city of cape coral city auditor's office · closing cashier supervisors be available to...

City of Cape Coral City Auditor's Office

TO: Mayor and Council Members ......L...~

THRU: Dona J. Newman, City AUdito~' - l\' \f....... FROM: Margaret L. Krym, Assistant City AUditor~

DATE: September 11, 2009 SUBJECT: Follow Up of FY2006 Sun Splash Family Waterpark Cash Handling Audit

Introduction

In FY2006 several cashiers working at the Sun Splash Family Waterpark provided statements alleging misappropriations of cash by other cashiers. Following a criminal investigation, Management and the City Auditor agreed that further investigation and review of the internal controls related to cash handling at the Waterpark was appropriate.

This review of internal controls was completed and a report was issued. That report included seven recommendations which Management agreed to implement. They are listed in the attached grid (Attachment A.)

Summary of Implementation Status

All recommendations have been implemented and/or the underlying identified weaknesses have been mitigated.

Other Observations During our work at the Sun Splash Family Waterpark we were required to review their documented policies and procedures. Documented policies and procedures function as an internal control by providing specific direction to staff on how they should act to accomplish Management's objectives. Based on our review of the policies and procedures at the Waterpark, we wish to commend the Waterpark Management for the thoughtful work effort reflected in these documents. They serve as an excellent example for other departments to use as a standard.

Additionally, when we reviewed these documents we found that the Waterpark has a documented policy stating that cash handlers who have an overage/shortage cash event greater than $5 in a day will on the first offence be taken off the register and put on probation until they attend an internal 2 hour cash handling class. A second offence will result in termination of the employee's contract. We observed documentation indicating several employees who had overages or shortages greater than $5 and who

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Follow Up of FY2006 Sun Splash Family Waterpark Cash Handling Audit September 11, 2009 of 4

continued to work as a cash handler. In some cases they did receive retraining and in others they did not. We also noted several employees who had more than one instance of an overage or shortage greater than $5 that were not terminated.

In order to provide staffing and have cashiers available the Division found their current policy too restrictive. We concur. The Waterpark Policy is more restrictive than the general policy for the Parks and Recreation Department and Management has questioned this. They have currently suspended the policy until a new policy can be decided upon.

We would note however, that tolerated non-compliance with a documented policy and procedure weakens Management's ability to enforce compliance to all policies and procedures. Also, in this case, the required retraining is intended to re-enforce accuracy in staff's handling of cash and strengthen the controls over cash. Disregard for the retraining policy altogether may weaken the cash controls.

We suggest that Management review and/or revise their policy regarding required disciplinary action for instances of overages and shortages greater than $5 such that they can enforce compliance, maintain adequate staffing and still retain adequate control over cash. We also suggest that the new policy be over arching and applied to all departments in the Parks and Recreation Division.

Status of individual Recommendations

Recommendation #1 At the time of the incident in 2006, cash handlers were able to print duplicate receipts for individual transactions. We recommended and Management agreed to modify the related software such that only supervisory staff could print a duplicate receipt.

Recommendation #1 has been completed and the underlying risk has been mitigated.

Recommendation #2 The original finding stated that Management did not have adequate oversight in place to mitigate the internal control weaknesses in the RecTrac Point of Sale software module. Three recommendations were made to address this weakness.

A. We recommended and Management agreed to change the procedures regarding voided transactions and refunds such that both these activities would require timely supervisory involvement. These procedural changes have been implemented.

B. We recommended and Management agreed to ensure that shift supervisors and closing cashier supervisors be available to monitor and assist cashiers and provide a deterrent. These procedural changes have been implemented.


C. We recommended and Management agreed to install security cameras in the ticket booths and cash office. This has not been done. It is our opinion that the cost of installing cameras and monitoring the resulting videos may not be justified.

Recommendation #2 items A and B have been implemented and along with the implementation of Recommendation #1, have sufficiently mitigated the underlying risk.

Recommendation #3 We had recommended and Management had agreed to update their Policy and Procedure Manuals and to ensure that they contained written procedures for "Voids" and "Refunds" and other RecTrac transactions. The current manual does address this recommendation and contains procedures for "Voids", "Refunds" and RecTrac activity.

