. Changes in
policies and procedures should be vetted, formally approved by the Treasurer,
dated and disseminated to all operating departments.




                                                                     Page 8 of 15
Audit Objective: Are cash receipts
and petty cash transactions at the
Office of Vital Statistic complete,
accurate, adequately documented,
recorded, and deposited timely and
intact?


      Finding #2
      Our cash count at OVS found:

             Daily cash collections are not transmitted to ASG Revenue Division consistently
              in a timely manner. Of the three deposits reviewed, delays were between two
              and five days. For instance, cash collections on two of the days reviewed
              (October 15 and 18, 2010) were withheld up to four days at the Office of Vital
              Statistics and were not yet deposit to ASG Revenue Division. These collections
              were included in our cash count on October 19, 2010 and deposited to ASG
              Revenue Division the same day. According to the OVS clerk specialist, who
              prepares the daily collection for deposit, she was unavailable to deliver the
              deposit to the Revenue Division since most of the staff members were out of the
              office.

              Timely depositing of revenue helps minimize the risk of loss, theft, or
              misappropriation of funds.

             The cash collection on October 19, 2010 (transmittal letter no. 250055) showed
              that an off-island personal check was included. OVS laws and policies prohibit
              personal checks from off-island.

             OVS does not maintain a log of pre-numbered cash receipt books issued from
              Treasury. The absence of this important control feature results in the risk that
              some manual receipts could be issued when cash is collected, but not recorded.
              All pre-numbered manual receipts must be accounted for, at all times. This is a
              good example of why we recommend the use of electronic cash registers as a
              preferred receipting method whenever practical.

              RECOMMENDATION #2
              We recommend the OVS:

                    Ensure cash collections be Transmitted to ASG Revenue division daily,
                     as is required by existing Treasury policy.
                    Enforce its policy which prohibits acceptance of personal checks from off-
                     island.
                    Maintain a log of cash receipt numbers issued from Revenue division to
                     ensure accountability.




                                                                                  Page 9 of 15
Audit Objective: Are there
adequate safeguards to ensure         Finding #3
accuracy of the cash intake at the    Incompatible cash receipting duties are not adequately
Office of Vital Statistic?            segregated at OVS. Currently, the fund custodian
                                      (clerk specialist) collects cash, prepares cash receipts,
      balances the day’s cash and receipts, prepares the transmittal letter for submittal to ASG
      Revenue Division. Furthermore, all staff members at OVS have access to “common”
      collected cash.

      The most effective way to prevent theft of cash receipts is to segregate the duties of
      cash handling and recording. When one person controls multiple phases of a
      transaction, the risk of undetected cash theft increases dramatically. Furthermore,
      multiple people having unfettered access to money results in a lack of accountability. In
      this scenario, responsibility cannot be assigned to an individual if there is a shortage or
      missing funds. Cash collection procedures should specifically attempt to segregate
      incompatible individual tasks to enhance accountability.


              RECOMMENDATION #3
      We recommend the Director of Treasury develop and establish cash collection policies
      and procedures which encourage segregating incompatible tasks among staff to
      promote accountability. It is further recommended that just one person have access to
      collected, combined cash during the day.


      Finding #4
      Physical safeguarding of cash receipts and change funds could be improved at OVS.
      Daily cash collections are kept lose and scattered in the Registrar’s office desk drawer.
      However, the physical safeguarding of cash, checks overnight and unissued receipts for
      payment forms are kept in a locked filing cabinet and appear adequate.

      Without adequately safeguarding and securing cash receipts, the risk of theft and
      misappropriation increases. When feasible, cash and cash items should be physically
      protected through the use of safes, vaults, locked cash drawers, cash registers and
      locked metal boxes. Use of an electronic cash register would also improve security over
      cash receipts.

              RECOMMENDATION #4
              We recommend that ASG Director of Treasury purchase an electronic cash
              register for the Office of Vital Statistics’ cash collections.

              We further recommend the Director of Treasury assess the condition and need of
              cash registers in all cash collection areas within ASG since many other
              departments face the same issue.




                                                                                   Page 10 of 15
V. Management’s Response




                           Page 11 of 15
VI. CORRECTIVE ACTION PLAN REQUEST



The Territorial Audit Office (TAO) conducted an exit meeting with representatives of the
Department of Homeland Security, the Office of Vital Statistics, Treasury Department
and Governor’s Office on ____________________________________________.

The purpose of the meeting was to present, review and discuss proposed audit findings
and recommendations contained in the preliminary report, with the audited agencies.
Although the audit was performed on OVS activities, the other departments were
involved as a result of the findings. ASG Code Title 4, Chapter 4.0412 establishes
procedures to be followed at the conclusion of an audit. This code section requires that
the Territorial Auditor present and discuss with agency officials, proposed findings which
may be included in the audit report. The audited agencies are then required to submit a
written statement explaining or rebutting the proposed audit findings, including any
corrective actions to be taken that are designed to preclude recurrence of adverse
findings. The Agency’s response is required to be submitted to TAO within 30 days after
receipt of the proposed findings, and subsequently published in the final audit report.

TAO’s Policies and Procedures Manual Part II, Chapter 7 requires the submission of a
corrective action plan by management of the audited agency(s) within 180 days of the
final audit report date. Such corrective action plan should include the timeframe for
implementation.

Accordingly, it is hereby requested that the aforementioned Departments collaborate on
the preparation of the Corrective Action Plan in connection with this audit. The plan
should be submitted to TAO 180 days from the issue date of this report.

TAO will include the state of progress on corrective action plans which resulted from
issued audit reports in its annual report to the Governor and Fono.




                                                                            Page 12 of 15
VII.   Contact Information:


                       Territorial Audit Office
 Office Telephone: 684- 633- 5191
 Website: http://americansamoa.gov/departments/tao/territorial-audit-
                                 office

Waste, Fraud and Abuse Hotline
The public can call the Territorial Audit Office at 684- 633- 5191 to
report matters involving suspected waste, fraud or abuse of public
assets. You can also email TAO at: 1dawg@comcast.net




                                  Territorial Auditor – Robert Dantini CPA, PFO




                                                                 Page 13 of 15

								
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