Cash Receipts Processing Audit Final Report - Florida

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In Brief IA 2016-8787 Audit of Department Cash Receipts Process

Purpose of this Audit One of the processes highlighted during the fiscal year 2015-2016 annual Internal Audit planning was cash management. As a result, an enterprise wide project was included in the audit plan to evaluate the adequacy of the internal controls related to the Department of Management Services (DMS) cash receipts processes. The specific objective of this audit was to perform an assessment of internal controls related to handling and processing DMS cash receipts. Special emphasis was made to determine the risk of fraud.

Scope & Methodology The audit scope included an examination of each area’s records and activities related to cash receipts processing covering the period of July 1, 2015 through June 30, 2016. Our methodology included reviewing the department policy to ensure appropriate internal controls had been addressed, and observing daily operations and testing transactions to determine effectiveness of these internal controls. The audit also included surveys and interviews with management and staff to obtain an understanding of the actual procedures in effect. The audit was performed pursuant to section 20.055, Florida Statutes, and in compliance with standards outlined by the Institute of Internal Auditors (IIA).

What We Found Process

Components Control Procedure Results Finding No.

Documentation of Receipts

Receipts are immediately logged upon receipt

1 Receipt logs contain the

required information

Transmittal forms properly prepared

2

Checks are immediately restrictively endorsed upon receipt

3

Safeguarding Receipts

Receipts are processed in secured location

4

Segregation of Duties

Staff exercise appropriate segregation of duties

5

Receipts Outside of Tallahassee

Receipts are processed according to department policy

6

Timely Processing of Cash Receipts

Receipts transmitted timely to FMS per policy

7

Receipts deposited timely per statute

8

Policy/Procedures requires updating and/or enhancing

Policy/Procedures followed by some program areas

Background DMS processes cash receipts for the diverse services it provides. The department’s policy identifies Financial Management Services (FMS) as being responsible for making all deposits of these cash receipts. FMS established this policy to outline the procedures for opening mail, handling monies received through the post office or through direct delivery to program areas, documenting the departmental units involved and their respective responsibilities in cash receipts processing. The policy is applicable to any area of DMS where cash, checks, money orders or other monetary instruments are received. Also, cash receipts processed by the department are subject to deposit guidelines mandated in section 116.01, Florida Statutes.

Our Recommendations

We recommend: 1) FMS updates its policies and procedures to ensure adequate internal

controls for cash receipts processing and compliance with statutory requirements.

2) Management identify all areas processing cash receipts and evaluate the risk and determine if the cash receipts currently being processed in other divisions should be transferred to FMS.

3) FMS communicates the updated policies and procedures to divisions and areas processing receipts, and to provide education and training to these areas. We acknowledge that FMS has already scheduled training in June 2016 for cash receipts processing.

4) FMS monitors compliance with policies, procedures, and statutes and follow-up with management to ensure conformity.

Management has begun working with the Strategic Planning Office and division management to address the findings in this report.

Management Response: FMS will update policies, procedures and processing documents, provide training for divisions continuing to process cash receipts, and monitor cash receipts processing by the divisions to ensure compliance. Also, division management has agreed to ensure cash receipts are processed in compliance with policies and procedures.

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AUDIT OBJECTIVE The objective of this audit was to perform an assessment of internal controls related to handling and processing DMS cash receipts. Special emphasis was made to determine the risk of fraud in the assessment.

SCOPE AND METHODOLOGY

The scope of the audit included cash receipts processed during fiscal year 2015-16. To achieve the audit objective, we began with a review of the internal controls as outlined in the Department of Management Services’ (DMS) Administrative Policy for Cash Receipts No. 06-101. We identified statutes related to the processing of cash receipts and noted section 116.01, Florida Statutes. In addition, we compared the DMS policy to the statute to ensure compliance. Our review focused on the five main components of an internal control framework:

1) Control Environment – assignment of authority and responsibility along with internal policies

2) Risk Assessment – assesses the risks of the process as it seeks to achieve its objectives 3) Control Activities – the actions management establishes through policies and procedures

to achieve objectives and respond to risks in the internal control system 4) Information and Communication – the quality of information and effective

communication 5) Monitoring – activities management establishes and operates to assess the quality of

performance over time and promptly resolves noted deficiencies identified To determine which divisions and program areas were receiving and processing cash receipts, we surveyed management in each of the divisions. The survey results noted seven program areas in addition to Financial Management Services (FMS) that processed cash receipts. An internal control questionnaire was sent to management in these areas to determine the volume of cash receipts and to obtain information about the procedures and controls used in each of the areas processing cash receipts.

