db14101.Q 1 COMMISSIONERS' COURT AGENDA REQUEST PLEASE FURNISH ONE ORIGINAL AND TEN (10) COPIES OF THIS REQUEST AND DOCUMENTS TO BE REVIEWED BY THE COURT MADE BY: Tess Mabry OFFICE: Auditor MEETING DATE: 6/14/10 TIME PREFERRED: any SUBJECT: Consider, Discuss and Take Appropriate Action to receive the Audit Report by the Kerr County Auditor of the Office of the Kerr County Attorney EXECUTIVE SESSION REQUESTED: (PLEASE STATE REASON) NAME OF PERSON ADDRESSING THE COURT: Tess Mabry ESTIMATED LENGTH OF PRESENTATION: 5 minutes IF PERSONNEL MATTER - NAME OF EMPLOYEE: Time for submitting this request for Court to assure that the matter is posted in accordance with Title 5, Chapter 551 and 552, Government Code, is as follows: Meeting scheduled for Mondays: 5:00 PM previous Tuesday THIS REQUEST RECEIVED BY: THIS REQUEST RECEIVED ON: @ .M. All Agenda Requests will be screened by the County Judge's Office to determine if adequate information has been prepared for the Court's formal consideration and action at time of Court Meetings. Your cooperation will be appreciated and contribute towards your request being addressed at the earliest opportunity. See Agenda Request Rules Adopted by Commissioners' Court. REPORT Monday, June 07, 2010 To: Rob Henneke, Kerr County Attorney From: Theressa "Tess" Mabry, Kerr County First Assistant Auditor Subject: Audit Report of the Office of County Attorney Background: The Office of County Attorney was established by the Texas Constitution and serves the state in prosecution of criminal matters in the County Court, County Courts -at -Law and Justice Courts. The County Attorney seeks protective orders on behalf of victims of domestic abuse and violence. The county represents the State of Texas in adult and child protective service and adult guardianship proceedings. The County Attorney serves as the chief legal officer for Kerr County. The County Attorney serves four year terms and sees to the collections of various monies including fees for checks drawn on insufficient funds and restitution for said checks, collection of fees for Pre -Trial Diversions and collections for Discovery materials. The current County Attorney maintains a full -time staff of 6, including two assistant County Attorneys. The County Attorney administers county budgeted expenditures of $ 519,000. Changes to Risk Assessment: Changes in risk have occurred since the previous audit. The County Attorney Position was vacated by Rex Emerson in October of 2009 when he was appointed to the 198th Judicial District Judge position. At that time, Ilse Bailey was working as Acting Kerr County Attorney until after the March 2010 Primary Election. Rob Henneke, upon winning the Republican Primary and with no opposition in the general election, was appointed to the Kerr County Attorney position beginning on April 1, 2010. The turnover of an Elected Official /Department Head position creates the risk inherent with change as well as procedural changes. Risk, during this time of change, is assessed at a moderate level and should decrease with time, given the learning of new procedures of all parties involved and additions of any new internal control and reporting procedures outlined herein. Risk continues to be at a mitigated level due to the continued ethical tone of the elected official and his desire to project his ethical considerations to all areas of his office, including financial accounting and reporting. Objectives: Determine: • statutory financial and reporting compliance with regard to finances; • financial policy and reporting compliance with regard to finances; • the level of internal control employed with regard to finances; • The appropriateness of expenditures made during the audit period • The proper accounting for and control of cash and verification of the beginning cash balance; • And risk with regard to finances and internal control of the office of the Kerr County Attorney. Scope: The scope of the audit includes financial reporting and internal control for the period of 10/01/2009 to 3/31/2010 for the Hot Check Fund, Discovery Fund and Pretrial Diversion Collections. Program and Fieldwork: The audit program was prepared by Theressa Mabry who was also assigned to fieldwork. The deadline for the completion of the audit is May 31, 2010. Sampling: Judgment sampling was indicated due to the varying purposes and methods of accounting for and reporting of financial items. 10% of all applicable cases were sampled of the hot check collections, an attempt was made to sample 100% of Discovery fund revenues for the time period and Pretrial Diversions were sampled at 12% of cases with applicable Pre -Trial Diversion orders. Procedures: • Interviewed employees regarding internal control as well as financial accounting and reporting • Administered an Internal Control Questionnaire answered by the elected official • Traced a sample of receipts of Hot Check Collections for verification of accounting, reporting and internal controls • • Traced a sample of Discovery Fund revenues for verification of accounting, reporting and internal controls • Traced a sample of Pre -Trial Diversion revenues for verification of accounting, reporting and internal controls • Counted and verified change fund • Verified balance of Hot Check "Trust" Account Findings: There were no instances of misappropriation of funds found regarding the Office of the County Attorney. Although the staff of the County