Read Microsoft Word - WP 10.01 - Final Audit Report.doc text version

Audit Report

County Controller

Stephen J. Barron, Jr.

PRISON COMMISSARY & INMATE TELEPHONE SYSTEM

As of December 31, 2007

Audit Manager

Frank S. Kedl, CIA

Solicitor

Timothy P. Brennan, Esq.

County Executive

John Stoffa

County Council

Ann McHale, President Wayne A. Grube, Vice-President Ron Angle Margaret Ferraro John Cusick Charles M. Dertinger J. Michael Dowd Lamont G. McClure, Esq. Diane Neiper

Office of the Controller County of Northampton Pennsylvania

STEPHEN J. BARRON, JR. CONTROLLER OF NORTHAMPTON COUNTY

FRANK S. KEDL, CIA

Audit Manager

NORTHAMPTON COUNTY COURTHOUSE 669 WASHINGTON STREET EASTON, PENNSYLVANIA 18042 PHONE (610) 559-3186 FAX (610) 559-3137

TIMOTHY P. BRENNAN, ESQ.

Solicitor

July 24, 2008 Members of the Northampton County Council John Stoffa, County Executive County of Northampton, Pennsylvania

We have completed an audit of Prison Commissary and Inmate Telephone System as of December 31, 2007. The Executive Summary on page 1 summarizes the audit results and identifies opportunities for improvement, while the Audit Results section provides a detailed explanation. We acknowledge the cooperation and assistance we received from the Department of Corrections and the Procurement Division. Their help was essential to the performance of this audit. Our report was discussed with management at our exit conference on June 30, 2008. Management's response is included in the Audit Results section of the report. Very truly yours,

Stephen J. Barron, Jr. County Controller

Paul L. Albert, CIA Lead Auditor

Table of Contents

PAGE

EXECUTIVE SUMMARY - OPPORTUNITIES FOR IMPROVEMENT................. 1 INTRODUCTION ............................................................................................................. 2 PURPOSE AND SCOPE .................................................................................................. 4 METHODOLOGY ............................................................................................................ 4 AUDIT RESULTS ............................................................................................................. 5 Section A ­ Internal Controls

1. 2. 3. Segregation of Duties .................................................................................................................. 5 Timely Deposit of Funds............................................................................................................. 6 Policies and Procedures .............................................................................................................. 7

Section B ­ Compliance

1. Inmate Telephone Contract ....................................................................................................... 8

EXECUTIVE SUMMARY - OPPORTUNITIES FOR IMPROVEMENT

The following is a summary of the content of the enclosed report. See report references noted below for full detail.

Section A ­ Internal Controls

1. To maximize the security of assets and minimize the possibility of errors going undetected, duties involving cash disbursements should be properly segregated. Section A-1, page 5. 2. To properly secure cash and maximize returns to the County, funds received by the Prison should be deposited within a day of when they're received. Section A-2, page 6. 3. The management of the Prison should develop a Policies and Procedures Manual relating to commissary processes. The Controller's Office is available to assist the Prison staff if requested. Section A-3, page 7.

Section B ­ Compliance

1. Procurement should design and implement a process of assuring that executed contracts are in place for all bids and proposals awarded by Executive Order. Also, Procurement's Solicitor should determine if the terms of the Inmate Telephone contract need to be amended to clarify the length of the contract. Section B-1, page 8.

1

INTRODUCTION

The Northampton County Department of Corrections (Prison) operates a commissary for the benefit of the inmates. For a number of years the Prison operated their commissary in-house. A Corrections Officer was assigned fulltime to the commissary and he purchased merchandise, filled orders placed by inmates, updated the Prison's computer system and distributed merchandise. The commissary within the Prison was stocked with merchandise for inmates with everything from food, clothing, toiletries and greeting cards to small electronics. In 2007 the County issued a Request for Proposal for commissary services. Oasis Inmate Commissary Services won the proposal and took over commissary services on 4/26/07. Inmates may place orders between 4:00 PM Friday and 9:00 PM on Sunday; funds are automatically taken out of the inmates' personal property account. Orders are filled by Oasis and sent to the Prison in individually sealed bags. An employee from Oasis comes to the Prison and distributes the merchandise along with a Corrections Officer. One of the comparisons that could be made between the in-house commissary and one that's outsourced is the percent of profit earned on commissary sales. The contract with Oasis guarantees a 41% profit which is much greater than the profit earned when the commissary was operated in-house. Profits earned on the commissary are classified as revenue for the Prison and are used to offset Prison expenditures. The table below shows a comparison of profit earned on commissary sales.

Comparison of Profit on Commissary Sales

Percent Profit 13.7% 15.5% 10.2% 12.2% 40.8%

Period 2004 2005 2006 1/1 ­ 4/26/07 4/27 ­ 12/31/07

Profit $30,405 $45,311 $29,042 $11,262 $103,712

Status In-house In-house In-house In-house Outsourced

Another component of this audit is inmate telephone services. The County contracts with a vendor to allow inmates to make outside telephone calls using funds that were put into an account by someone outside the Prison. When the funds are depleted, the inmate may not make outside calls. In 2006 the County solicited proposals for an inmate telephone system. The winning vendor, Inmate Telephone Inc., agreed to pay the County a 53% commission on all calls made. The table below shows a comparison of the telephone revenue earned each 2

year. Telephone commissions are classified as revenue to the Prison and are used to offset Prison expenditures.