Recommendation #3 has been completed and the underlying risk has been mitigated.

Recommendation #4 Management had agreed that they would document all remedial training provided to cashiers. The Division is providing remedial training and logs are maintained of all staff who attend these sessions.

Recommendation #4: Management has completed what they agreed to do and the specific underlying risk associated with this documentation has been mitigated.

Recommendation #5 During the original audit we found that cash register tapes were not being adequately controlled and stored. We recommended that storage methods be put in place to protect these tapes and ensure their availability. Management agreed and indicated they were planning to eliminate the use of registers with tapes.

At this time, the park has only one register that relies on a tape to store and back up its data. Tapes from this register are being adequately protected and are retrievable.

Recommendation #5 has been completed and the underlying risk has been mitigated

Recommendation #6 During the original audit we found that void transaction activity was not being tracked and analyzed by Management. We recommended and Management agreed that a daily void report should be maintained and void activity by cashier should be reviewed.

During our follow up review, we found that a Daily Void Report is being prepared. It does not track voids by cashier but we found that the number of voids reported is not significant. Additionally, we found that all voids over $10 are reviewed by supervisory staff at the time they occur.


Recommendation #6 has been completed and the underlying risk has been mitigated

Recommendation #7 During the original audit, we found that "blank" ticket stock was not being retained. We recommended that actual voided tickets should be retained in all cases to substantiate each voided ticket transaction.

During our follow up review we were advised that staff still does not retain damaged "blank" tickets. They are shredded. However, all tickets that have been printed on and voided are retained and are stapled to the cash balancing sheet. The control number that identifies a ticket is printed on it and is provided by the RecTrac Software. The blank ticket stock population is not controlled. The printed ticket stock population with RecTrac Software identifying numbers is controlled.

Recommendation #7: Management has implemented what they agreed to do and we concur that the underlying risk has been mitigated.

We would like to thank Annette Figueroa, Waterpark Manager and Janice Fusco, Operations Manager for their helpful assistance during this follow up engagement.

xc: Terry Stewart, City Manager Carl Schwing, Assistant City Manager Dolores Menendez, City Attorney Bonnie Potter, City Clerk Steve Pohlman, Parks and Recreation Director Mark Mason, Financial Services Director Michael Kalvort, Parks and Recreation Deputy Director Annette Figueroa, Waterpark Manager Janice Fusco, Waterpark Operations Manager Audit Committee


Sun Splash Family Waterpark Cash Handling Audit January 12, 2006

Attachment A

Action to beFinding Recommendation Management Response

taken

1. The reprint function in the RecTrac Point of Sale module (POS) was operational. This reprint function allowed duplicate receipts to be printed that were identical to the originals. The RecTrac Point of Sale module did not contain a feature to disable, restrict, track, or monitor the use of the reprint function. These duplicate receipts provided an opportunity for cashiers to misappropriate funds undetected.

The software vendor has stated their organization is planning on adding a password feature the reprint function as part of their next release slated for January 2006. Continued efforts should be made by Parks & Recreation management to obtain software upgrades that disable, restrict, track, or monitor the use of the reprint function in the point of sale module.

Vendor to modify software to meet standards of Internal Auditor.

Implement software changes.

2. Management did not have adequate oversight in place to mitigate the internal control weaknesses in the RecTrac Point of Sale software module.

Timely internal control improvements are recommended that focus on increased management oversight and mitigate the risks associated with the RecTrac POS internal control weakness.

XXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXX

2A Procedural changes that include All voided transactions over $10.00 Enact policy immediate manager approval for will require management interaction proposed by all voided transactions should be with customer to supplement current waterpark

considered. When a cashier policy of management approval. All management relative

needs to void a sale, a manager waterpark managers will continue to to the voided

should be called immediately. circulate throughout the waterpark to transactions in

Additionally, managers should meet the service needs of all guests excess of $10.00.

circulate regularly from one cash and employees and tend to the

station to another so cashiers will administrative functions of the

be aware a manager could appear waterpark.

at any time. Customer information

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Attachment A

Finding Recommendation Management Response Action to be

taken

28

(name. address, phone number) should be obtained when issuing cash refunds. This gives park managers the opportunity to verify a particular refund and increases the perception of detection. Ensure shift supervisors and Senior waterpark managers, the Head Continue with current closing cashiers are available to Cashier, and shift supervisors will oversight practices. monitor and assist cashiers to continue to monitor and assist all staff create more of a theft deterrent. and guests throughout the operating

periods.