1) Telecommunication 2) Real Estate Development and Management 3) Retirement 4) State Group Insurance 5) Financial Management Services

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6) General Counsel 7) Specialized Services 8) State Purchasing

The audit also followed-up on findings and recommendations related to cash receipts processing noted in the Auditor General’s published Report No. 2009-078 of the Department of Management Services and Related Entities: Nonpublic Information Safeguards and Revenue and Cash Receipts Operational Audit, to ensure resolution of those findings. Management and persons processing cash receipts in each of these program areas were interviewed regarding procedures and controls used to process cash receipts. Original records and copies were used as evidence and verified through observation, interviews with staff, and physical examination. Unannounced observations were conducted in these areas to obtain an understanding of the actual procedures used and to assess the effectiveness of internal controls. This audit was performed by the authority outlined in section 20.055, Florida Statutes, and in accordance with the Institute of Internal Audit standards. Scope Limitations

• The audit did not include journal transfer or wire transfer receipts. • We were unable to verify if the cash receipts identified during the audit represent 100

percent of the receipts being processed in the program areas.

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BACKGROUND

The Department of Management Services processes cash receipts for the diverse services it provides and these receipt types include but are not limited to:

• agency and member payments for retirement accounts • online and live auction revenue from fleet management disposal • SUNCOM revenue • E-Rate revenue • administrative fees • My Florida Marketplace transaction fees • parking fees • insurance rebates, refunds, premiums, and settlements • recovery of retirement payments • fees for public records requests and other miscellaneous items • fees from the State Agencies for Surplus Property (SASP) program

Department of Management Services Policy No. 06-101, dated March 5, 2008 and revised April 20, 2012, identifies FMS as being responsible for making deposits of all cash receipts. FMS established this policy to outline the procedures for opening mail, handling monies received through the post office or through direct delivery to program areas, documenting the departmental units involved, and their respective responsibilities in cash receipts processing. The policy is applicable to any area of DMS where cash, checks, money orders or other monetary instruments are received.

The policy requires that program areas processing cash receipts identify a custodian. It also requires that the designated custodian be provided current and approved local procedures regarding the collection of cash receipts to employees with receipt responsibilities. In addition, the policy outlines other FMS responsibilities which are highlighted in the table below.

Individual or Group Responsibilities

Bureau of Financial Management Services

• Annual review and update this policy. • Provide guidance to divisions and employees. • Research current policy to determine whether a policy revision

or policy rescission is required. • Submit request to create, amend and rescind policy. • Maintain appropriate paper work regarding state-owned

property. • Ensure policy content is accurate. • Monitor policy compliance and elevates concerns as

appropriate.

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The cash receipts policy provides procedures for program areas receiving and processing cash receipts. The chart below highlights some of the responsibilities.

Individual or Group Responsibilities

Program Area • All checks and money orders are properly endorsed with the department’s bank endorsement stamp.

• All payments are recorded on a Transmittal Form before submitting to FMS.

• Ensure that all cash, checks, money orders and other monetary instruments are submitted to FMS in a timely manner.

The following charts show reported volume of cash receipts.

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

DivTel FMS REDM SpecializedServices

StatePurchasing

Retirement State GroupInsurance

GeneralCounsel

641

44,554

442 123 322,043

97 332

Table 1- DMS FY 2014-15 Cash Receipts Volume - Count

Source: DMS Policy 06-101

Source: Information from survey of program areas conducted during the audit.

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Also, cash receipts processed by the department are subject to deposit guidelines mandated in section 116.01, Florida Statutes, which requires deposit of funds to the account of the State Treasury not later than seven working days from the close of the week in which the funds were received.