Attorney's office maintains an excellent level of integrity in its operations, improvements can be made in financial accounting, reporting and internal controls which would assist the office in attaining an even higher level of operations and efficiency. These findings are detailed below. Recommendations: With regard to Hot Check Collections: • Detail Listing of Hot Check Deposits It is recommended that the hot check collections department include a detail of the hot check and fee amounts deposited with the Treasurer at time of deposit. This listing can be redacted to remove individual names for privacy purposes while maintaining the hot check department receipt number. It is also recommended that an intact version of the detail listing continue to be filed in the hot check collections department with the deposit copies for tracing purposes to each deposit made with the Treasurer's office for verification of deposit detail. • Monthly Report It is recommended that a report be submitted to the Auditor's office on a monthly basis verifying the amount deposited during the month for hot check collections showing receipt numbers and amounts. Individual names can, again, be redacted for privacy purposes. This report would be used to verify correct deposition with the Treasurer and entry into the Incode financial system. With regard to Discovery Revenue Collections: • Regular Deposits to the Treasurer It is recommended that deposits of Discovery Revenues be made to the Treasurer on a regular basis not longer than every 30 days in accordance with the Texas Local Government Code Section 113.022. This regular deposition of funds would satisfy compliance with statute and relieve the Office of the County Attorney of the burden of security of cash assets associated with discovery revenue. • Detail Listing of Discovery Deposits It is recommended that the discovery collections department include a detail of the discovery collection amounts deposited with the Treasurer at time of deposit. This listing should include a receipt number which would be traceable to the ledger balances for each account and the amount and date of the receipt. A copy of this listing should be available in the discovery collections department to verify the deposit with the Treasurer for tracing purposes. • Monthly Report It is recommended that a report be submitted to the Auditor's office on a monthly basis verifying the amount deposited during the month for discovery collections showing receipt numbers and amounts. This report would be used to verify correct deposition with the Treasurer and entry into the Incode financial system. • Financial Information System It is recommended that the County Attorney's office consider a change in financial accounting software for the discovery collections department. The current system does not provide the reporting capabilities needed to satisfy reporting requirements for adequate intemal controls and staff training for such a system should be comprehensive and allow the user to utilize all functions of the software. The software program has since been updated and now is capable of providing the requested reporting capability. With Regard to Pre -Trial Diversion Revenue: • Control of Collections It is recommended that the County Attorney's office release control of collection of Pre -Trial Diversion revenue to the Office of the County Clerk. While it is necessary to verify the collection of Pre -Trial Diversion monies for compliance with court ordered supervision terms, the receipt of all fees related to this program can verified within the lncode financial program, avoiding the need of those monies to be received in the Office of County Attorney. This redirecting of revenue would add a level of internal control to the collection of those revenues. The redirection would allow revenues to be posted with the County Clerk fees into the Odyssey system, allowing for a centralized and consistent application of accounting procedures. The Office of the County Attorney would then have access to review the posted items in Odyssey and again in lncode to verify the compliance with the fee terms of the Pretrial Diversion order. This release of the fee would add controls, while providing the staff of the County Attorney with decreased duties. The County Attorney is currently working with the County Clerk to redirect the collection of Pre -Trial Diversion monies through the Office of the County Clerk as recommended With regard to General Internal Controls • Segregation of Incompatible Duties It is further recommended that, where possible, the Office of the County Attorney segregate collection of monies, the posting and deposition of those monies, and the end -of -month reconciliation. This can be accomplished by creating new inter- office procedures directing the flow of financial information between individuals rather than allowing one person control of one aspect of the financial information. For example, receipt of hot check monies can be receipted and posted by one individual and a cash count end -of -day reports can be reviewed by another individual to confirm receipts. The County Auditor's office appreciates the diligence and access to information on the part of the Office of the County Attorney and commends the staff on its participation and tremendous cooperation. We also thank the County Attorney for agreeing to implement the recommendations detailed in this report.