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HomeMy WebLinkAboutMINUTES - 06052001 - C.158 r' 07 C o n ra TO: BOARD OF SUPERVISORS FROM: William J. Pollacek, Treasurer-Tax Collector x —- :k,;:��• �:_ ;z Costa c3ti~�oa DATE: June 5, 2001 SrA'�oUK County SUBJECT: -AUDI-T._ REPORT ON THE COUNTY TREASURY SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION Recommendation: ACCEPT the audit from the County Auditor-Controller on the activities of the County Treasurer and the Treasury Oversight Committee as required by Government Code Section 27134. ACCEPT the Treasurer's response to the above audit. BACKGROUND/REASON (S) FOR RECOMMENDATION (S): Per Government Code Section 27134 and at the request of the Treasury Oversight Committee, the County Auditor-Controller audited the County Treasury for the period of January 1 , 2000 through December 31, 2000. The audit and the County Treasurer's response were reviewed at the Treasury Oversight Committee meeting of May 15, 2001 . The County Treasurer and the Treasury Oversight Committee members agreed with the Auditor-Controller's recommendations and Treasurer's response. Copies of the Auditor-Controller's audit and the County Treasurer's response are submitted to the.Board of Supervisors for review and acceptance. WJP:djm Attachments CONTINUED ON ATTACHMENT: YES SIGNATURE: All , RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDA 10 BOARD COMMITTEE APPROVE OTHER SIGNATURE (S): ACTION OF BO D N June 5, 2001 APPROVED AS RECOMMENDED XX OTHER a VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE AND CORRECT COPY OF AN ACTION TAKEN AND ENTERED ON MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE SHOWN. XX UNANIMOUS(ABSENT ---- ) AYES: NOES: ABSENT: ABSTAIN: Contact: cc: Treasurer-Tax Collector ATTESTED June 5, 2001 JOHN SWEETEN,CLERK OF THE BOARD OFSUPERVISORS AND COUNTY ADMINI T T BY: DEPUTY Office of COUNTY AUDITOR-CONTROLLER Contra Costa County Martinez, California April 30, 2001 TO: Alfred M. Granzella, Chairperson, Treasury Oversight Committee FROM: Kenneth J. Corcoran, Auditor-Controller Audit Staff: Joanne M. Bohren, CPA, Staff Audit r SUBJECT: Examination of the Activities of the County Treasurer and the Treasury Oversight Committee as Required by Government Code Section 27134 I. SCOPE OF EXAMINATION We have examined the activities of the County Treasurer (Treasurer) and the Treasury Oversight Committee (Committee) as requested by the Committee and as required by Government Code Section 27134. Our examination covered the period of January 1, 2000 through December 31, 2000, and included such tests and other auditing procedures as we considered necessary to: 1. Determine the extent of compliance with Government Code Sections 27131 through 27132.4 that govern the establishment, membership and meetings of the Committee. 2. Determine the extent of compliance with Government Code Section 27133 that governs the establishment, review and monitoring of investment policy. 3. Determine the extent to which the quality of the Treasurer's investment portfolio complied with applicable laws and administrative requirements governing investments, including Government Code Sections 53601-53607 and 53646 governing authorized investments and the County's Investment Policy. 4. Determine if internal controls were adequate to ensure the safeguarding of the financial assets under the Treasurer's control. 5. Determine if the Treasurer has contracted with financial entities for investment services and safekeeping and restricted investing transactions to brokers and issuers allowed by the County's Investment Policy. 6. Evaluate the accuracy of the Treasurer's Quarterly Investment Reports. 7. Determine the extent to which investments subject to the Treasurer's control were sold before maturity. Alfred M. Granzella, Chairperson,Treasury Oversight Committee April 30,2001 Exainination of the Activities of the County Treasurer and the Treasury Oversight Conunittee as Required by Government Code Section 27134 (continued) II. SUMMARY AND CONCLUSIONS As a result of our examination, we have concluded that in all material respects: 1. The establishment, membership, meetings and other activities of the Committee were in compliance with applicable laws. 2. The establishment, review and monitoring of the County's Investment Policy were in compliance with the law. 3. The quality of the Treasurer's investment portfolio met or exceeded the requirements set forth in applicable laws and in the County's Investment Policy. 4. Internal controls were adequate to ensure the safeguarding of the financial assets under the Treasurer's control, except that bank reconciliations need to be completed in a more timely and accurate manner(see Section III., Finding and Recommendation). 5. The Treasurer has contracted with financial entities for investment services and safekeeping and has transacted investments with eligible brokers and issuers. 6. The Treasurer's Quarterly Investment Reports were accurate as of March 31, 2000, June 30, 2000, September 30, 2000, and December 31, 2000. 7. Our review of investment dispositions subject to the Treasurer's control did not disclose any that were sold before maturity. III. FINDING AND RECOMMENDATION Timely and Accurate Completion of Bank Reconciliations Needed As of April 6, 2001, the Treasurer's Office had not completed reconciliations of its bank accounts for the months of September, through December 2000. All activity posted to the monthly bank statements had been reviewed, but there were still no reconciled balances for these months. These incomplete bank reconciliations contained unidentified differences which were being carried forward to the subsequent month's bank reconciliation. Through December, the Treasurer's Office had a cumulative unidentified deficit of$40,327.98. 