$-

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

DivTel FMS REDM SpecializedServices

StatePurchasing

Retirement State GroupInsurance

GeneralCounsel

$8,292,463

$111,024,429

$113,575

$4,170,193

$109,067

$19,874,374

$1,412,861 $86,045

Mill

ions

Table 2- DMS FY 2014-15 Cash Receipts Volume - Dollars


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EXECUTIVE SUMMARY Internal controls are essential to an effective operation and these activities or procedures are designed to provide reasonable assurance that operations are “going according to plan.” Without adequate internal controls, management has little assurance that its goals and objectives will be achieved. Properly designed and functioning controls reduce the likelihood that significant errors or fraud will occur and remain undetected. Internal controls also help ensure that processes are performing as expected. Department of Management Services Administrative Cash Receipts Policy No. 06-101 provides policies and procedures for staff responsible for processing cash receipts. It includes procedures for receiving, processing, depositing, and transmitting cash receipts to FMS for deposit. Also, section 116.01, Florida Statutes, provides requirements to state agencies for depositing cash receipts. The audit noted that DMS cash receipts are processed by individuals within the divisions as well as FMS. The chart below provides information on the program areas processing cash receipts along with the volume and types.

DivTel REDM Specialized Services State Purchasing Cash

Receipts Type

Dollar Volume

Cash Receipts

Type Dollar

Volume Cash

Receipts Type

Dollar Volume

Cash Receipts

Type Dollar

Volume

SUNCOM, E-Rate, Admin Fees

$8,268,749 Paid Parking $65,847 Live Auction $3,562,800 MFMP Trans

Fees $108,919

Insurance Claim $26,408

Refund, Reimbursements, Screening, Badges

$24,140 On-line Auction $607,393 Travel

Reimbursements $117

Tower Lease Revenue $10,769 Capitol 22nd Floor

Rentals $21,811 Fleet Management $381,150 Cell Phone

Reimbursements $31

Not DivTel Receipts $9,213 Cell Phone

Reimbursements $1,777

Retirement DSGI FMS General Counsel

Cash Receipts

Type Dollar

Volume Cash

Receipts Type

Dollar Volume

Cash Receipts

Type Dollar

Volume Cash

Receipts Type

Dollar Volume

Member & Agency Payments

$19,874,374 Settlement $804,936 FLAIR $67,478,016 Retirement Recovery & Public Records Fees

$85,267

Refunds $414,975 E911 $25,165,373 Not OGC Receipts $768

Rebates $87,690 MFMP $18,381,041 Returned to Sender $10 Returned to Sender $20,682

Performance Penalties $8,750

Fees $6,956 Lockbox Premiums $4,583 Not DSGI Receipts $4,290


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During our audit, we sampled six program areas based on information received in survey responses regarding cash receipts volume processed for fiscal year 2014-15. Program areas processing receipts were verified with FMS; however, we were unable to determine if all areas had been identified. The findings noted in the 2009 audit performed by the Auditor General were followed up on to determine if the control deficiencies had been addressed. We noted that the divisions included in the previous audit had taken corrective action to address the findings identified in that audit. However, some of the same findings were identified in other divisions within DMS during this audit and additional improvements are needed to help ensure the effectiveness of internal controls related to cash receipts processing. The audit identified areas where the current policy for processing cash receipts should be enhanced and updated. The findings are summarized by the internal control components used as a basis for our review. Control Environment and Control Activities The audit noted that following areas should be addressed in the cash receipts policy:

• Safeguarding of assets during processing • Physical security of areas where cash receipts are processed • Procedures for processing cash receipts in areas outside of Tallahassee

Also, the audit noted that the cash receipts policy requires updating in the following areas to ensure compliance with statutory requirements and to ensure adequate internal controls:

• Procedures for ensuring segregation of duties • Timelines for transmittal and processing cash receipts • Documentation required when processing cash receipts

Further, the audit noted that local procedures used by the divisions processing cash receipts should be updated to ensure consistency with the current policy or statute. In addition to recommending that management seek to improve the control environment and control activities through updates to the policies and procedures, we recommend that management strive to improve the other components of the internal control environment related to this process through the following:

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• Risk Assessment Work with division management to identify all program areas processing cash receipts and evaluate the risk and determine if the cash receipts currently being processed in other areas should be transferred to FMS.

