Reservoir Audit

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• management

Informations

• Publié par: Mephar
• Nombre de lectures: 20
• Langue: English

Extrait

City of Boulder

Parks and Recreation Department

Review of Internal Control Risk Areas – Boulder Reservoir

May 2003

Internal Audit Services

Audit and Evaluation Division

Human Resources & Organizational

Effectiveness Department

Audit Report Summary

City of Boulder - Parks and Recreation Department

Review of Internal Control Risk Areas – Boulder Reservoir

Tests and observations were performed to assure:

•

Consistent and effective processes are in place for collection of revenues from gate

entry (boats and people), pass sales (boats and people), mooring and storage charges,

facility rental for picnics and events, boat rental, retail fuel sales, and classes.

•

Appropriate published rates are charged for use of facilities, equipment rental, classes

and services.

•

Effective controls are in place for safeguarding and deposit of cash, recording of

revenue, and reconciliation of revenue recorded with monies received and deposited.

•

Management (system) reports are available as tools for managing and reporting

revenues, expenses, accounts receivable and for use in planning for staffing and

equipment needs, class schedules, and fees.

Process Improvements implemented include:

•

Implementation of a Point of Sale (POS) system, followed by an upgrade to that

system, provided a framework for improved controls including timely provision of

transaction receipts to Reservoir customers.

•

Reservoir front gate personnel have begun using a hand stamp to facilitate use of

facilities for customers who run, cycle or walk a circuit around the Reservoir (which

requires them to re-enter the front gate repeatedly.)

Process Improvements planned include:

•

Implementation of scannable passes for frequent Reservoir customers to facilitate

front gate entry while providing management with improved attendance data.

•

Administrative support from Parks and Recreation Administration Division and

Information Technology Department to improve cash collection and deposit controls.

•

Improved reporting tools for Reservoir management.

Guy E. Wiley, Internal Auditor

City of Boulder

Internal Control Risk Areas – Boulder Reservoir

OVERVIEW

This audit is a follow-up to observations from June 2001 made by the City of Boulder

Internal Auditor in conjunction with a review of the cash collection process in Parks and

Recreation performed in early 2001 by the city’s external auditors, Johnson, Holscher &

Company.

A Point of Sale (POS) system was implemented in the spring and early

summer of 2002 and an upgrade to that system was implemented at the end of the season.

This follow-up audit was done, in part, to test the impact of control improvements

associated with the business process changes made as part of this system implementation.

AUDIT SCOPE

1.

Review policies and controls to assure consistent and effective processes are in place

for collection of revenues from gate entry (boats and people), pass sales (boats and

people), mooring and storage charges, facility rental for picnics and events, boat

rental, retail fuel sales, and classes.

2.

Test controls to assure that appropriate published rates are charged for use of

facilities, equipment rental, classes and services.

3.

Review controls over safeguarding and deposit of cash, recording of revenue, and

reconciliation of revenue recorded with monies received and deposited.

4.

Review management (system) reports available as tools for managing and reporting

revenues, expenses, accounts receivable and for use in planning for staffing and

equipment needs, class schedules, and fees.

OBSERVATIONS AND RECOMMENDATIONS

1.

Assure collection of entry fees with positive record of entry.

Activity at the entry

gate to the Reservoir was observed on several occasions including weekend and

holiday times to best identify performance of system and personnel and identify

potential areas for improvement.

A.

The CLASS POS System can provide a customer receipt for every payment

transaction.

(Expectation by customers to receive a system-generated receipt can

help to assure that all revenue transactions are recorded on the system.)

This

capability did not work effectively during the audit period due to system

limitations resolved in the next upgrade of the CLASS POS system.

RECOMMENDATION:

The system upgrade implemented at the end of the

season may improve time required for the CLASS POS system to produce

receipts.

The customer’s expectation to receive a receipt for each transaction is a

control that is critical to assuring that all sales are recorded on the system and

associated revenues are deposited.

Parks and Recreation Administration should

test the receipt producing cycle to assure that it is fast enough to effectively

support Reservoir gate entry operations.

RESPONSE:

We agree.

The software upgrade was a major solution to this

problem due to the way the software was writing the printed receipts to tables.

The system receipt printing functions within CLASS are now greatly improved.

Additionally, the band width that services the Reservoir has been increased to

further speed up the process.

We have tested the receipt printing functions at the

reservoir and it is greatly improved. We are also installing a thermal receipt

printer at the primary entrance gate.

B.

Persons with registered boat passes and/or annual entry passes are waived through

the entry gate based on visual review of passes.

The current process does not

provide for effective verification of passes mechanically (scanning) or visually.

A

new method was implemented for the 2002 season for holders of Recreation

Center passes (currently valid for entry to the Reservoir.)

The pass holder

(member) can obtain a special green paper Reservoir pass for entry to the

reservoir

from Reservoir personnel upon confirmation that the pass is an annual

pass that has not or will not expire during the current Reservoir season.

Reservoir

personnel have identified and confiscated forged versions of this paper pass.