2C Installation of cameras in ticket Sun Splash management will pursue Install cameras, booths and cash office. the installation of cameras with

recording devices to support standard and routine audit review.

monitors and recording devices in the Cash Office, ticket booths and Cafe.

3. The Cashier Manual and Supervisor's Cash Office Manual for Sun Splash Family Water Park were last updated for the start of the 2005 season and did not include references to the RecTrac computer system. Additionally, the Cashier Manual did not include the procedures for issuing cash refunds to

The updates to the Cashier Manual and Supervisor's Cash Office Manual to include references to the RecTrac computer system should be completed in time to be used for training sessions to be conducted before the reopening of the waterpark in March 2006.

The 2006 Cashier/Guest Service/Food Service Manual and Supervisory Manual include process oriented and site specific RecTrac procedural guidelines based on the 4 volumes of RecTrac published operating manuals. All procedural manuals, as historically approved by P&R Administration, will include written void and refund procedures.

Implement new site specific RecTrac manuals at the beginning of the 2006 operating season.

customers. Updates to these manuais were in progress at the time of the audit but were not yet finalized.

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Attachment A

Finding Recommendation Management Response Action to be

taken

4. Cashiers who generate more than $5.00 per day or $25.00 a month in overages/shortages were not consistently being sent to the mandatory retraining classes as specified in the Cashier Manual and the Supervisor's Cash Office Manual. No written documentation was available related to this type of cashier retraininq.

Mandatory retraining of cashiers should be conducted as required by the Cashier Manual and the Supervisor's Cash Office Manual. Session records including cashier attendance should be formally documented and retained.

Remedial training will be documented in an identical fashion to all other employee in-service training conducted to include lesson plans and attendance records. Per historical practice, disciplinary notices, as signed by the employee and a senior manager, will continue to be maintained in each employee file.

The periodic and annual performance evaluation for the Head Cashier's position includes a mandated procedural standard regarding this reporting function with P&R Admin included in the distribution of summary reports.

5. The documentation and inventory of used yellow cash register tape rolls from the Casio cash registers was incomplete and not reliable for use as a management tool. Additionally, the yellow cash register tape rolls from the Casio cash registers were not reviewed. The incomplete data was not reliable for use as an internal control measure or management tool.

Sun Splash Family Waterpark management should develop and document an organized storage method for all used Casio yellow tape rolls. The system should assure all Casio tape rolls are accounted for and allow for easy access to the tapes when needed.

Journal tapes were reviewed by Cash Office personnel and management as warranted based on cash out documents. Sun Splash management is moving forward with the elimination of Casio registers by the start of the 2006 operating season.

Proceed with the elimination of all Casio registers. Sun Splash will utilize the inventory guidelines of the City Auditor until the elimination of all Casio registers has been completed.

6. Void transactions were not being tracked and analyzed by management. The Head Cashier did not maintain a report of daily voids by cashier for analysis.

The Head Cashier should maintain a daily void report by cashier for each day the park is open. Copies of this report should be distributed along with the Over/Short Report to the Waterpark Manager and the Operations Manager for review.

Cash office personnel and management reviewed voids by cashier on a daily basis. A formal "Void" summary' report will be implemented for the 2006 operating season to serve as written support of the daily audit review.

Implement reporting standard with distribution to include P&R Administration.

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Attachment A

Action to beFinding Recommendation Management Response

taken

7. Supporting documents were being discarded. The Head Cashier was not instructing cashiers to retain blank admission tickets when approving voided ticket transactions. In the case of completely blank tickets, the Head Cashier instructed cashiers to destroy and dispose of any blank ticket stubs.

The actual voided tickets should be retained in all cases to substantiate each voided ticket transaction.

For any misfeed resulting in a blank ticket, the cashier will be instructed to maintain and detail the occurrence of the misfeed and submit to the Head Cashier as required for any voided sale with all documents maintained for independent review.

Adopt City Auditors recommendations in accordance with established waterpark policy for voids.

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