• Information and Communication Provide training for the program areas that will process cash receipts to help ensure awareness of and compliance with policies, procedures, and statutes. Also, implement procedures for communicating with division management regarding issues identified in cash receipts processed.

• Monitoring Implement procedures to monitor division activities related to cash receipts processing.

Management is already working with the Strategic Planning Office and division management to address these findings. Training sessions were conducted by management on June 7th and 8th to review cash receipts processing.

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FINDINGS

FINDING 1 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES RELATED TO LOGGING CASH

RECEIPTS

The DMS Administrative Cash Receipts Policy No. 06-101 requires that cash receipts are recorded in a log and recorded immediately upon receipt. The policy notes that the accompanying paperwork from the envelope should be clipped together with the receipt. Also, the policy outlines that the following information should be documented in the log.

• Date • Log number • Payee • Check number • Amount

From interviews with staff and examination of the logs, we noted that it was not clear what date the policy requires and that the logs do not always contain the required information. For example, we noted that information regarding the date received and the date transmitted was missing from some logs. We noted that a log was not always used outside of FMS to record cash receipts. Further, we noted that receipts processed after core working hours are often not logged until the next business day. During discussions with staff, some of the cash receipt custodians noted that they were unaware of the policy requirements. In addition, we were not always able to identify documentation of the reconciliation of transmitted receipts to the Revenue section’s deposit records. Adequately documenting cash receipts helps ensure accountability and reduces the risk of loss, errors in processing, theft and misappropriation of these assets. We recommend that FMS review the cash receipts policy and update it to include more specific information regarding documentation of receipts. Also, we recommend that procedures be implemented to communicate the changes to division personnel. Further, we recommend that FMS implement monitoring procedures for all areas processing receipts to ensure compliance with the updated policy. Finally, we recommend FMS implement procedures to follow-up with division management when receipts have not been processed according to DMS policy to help reinforce department policy.

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Management Response: • “FMS review the cash receipts policy and update it to include more specific

information regarding documentation of receipts.” Concur: FMS is in the process of revising the cash receipts policy to include more specific

information regarding cash control requirements, including segregation of duties; security, restrictive endorsement and documentation of receipts; proper completion and use of the transmittal form; and remittance timeframes. FMS has revised the transmittal form, created an FAQ document, and provided training on June 6-7, 2016. The training addressed all of the cash control requirements outlined in #1, above.

• “FMS implement monitoring procedures for all areas processing receipts to

ensure compliance with the updated policy.” Concur: FMS will monitor revenue transmittals (forms and checks) and will notify

applicable program area and division director of instances of non-compliance.

• “FMS implement procedures to follow-up with division management when receipts have not been processed according to DMS policy to help reinforce department policy.”

Concur: FMS will implement procedures to follow-up with division management when receipts have not been processed according to DMS policy.

FINDING 2 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES RELATED TO TRANSMITTING

CASH RECEIPTS

The DMS cash receipts policy requires that checks and money orders transmitted to FMS be accompanied by a transmittal form and that the form contain at least the following information.

• Date • Transmittal number • Organization code and fund which should receive the deposit

However, the policy does not indicate what date should be included on the transmittal form. We noted variations in the dates being recorded on the form. Some custodians were using the initial date of receipt and others were using the date the transmittal was being prepared for submission to FMS.

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We recommend that FMS review the cash receipts policy and update it to include more specific information regarding the use of the transmittal form. Also, we recommend that procedures be implemented to communicate the changes to division personnel. Further, we recommend that FMS implement monitoring procedures for all areas processing receipts to ensure compliance with the updated policy.

Management Response: • “FMS review the cash receipts policy and update it to include more specific

information regarding the use of the transmittal form.” Concur: FMS is in the process of revising the cash receipts policy to include more specific

information regarding cash control requirements, including segregation of duties; security, restrictive endorsement and documentation of receipts; proper completion and use of the transmittal form; and remittance timeframes.