RECOMMENDATION:

The use of scanning for membership and boat passes at

a separate entry point would relieve some of the potential for customer delay

inherent in the current process.

Parks and Recreation should consider

implementing season passes and boat passes that can be scanned by a machine to

provide entry into the Reservoir facility.

RESPONSE:

We agree, and will be implementing scanning at the Reservoir in

two phases.

We are currently in the process of implementing phase 1, which will

begin the sale of electronic season gate passes at the Reservoir, as well as the

Recreation Centers and the Iris Center.

We will be scanning them as well as all

regular Parks and Recreation annual/punch passes.

Phase 2 will be implemented

next season and will include the issuance of electronic boat passes and full

scanning at the Reservoir.

C.

The auditor noted during observations at the entry gate that runners and cyclists

do a circuit around the Reservoir that includes necessary multiple re-entries at the

front gate.

Reservoir personnel relied on customer’s honesty in stating that they

had already paid for entry or on the gate attendant’s memory that an individual

had already paid.

RECOMMENDATION:

The Reservoir should adopt some method (such as a

hand stamp) to identify those runners or cyclists who will be repeatedly re-

entering the entry gate to assure entry payments have been received.

RESPONSE:

This was implemented in 2002.

D.

Mooring and storage fees, boat rentals, and retail fuel sales are recorded through

the Point of Sale system.

Sales in each of these categories were tested with no

exceptions noted.

There is a further control on retail fuel sales through use of a

“Gasboy” fuel metering system that requires dual keys to operate with different

keys for retail versus internal use.

Management regularly ties fuel sold retail to

POS system amounts.

The auditor reviewed fuel sales identified as internal use

and found that quantity to be reasonable.

No exceptions were noted in this

process.

No Response Required.

E.

Scheduling and fees for sailing, boating and water skiing classes are recorded in

the CLASS Registration module.

This module can produce a class roster for use

by instructors to assure that class attendees have paid for and signed up for a

class.

No exceptions were noted in this process.

No Response Required.

F.

During the 2002 Reservoir season, persons entering the front gate were asked if

they were entering to attend a specific picnic or event.

If they answered that they

were attending the XYZ Company party, they were given directions to the picnic

facility assigned for that event and a tally mark was put on a sheet of paper to track

attendance for each event.

This method is open to error and therefore not

dependable as a source for billing facility event holders.

Reservoir management

has stated that if there is a difference between the gate count and the count taken

by an event sponsor, the event sponsor’s count is used.

RECOMMENDATION:

Implement a process for measuring event attendance that

uses scanning of specifically assigned bar codes for each event.

This method would

produce a receipt, so that all persons entering who do not have a season pass would

have a receipt.

This method is likely to improve accuracy and timeliness of counts

for specific events.

RESPONSE: We will consider this once we have membership pass scanning fully

implemented and running smoothly

G.

There are occasions when people need access to the Reservoir for meetings with

Reservoir management, construction or repair work, etc.

Presently people who

enter for these reasons (without payment for entry) are recorded on a manual log

book but are not issued a receipt or document indicating their purpose at the

Reservoir.

RECOMMENDATION:

For improved control and security at the Reservoir, use one

or more bar codes to be kept at the entry gate to record these visits.

When the bar

code is scanned, the system will provide a receipt showing the general purpose of the

visit.

This also will provide a tool for management review to identify potential abuse

of these categories.

RESPONSE:

We will consider this once we have membership pass scanning fully

implemented and running smoothly

2.

Assure proper published rates are charged for use of facilities and services.

In

the CLASS software,

fees are in a system table with each fee category linked to a key

on the POS keyboard.

Although errors can be made in determining which key to use,

the price is determined by the system, not by the employee who is entering the

transaction.

Sales of gate entry and annual passes, boat mooring and storage, retail

fuel sales, and boat rental were observed by the auditor with no exceptions noted.

As

noted above, furnishing the customer a receipt of each transaction would further

strengthen this control.

Implementation of the CLASS system included a Facility Usage module used for

scheduling, developing contracts, recording actual usage, and tracking deposits and

payments for group picnics.

Fees are established for each facility/service and are

applied by the system based on input of customer’s facility/service requirements and

subsequent changes based on customer requests that are input by Reservoir personnel.

To test for appropriate charges for events and facility rentals, the auditor observed

set-ups for individual events and then checked throughout the actual events to see

what amenities or services might be added.

The auditor subsequently traced the

observed facilities, services provided to the billing to the customer.

In all instances,

the appropriate charges were reflected in the amount billed to and paid by the

customer.

No Response Required.

3.

Controls over safeguarding and deposit of cash, recording of revenue, and

reconciliation of revenue recorded with monies received and deposited.

The

CLASS system implemented in 2002 records the method of payment – cash, check,

credit or debit card.

This prevents substitution of checks for cash (coupled with not

entering a transaction.)

This is also helpful in balancing deposits to revenue recorded

on the POS System.

In response to an earlier recommendation, the Reservoir has acquired a two

compartment safe for the entry station to improve controls in the cash collection

process.

A.