2 Alfted M. Granzella,Chairperson,Treasury Oversight Conunittee April 30, 2001 Examination of the Activities of the County Treasurer and the Treasury Oversight Conunittee as Required by Government Code Section 27134 (continued) 11I. FINDING AND RECOMMENDATION (continued) Timely and Accurate Completion of Bank Reconciliations Needed (continued) The main cause in the delay of the monthly reconciliations was confusion over credit card deposits. County department credit card deposits do not get credited to the Wells Fargo Bank account until the departments clear their credit card scanning machines. Some of the departments accepting credit cards were not clearing these machines on a daily basis. Consequently, there was difficulty reconciling daily credit card deposits recorded in the Treasurer's checkbooks to the actual credit card deposits recorded on the bank statement. There was an increase in the number of reconciling items, as well as the amount of time it took to perform the monthly reconciliations, relating to the merger of Wells Fargo Bank and another bank. At the time of the merger, the County's bank account number was changed, bank statements produced by the bank were redesigned, and bank posting errors began to be detected. There was also increased difficulty in the matching of each credit card charge to each credit card deposit, causing a delay in the allocation of these charges to the appropriate departments. The Treasurer's Office has had ongoing communication with upper management of Wells Fargo Bank to resolve these problems. Bank reconciliations are a critical control and should be given sufficient priority to ensure timely and accurate completion. An incomplete bank reconciliation increases the risk that errors or irregularities may occur and not get detected. Recommendation: A bank reconciliation should be performed in a timely manner with any variances identified and resolved. The Treasurer's Office should continue its communication with the upper management of Wells Fargo Bank to expedite the resolution of the above mentioned problems. Also, the Treasurer's Office should advise departments accepting credit card payments to clear their machines daily. 3 -Alf red M.Granzella,Chairperson,Treasury Oversight Committee April 30,2001 Examination of the Activities of the County Treasurer and the Treasury Oversight Conunittee as Required by Government Code Section 27134 (continued) IV. STATUS OF PRIOR AUDIT RECOMMENDATIONS RECOMMENDATION STATUS Segregation of Duties Needs Improvement With the Investment Officer position remaining The Treasurer's staff has shown improvement unfilled (at the end of 1999), a third member of in the area of transaction review and the Treasurer's staff should review the investment transaction sheet sign off. The transactions being made (and sign off on the Investment Officer position has been filled by investment transaction sheet) when either the the former Investment Operations Analyst, Assistant Treasurer or Investment Operations and the Investment Operations Analyst Analyst are not in the office. When the position has been filled by a former Investment Officer position is filled, we Accountant III from the Auditor-Controller's recommend that the Treasurer segregate the Department. However, until the new initiating and authorizing functions from the Investment Operations Analyst has received recording function. sufficient training, there will still be no segregation of duties between the initiating and authorizing functions from the recording function. We would like to express our appreciation to the Treasury staff, especially Clarissa Javier, Beverly Rellar and Brice Bins for their assistance and cooperation during this audit. 4 i dk r CONTRA COSTA COUNTY TREASURER'S OFFICE 625 COURT STREET, ROOM 102 MARTINEZ, CA 94553 DATE: May 9, 2001 TO: Alfred M. Granzella Chairperson, Treasury Oversight Committee FROM: Clarissa V. Javier Assistant Treasurer RE: Response to the Examination of the Activities of the County Treasurer for the Treasury Oversight Committee as Required by Government Code Section 27134 Following is the Treasurer's response to the findings and recommendations section on the completion of bank reconciliations. As noted in the audit, treasury operations were greatly impacted by external activities, such as: • Wells Fargo Bank—Norwest merger and redesign of reports or statements • Credit card transactions Solutions are as follows: WELLS FARGO BANK • On-going communication with Wells Fargo's most senior management is in place as needed. • A bank operations staff has been assigned to assist the County Treasury to resolve daily issues. BANK STATEMENTS • Bank statements have all been reconciled to December, 2000. • The cumulative unidentified deficit of$40,327.98 was caused by credit card transactions, and have all been cleared. • To date, January 2001 and February 2001 have been reconciled. March statements are in process. • The new Operations Analyst has been scheduled to assist with the bank reconciliations and research differences on a regular basis. Page 2 Response to the Examination of the Activities of the County Treasurer for the Treasury Oversight Committee as Required by Government Code Section 27134 CREDIT CARD DEPOSITS • The problem was narrowed down to only one department, but with three operational sites. The problem consisted of. 1. The department sites were not clearing their credit card machines daily, and 2. The deposit permits did not match the amounts on the bank statements as a direct consequence of not clearing the machines daily. • A.designated Wells Fargo account has been opened for the sole use of the identified department's credit card activities. This should facilitate bank statement reconciliation.