• “Procedures be implemented to communicate the policy changes to division

personnel.” Concur: FMS has revised the transmittal form, created an FAQ document, and provided

training on June 6-7, 2016. The training addressed all of the cash control requirements outlined in #1, above.

• “FMS implement monitoring procedures for all areas processing cash

receipts to ensure compliance with the updated policy.” Concur: FMS will monitor revenue transmittals (forms and checks) and will notify

applicable program area and division director of instances of non-compliance.

FINDING 3 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES RELATED TO RESTRICTIVE

ENDORSEMENT OF CASH RECEIPTS

Department policy requires all offices responsible for processing receipts to restrictively endorse them as soon as they are received. During the audit, we noted that checks were not endorsed immediately upon receipt in some areas processing cash receipts. For example, we observed checks being held until the second mail delivery or until the following business day before being endorsed. We also noted checks were not endorsed at all prior to being secured for processing at

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a later time. Immediate endorsement of cash receipts helps reduce the risk of theft, misappropriation, and other frauds. We recommend that FMS update its procedures to provide additional guidance for the immediate restrictive endorsement of cash receipts. Also, we recommend that FMS include restrictive endorsement in their training and implement monitoring for areas processing cash receipts to ensure cash receipts are restrictively endorsed immediately upon receipt.

Management Response: • “FMS update its procedures to provide additional guidance for the

immediate restrictive endorsement of cash receipts.” Concur: FMS is in the process of revising the cash receipts policy to include more specific

information regarding cash control requirements, including segregation of duties; security, restrictive endorsement and documentation of receipts; proper completion and use of the transmittal form; and remittance timeframes.

• “FMS include restrictive endorsement in training to areas processing

receipts.” Concur: FMS has revised the transmittal form, created an FAQ document, and provided

training on June 6-7, 2016. The training addressed all of the cash control requirements outlined in #1, above.

• “FMS implement monitoring procedures for all areas processing cash

receipts to ensure cash receipts are restrictively endorsed immediately upon receipt.”

Concur: FMS will monitor revenue transmittals (forms and checks) and will notify applicable program area and division director of instances of non-compliance.

FINDING 4 IMPROVEMENTS ARE NEEDED IN THE SAFEGUARDING OF CASH RECEIPTS

Physical security of cash receipts is a key part of ensuring the proper handling of these assets. As such, all areas handling cash receipts should have an area where access to the cash receipts is restricted to authorized persons only.

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During the audit, we noted that cash receipts were not always maintained in secured areas. For example, FMS does not have a restricted cash office that is only accessible to persons processing cash receipts. Also, we identified cash receipts processed in employee cubicles or other areas accessible to staff not authorized to handle cash receipts. In addition, receipts were not always secured when unattended. Finally, safeguarding of cash receipts is not specifically mentioned in the cash receipt processing policy. Safeguarding cash receipts helps reduce the risk of loss, theft or misappropriation of assets. We recommend that FMS updates its policies and procedures to include information and guidelines regarding securing cash receipts. Also, we recommend areas where cash receipts are currently being processed be assessed to determine how processing can be secured and we recommend management limit this processing to only areas where they can be adequately secured from unauthorized access. Management Response:

• “FMS update its policies and procedures to include information and guidelines regarding securing cash receipts.”

Concur: FMS is in the process of revising the cash receipts policy to include specific information regarding cash control requirements, including segregation of duties; security, restrictive endorsement and documentation of receipts; proper completion and use of the transmittal form; and remittance timeframes.

• “Areas where cash receipts are currently being processed be assessed to

determine how processing can be secured.” Concur: Due to the configuration of the FMS work area, major construction would be

needed to create a secure area, so cash receipts processing must be done in employee cubicles.

• “Management limit cash receipts processing to only areas where receipts

can be adequately secured from unauthorized access.” Concur: Employees responsible for processing receipts (FMS and division program areas)

are instructed to keep receipts secured at all times when not attended. In addition, FMS has recently developed a standard operating procedure concerning security of sensitive documents/data and distributed it to the bureau's employees. Supervisors within the bureau monitor this regularly to ensure compliance.