In a “management letter” to the City of Boulder Finance Director, the city’s

external auditors identified concerns with “oversight of cash controls …… at the

Reservoir.

A seasonal employee is implementing and maintaining the new cash

receipts system.”

They recommended that: “A standard City employee should

become familiar with the new system and procedures, and have responsibility for

maintaining internal controls.”

RECOMMENDATION:

Parks and Recreation should resolve this issue prior to

the close of this year’s annual independent audit.

RESPONSE:

We agree, however due to financial constraints it is not feasible to

hire a standard employee to work full or part time at the reservoir.

Beginning in

2003, a department analyst will work part-time at the reservoir and provide

oversight for business processes and cash handling to maintain internal controls.

The department is planning to centralize reservoir administrative functions in the

future.

Administrative staff will be assigned reservoir administrative duties;

passes will be sold and picnics will be scheduled through the Iris Center.

B.

To add to separation of duties for the deposit and revenue recording process at the

Reservoir, Parks & Recreation central administrative personnel posted deposit

information to BFS (the City of Boulder’s Finance System) during the 2002

season.

Various events contributed to delays in posting of deposits in 2002.

Information Systems has developed an automated upload capability to automate

the posting of deposits (revenue recording to BFS) from the CLASS system. This

capability was not implemented at the Reservoir in 2002.

RECOMMENDATION:

Implement automated upload of deposits (revenue

entries) to BFS for the Reservoir for the 2003 season.

This needs to be done as

early as possible as revenue from Boat Passes and Season Passes comes in early

in the year.

Automated upload reduces keying errors and improves internal

control over the cash collection and deposit process.

RESPONSE:

We agree.

Staff is waiting on IT to complete this duty so uploads

are possible.

4.

Management Controls

A.

Measuring citizen use of Boulder Reservoir Facilities and Services.

Use of specific facilities for picnics, parties or other events includes (manual) count

of attendees and (system recorded) rental of equipment included in event contracts.

Purchase of individual (daily) entrance fees measures the level of that use.

Individual

rental of boats and other equipment and purchases of fuel for motorized boats also

includes recording of uses of those services.

All of these purchases can be tracked by

day, and most even by time of day, on the newly implemented CLASS system.

These

reports can be used to assist in planning for employee coverage for peak loads, as

well as for determining appropriate fees.

The system does not presently provide a usable method for recording each instance of

use of Annual Reservoir Passes, Annual or punch card Recreation Passes or Annual

Boat Passes. 90Reservoir personnel have complained that scanning passes hampers

system performance and takes too much time.

For the 2002 season, annual passes for

the reservoir did not include a bar code to be read by the system and also did not

include scanning stations.

RECOMMENDATION

Parks and Recreation should investigate ways to scan annual passes and boat passes

at the Reservoir.

This will likely require redesign of the entrance area to the

Reservoir to facilitate scanning of passes by customers.

Parks and Recreation and

Information Technology have met to begin investigating scanning capability for the

Reservoir with a plan to implement this capability for the 2003 season.

RESPONSE:

We agree.

IT has researched and tested a wireless solution.

While it

worked, mitigating the glare by using a tablet computer designed for outside use,

working with logistical problems of technology and traffic, have all proven, thus far,

to make the solution financially feasible.

Reservoir staff will change the order in which they open lanes to facilitate scanning.

It will mean opening the North POS window and requiring a passenger side

transaction and limiting the far South “wave through”

lane will only be opened in the

busiest of times and only to boaters with annual passes.

In 2004 boat permits will

move from paper cards to the scan-able pass format.

Staff will continue to explore the

feasibility of redesigning the entrance area to the reservoir.

B.

Reporting tools for management.

Most revenues for the Reservoir are received in advance – purchase of annual passes,

daily entry, boat rental, class registration, etc.

Events and picnics are scheduled on

receipt of a deposit and full payment is billed on completion of the event and paid at

that time or remain open for future invoicing and payment.

Revenue reports from the

CLASS system, therefore, show most revenue associated with the date it is received

and earned.

Revenue reports for the 2002 Reservoir season did not show revenue in a

format useful to management – no one report would give all revenue, and data from

several individual reports needed to be summed to tie to the existing summary

reports.

The new version of CLASS, implemented at the close of the Reservoir’s 2002 season,

has many more reports available.

Custom reports can also be designed using the

Crystal Reporting package that comes with the CLASS software – either by City of

Boulder personnel or by the Class software vendor.

Expense transactions appear in BFS as payment entries are made on BFS for direct

payments to vendors or after loading of monthly statement information from

Bouldercard purchases tracked in the city’s internal “Fastrack” system.

The delay in recording of expense information on BFS from Bouldercard transactions

and problems with 2002 CLASS revenue reports present challenges to Parks and

Recreation in furnishing management with useable, timely financial reporting.

RECOMMENDATION:

Parks and Recreation Administration should work with

Information Technology, Reservoir management and employees, and the CLASS

software vendor to implement useable management financial information reporting

for the 2003 season.

Internal Audit will offer to assist in this effort.

RESPONSE:

The analyst working at the Reservoir will develop and provide

financial reports for management during 2003.