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HomeMy WebLinkAboutAudit Reports - Public - Independent Review of City Court Compliance with Minimum Accounting Standards - 4/1/2023 (3) Independent Review of City Court Compliance with Minimum Accounting Standards April 2023 Independent Internal Audit Program Independent Internal Audit Program Independent Review of Glendale Court 1 Table of Contents Independent Auditor’s Report on the Application of Agreed-Upon Procedures . 2 Background ................................................................................................................... 3 Procedures and Results: .......................................................................................................... 4 Independent Internal Audit Program Independent Review of Glendale Court 2 Independent Auditor’s Report on the Application of Agreed-Upon Procedures April 25, 2023 Arizona Supreme Court Administrative Office of the Courts Nicholas DiPiazza, Presiding City Judge Glendale City Court We have performed an independent review of the Glendale City Court using the procedures enumerated in the Minimum Accounting Standards (MAS), Guide for Independent Review (effective January 1, 2021), which were issued and approved by the Arizona Supreme Court, Administrative Office of the Courts (AOC) to assist you in evaluating management assertions that the City Court has maintained effective internal controls over financial accounting and reporting and complied with the Minimum Accounting Standards detailed in Arizona Code of Judicial Administration (ACJA) Section 1-401. The Glendale City Court’s management is responsible for maintaining a system of internal controls to ensure compliance with MAS requirements. The “Procedures and Results” section of this report outlines the required procedures and our findings. There were no material reportable findings and recommendations identified as a result of the procedures performed. We were not engaged to and did not conduct an examination, the objective of which would be the expression of an opinion on management’s assertion. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. This report is intended solely for the information and use of the Arizona Supreme Court, AOC, and the Glendale City Court and is not intended to be and should not be used by anyone other than these specified parties. However, this report is a matter of public record and its distribution is not limited. Michael Kingery, CIA, CFE Internal Audit Program Manager City of Glendale, AZ Independent Internal Audit Program Independent Review of Glendale Court 3 Background The Arizona Supreme Court’s AOC, through §1-401 of the ACJA (referred to as the Code, entirely in this report), established the MAS for all appellate, superior justice and municipal courts to help the courts in ensuring the safety of public monies and outline the role and responsibilities of court personnel in complying with these standards. Section G of the Code requires each court to undergo an independent review, at least triennially, of its accounting records, procedures, automated financial management systems and internal controls. The City of Glendale’s ordinance 1 establishes the Independent Internal Audit Program (IIAP) that reports to an Audit Committee appointed by the City Council. Based on this reporting structure, the IIAP is independent of the City Court. The previous review of the Court’s MAS was completed in January 2020. This review covers the three-year period of calendar years 2020 through 2022. As required by the standards applicable to an agreed-upon procedures engagement, the City Court provided the following representations: a) The MAS for Arizona Courts prescribes the standard accounting policies and procedures to assist courts in complying with applicable statutes and generally accepted accounting principles. b) The Arizona Supreme Court, Administrative Office of the Courts (AOC) Minimum Accounting Standards (MAS), Guide for Independent Review (effective January 1, 2021) contains the procedures and sample sizes agreed upon for this review. c) We are responsible for establishing and maintaining effective internal controls over financial accounting, reporting and compliance with the MAS. Further, we have conducted the required annual self-assessments and have established and maintained effective internal controls over financial accounting, reporting and compliance with the MAS. d) We have made available to the auditor all documentation related to compliance with the specified requirements. e) We are not aware of any known noncompliance with the specified requirements, including any occurring during the years 2020 through 2022. f) Apart from the AOC’s operational review evaluation report received in July of 2022, we have had no communication from the AOC or others concerning possible noncompliance with the specified requirements, including any such communication received between January 1, 2020 and December 31, 2022. 1 Ordinance No. O19-43 passed by the City Council on May 14, 2019 Independent Internal Audit Program Independent Review of Glendale Court 4 Procedures and Results: Note: As the City of Glendale Court does not have a probation department, procedures that were applicable only for probation departments were excluded from this review and therefore not listed below. Administrative Requirements Procedures 1. Determine if all financial transactions are recorded in an automated receipts journal and include: a) Date payment was receipted; b) Amount received; c) Receipt/transaction number; and d) Receipt allocation by type, such as, but not limited to fine, criminal justice enhancement fund, medical services enhancement fund, restitution, and bond. 2. Determine if all financial disbursements are recorded in an automated disbursements journal and include: a) Date check issued; b) Amount disbursed; c) Name of payee; d) Court check number; e) Type of payment disbursement, such as, but not limited to fines, surcharges, restitution, and bonds; and f) Electronic fund transaction number, if applicable. 