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FINDING 5 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES TO ENSURE SEGREGATION OF

DUTIES RELATED TO CASH RECEIPTS

The employees performing cash receipts processing in areas outside of FMS ranged from staff and administrative assistants to operations management consultants. These employees often had other duties separate from those related to cash receipts processing. During the audit, we noted that some staff performed incompatible duties related to receipts processing. For example, we identified a program area where one employee has the responsibilities of generating the invoice, receiving and processing the receipt, and reconciling the receipt to the transmittal. Furthermore, we noted that some areas have developed internal cash receipts processing procedures, but these procedures did not always include segregation of duties or comply with DMS policy. Inadequate segregation of duties is a finding that was identified in the Auditor General’s Report No. 2009-078, Department of Management Services and Related Entities: Nonpublic Information Safeguards and Revenue and Cash Receipts Operation Audit. Ensuring that persons processing cash receipts do not have any incompatible duties reduces the risk of errors or fraud. We recommend that the FMS update the cash receipt policy to include more specific procedures that provide for adequate segregation of duties in the cash receipts processing. The procedures should include, but are not limited to, separating the responsibilities for authorizing, processing, recording, depositing, and reconciling transactions. Also, we recommend that FMS educates areas processing cash receipts about the segregation of duties procedures and implement monitoring procedures to ensure their compliance. Finally, we recommend that any procedures developed by areas outside of FMS processing cash receipts include specific procedures for segregation of duties compliant to those in the DMS cash receipts policy. Management Response:

• “FMS update cash receipts policy to include more specific procedures that provide for adequate segregation of duties for cash receipts processing. The procedures should include, but not be limited to, separating the responsibilities for authorizing, processing, recording, depositing, and reconciling transactions.”

Concur: FMS is in the process of revising the cash receipts policy to include more specific information regarding cash control requirements, including segregation of duties; security, restrictive endorsement and documentation of receipts; proper completion and use of the transmittal form; and remittance timeframes.

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• “FMS educates areas processing cash receipts about the segregation of duties procedures and implement monitoring to ensure compliance.”

Concur: FMS has revised the transmittal form, created an FAQ document, and provided training on June 6-7, 2016. The training addressed all of the cash control requirements outlined in #1, above.

• “Procedures developed by areas outside of FMS processing receipts include

specific procedures for segregation of duties compliant to those in the DMS cash receipts policy.”

Concur: The cash receipts policy will include a requirement that all areas processing cash receipts (whether in Tallahassee or outside of Tallahassee) must comply with all applicable statutes, rules, policies and procedures.

FINDING 6 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES FOR PROCESSING CASH

RECEIPTS OUTSIDE OF THE TALLAHASSEE OFFICE

During the audit, we noted that areas outside of Tallahassee also receive cash receipts. The cash receipts policy does not include procedures for cash receipts processed by areas outside of Tallahassee. In addition, we noted that checks were transmitted from these locations to FMS outside of the timeframes specified in the cash receipts policy. In the sample of transactions analyzed, we noted checks that were transmitted up to 67 days after the receipt date. Centralized cash receipts processing could help ensure timely processing and timely deposit of receipts to the State Treasury, and reduce the risk of loss, theft, and other fraud. We recommend that FMS work with division management to assess the risk associated with receipts being processed outside of Tallahassee and determine if these cash receipts could be remitted directly to FMS. If it is determined that these areas will continue to process cash receipts, we recommend that the cash receipts policy be updated to include procedures for processing cash receipts in areas outside of Tallahassee.

Management Response: • “FMS work with division management to assess the risk associated with

receipts being processed outside of Tallahassee and determine if these cash receipts could be remitted directly to FMS.”

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Concur: FMS is meeting with all program areas currently handling cash receipts to determine the appropriateness of that function within the division.

• “If it is determined that these areas will continue to process cash receipts,

we recommend that the cash receipts policy be updated to include procedures for processing cash receipts in areas outside of Tallahassee.”

Concur: FMS is in the process of revising the cash receipts policy to include more specific information regarding cash control requirements, including segregation of duties; security, restrictive endorsement and documentation of receipts; proper completion and use of the transmittal form; and remittance timeframes. These requirements apply to all program areas handling cash receipts, even those outside of Tallahassee.