Schedule of Profits from Inmate Telephone Services

Period 2004 2005 2006 2007 Commissions Earned $188,833 $249,997 $232,847 $237,161

3

PURPOSE AND SCOPE

The audit was conducted as part of the routine rotation of audits involving Prison operations. The purpose of the audit was: To determine if controls over the processing of financial transactions are adequate. To determine if processes are in compliance with laws and regulations. To determine of processes are efficient and effective. Our tests were conducted on transactions occurring during the time period of January 1, 2007 through December 31, 2007.

METHODOLOGY

Our methodology included: Researching contracts and speaking with individuals in Procurement. Interviewing individuals in the commissary and other areas of the Prison to document various processes. Reviewing those processes to identify and assess internal controls, and economy and efficiency. Identifying applicable policies, procedures, laws and regulations. Testing transactions for compliance and internal controls. We conducted this performance audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

4

AUDIT RESULTS

Section A ­ Internal Controls

1. Segregation of Duties

OBSERVATION The Clerical Specialist who manages inmate funds prepares checks and has custody of the signature stamp to apply an authorized signature to checks. No one individual should have responsibility for more than one of the three transaction components: authorization (approval), recording (recordkeeping) and handling cash (asset custody). By preparing checks (recordkeeping) and having access to the signature stamp (approval) this individual has duties that conflict. RECOMMENDATION To maximize the security of assets and minimize the possibility of errors going undetected, the individual that prepares checks should not have access to the signature stamp or the authority sign checks. MANAGEMENT RESPONSE Todd Buskirk, Director of Corrections The signature stamp has been secured in a Prison safe. The Director or designees have been signing checks with their original signature. The Prison will comply with the recommendation.

5

2. Timely Deposit of Funds

OBSERVATION While reviewing telephone commission checks we noted that three of 12 deposits were made four or more business days from when the deposit was prepared. This included not only telephone commission checks but also other funds being deposited by the Prison. Not depositing funds within a day of when they're received increases the possibility that funds could be misplaced. It also penalizes the County by not allowing them to invest funds sooner and maximize their return on investment. RECOMMENDATION To properly secure cash and maximize returns to the County, funds received by the Prison should be deposited within a day of when they're received. MANAGEMENT RESPONSE Todd Buskirk, Director of Corrections Personnel associated with deposits have been instructed to comply with timely deposit recommendation.

6

3. Policies and Procedures

OBSERVATION The Prison does not have a Policies and Procedures Manual for the commissary since Oasis took over operations. The current polices and procedures deal with an in-house commissary. Although the manual would not be extensive, it should include processes such as the reconciliation and payment of Oasis invoices, the ordering, delivery and distribution of merchandise, as well as policies to follow in instances where the inmate is discharged, released to another prison or released to Community Corrections before merchandise could be delivered. Manuals detail policies set forth by management and procedures guide employees on how to carry out those policies in a consistent manner. They're also good for crosstraining staff and training new employees. RECOMMENDATION The management of the Prison should develop a Policies and Procedures Manual relating to commissary processes. The Controller's Office is available to assist the Prison staff if requested. MANAGEMENT RESPONSE Todd Buskirk, Director of Corrections The Prison Accountant updated policy to reflect contract vendor practices and the Director approved the same for distribution.

7

Section B ­ Compliance

1. Inmate Telephone Contract

OBSERVATION On May 25, 2006 an Executive Order was issued awarding inmate telephone services to Inmate Telephone, Inc. The contract was not signed and executed until December 20, 2007, after the auditor made inquires to Procurement about the contract. Also, the contract states that the term of the contract is three years, from 9/1/07 to 8/31/09, a period which is in fact only two years. RECOMMENDATION Procurement should implement procedures to track the progress of contracts to ensure that they are fully executed after the award is made via an Executive Order. Also, Procurement should consult with their Solicitor to determine if an amendment to the Inmate Telephone contract is necessary to clarify the terms of the contract. MANAGEMENT RESPONSE Terry Beidelman, Deputy Purchasing Manager Inmate telephone services began prior to an executed contract. The contract was executed December 20, 2007 which is the legal start date of this contract. A change order was issued to correct the discrepancies between the executive order and the contract, to reflect a five year term. The County has the right to terminate any time with or without cause within a thirty day notice. The services are provided at no cost to the County but provide a revenue stream to the Prison and County. We have in place a monitoring procedure for contracts in the process of preparation, review, signature/insurance, certificates and execution and are currently working with ACS to enhance the system we currently have in place. Just want to thank you and the Controllers Office for your review.

8

Information

Microsoft Word - WP 10.01 - Final Audit Report.doc

11 pages

Find more like this

Report File (DMCA)

Our content is added by our users. We aim to remove reported files within 1 working day. Please use this link to notify us:

Report this file as copyright or inappropriate

260629


You might also be interested in

BETA
Microsoft Word - WP 10.01 - Final Audit Report.doc