FINDING 7 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES RELATED TO TIMELY

TRANSMITTAL OF CASH RECEIPTS

The DMS cash receipts policy requires program areas to “transmit receipts that total less than $500 to FMS within seven calendar days of receipt [and to] transmit all cash, as well as other receipts totaling $500 or more within one working day of receipt.” During the audit, we noted that cash receipts were not always transmitted in accordance with the timelines standard stated in the policy. We tested 37 transactions for timely transmission to FMS and noted that ten (27 percent) transactions were transmitted outside of the cash receipts policy requirements. Delays in transmitting receipts from program areas to FMS impact FMS’ ability to comply with the statutory deposit requirement. Also, untimely deposits delay the availability of funds for state use and increase the risk for loss.

We recommend FMS include in their update to the cash receipt policy, a revision of the requirements for transmitting cash receipts. Once the policy is updated, we recommend that division management implement local procedures to ensure compliance with policy as it relates to timely transmission.

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Management Response: • “FMS include in the update to the cash receipts policy, a revision of the

requirements for transmitting cash receipts.” Concur: FMS is in the process of revising the cash receipts policy to require program

areas to transmit cash receipts to FMS within 2 working days of receipt.

• “Once the policy is updated, we recommend that division management implement local procedures to ensure compliance with policy as it relates to timely transmission of cash receipts.”

Concur: Refer to the divisional responses at the end of the report.

FINDING 8 IMPROVEMENTS ARE NEEDED IN THE PROCEDURES RELATED TO TIMELY DEPOSIT

OF CASH RECEIPTS

Florida statute1 requires receipts to be deposited to the State Treasury not later than seven working days from the close of the week in which the funds were received. During the audit, we noted that cash receipts were not always deposited in accordance with the statute. We tested 77 transactions for timeliness of deposit and noted that eleven (14 percent) transactions were deposited outside of the statutory requirement. Untimely deposits delay the availability of funds for state use and increase the risk for loss. This finding was also identified in the Auditor General’s published Report No. 2009-078, Department of Management Services and Related Entities: Nonpublic Information Safeguards and Revenue and Cash Receipts Operational Audit.

We recommend FMS update the cash receipt policy to ensure timely deposit of cash receipts. Management Response:

• FMS update the cash receipts policy to ensure timely deposit of cash receipts.

1 Section 116.01, Florida Statutes: “Every state and county officer within this state authorized to collect funds due the state or county shall pay all sums officially received by the officer into the state or county treasury not later than 7 working days from the close of the week in which the officer received the funds.”

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Concur: FMS is in the process of revising the cash receipts policy to require program areas to transmit cash receipts to FMS within 2 working days of receipt, and FMS employees' expectations have been updated to require deposit of receipts within 4 working days. In March 2016 we implemented a quarterly Key Performance Indicator (KPI) to measure our compliance with the statutory requirement for depositing cash receipts. The Revenue KPI report will enable us to monitor compliance, both within the bureau and in the division program areas.

Division Management Response

Division management should assess the need/appropriateness to continue processing cash receipts and if it is determined that the division will continue to process cash receipts, division management will ensure: Security for cash receipts; Staff has knowledge of the cash receipts policy & will attend DMS training

sessions; Compliance with the updated DMS cash receipts policy; Division’s local procedures comply with updated DMS cash receipts

policy. Concur: Division management has determined they will either continue to process cash

receipts or that they have not yet determined their status. However, division management has agreed to ensure: Security for cash receipts; Staff has knowledge of the cash receipts policy & will attend DMS training

sessions; Compliance with the updated DMS cash receipts policy; Division’s local procedures comply with updated DMS cash receipts policy.

ACKNOWLEDGEMENTS We acknowledge that FMS has already started the process of updating its cash receipts policy, and is working with the Strategic Planning Office and division management to address findings identified in this audit. Also, the Office of Inspector General would like to thank DMS management and staff for their cooperation and assistance during this audit.

Cash Receipts Processing Audit Final Report - Florida

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