3. Determine if the court has established written policies and procedures that prescribe the court’s financial practices, and which apply to any departments or divisions within the court’s administrative structure that receives or disburses money. 4. Determine if the court or probation department has a granted secondary technology request on file with the AOC. If so, review the granted secondary technology request for allowable technology specific to the preparation and verification of financials. Determine if the court has established written policies and procedures that prescribe how the technology will be used. 5. Verify that the court displays its payment acceptance policies on any court-sponsored webpage and in a location within the court’s main lobby easily viewable by the general public, such as next to each customer service station, and that the payment acceptance policies include the following: a) A statement regarding the methods of payment that the court accepts, which shall include, but is not limited to: cash, cashier’s check, certified check, money order, credit card, debit card, or other financial institution generated fund transfer instrument and other forms or means of Independent Internal Audit Program Independent Review of Glendale Court 5 payment mandated by the supreme court; See AO 2020-202(2)(e)(f); b) A statement that a receipt shall be provided for every payment made in person to the court; c) A statement that the receipt provided by the court is proof of payment; and d) A statement regarding the court’s dishonored payment policy. RESULTS: As the court has not requested a secondary technology request from the AOC, procedure (4) is not applicable. For all other items in this section, no material exceptions were noted as a result of applying these procedures. Independent Review by Auditors Procedures 1. Review the last auditor’s final report to determine if the court retained a copy of the final report showing the date on which it was received by the court and that it was forwarded to the AOC within seven days from receipt. 2. Review the final reports issued for the last independent review by auditor and for the last operational review conducted by the AOC to determine if the court has addressed all the financial findings noted in the reports. RESULTS: For procedure (1), the last auditor’s final report (dated January 2020) was not received by the AOC until January 27, 2021. Per documentation with the previous report, the prior auditor had left the City’s employment and there was difficulty in accessing his files. Once the court and the City Manager’s Office obtained the report, it was sent to AOC. For procedure (2), there were no findings in the prior audit conducted by the City. In July 2022, the AOC completed an operational review evaluation and noted 15 findings. As part of this current audit, the City determined that all findings had been adequately and timely addressed. No additional material exceptions were noted. Safeguarding Monies and Financial Records Procedures 1. Determine through interviews, observation and by taking an inventory of the contents of the safe, if the court safeguards all monies received for the court and financial records such as, but not limited to receipts, blank checks, and financial reconciliation documents as follows: a. Assign each cashier a unique user identification. The user identification shall only be used by the assigned user. Independent Internal Audit Program Independent Review of Glendale Court 6 b. Changes safe keys, combinations, or both upon either: i. Termination of employment of a person who was granted access to a safe, unless access to the court or area where the safe is located is restricted by electronic access control or; ii. Change of responsibility of an employee who was granted access to a safe, unless the area where the safe is located is restricted by electronic access control. c. Maintains physical restrictions between the public and the areas where court monies and financial records are stored and allow only authorized access to those areas. d. Displays signs limiting admittance to areas where court monies and financial records are stored, unless access is restricted by electronic access control. e. Retains, counts, and handles all court monies in a secure location that is not accessible to the public and is only accessible to authorized personnel until monies are deposited with the bank or local treasurer. f. Stores all court monies overnight in a locked location from the moment they are received until they are deposited with the bank or local treasurer. g. Uses locking bank bags or tamper-proof bags to transfer court monies to the bank or local treasurer. h. Keeps cash drawers, cash boxes, payment drop boxes, bank bags, safes, and vaults locked and secured at all times when not in use. i. Stores all court monies overnight in a locked safe or vault with restricted access that is immovable or attached using a method that would prevent easy removal. j. Secures blank checks, unissued manual receipts, and any documentation that contains a whole credit card number, such as phone payment logs in a safe, locked cabinet, or locked area, and allows only authorized court personnel to access these documents. k. Each cashier shall individually secure the assigned cash drawer fund in a separate lockable drawer or locking bank bag at all times prior to balance and reconciliation and second person verification; l. Court personnel shall not commingle personal or non-court monies with court monies. This includes but is not limited to making personal change from the cash drawer fund, court change fund, or court deposit monies, and making change for court payments with personal monies. m. Court personnel shall not cash personal check or purchase supplies using monies from the cash drawer fund or the court change fund. n. Court employees and authorized personnel who issue receipts on behalf of the court shall not keep court monies with their own personal funds, deposit court monies in a personal bank account, or take court monies home with them upon departure. Independent Internal Audit Program Independent Review of Glendale Court 7 o. Court personnel shall investigate any shortage or overage of monies within one business day. If there is still a discrepancy, court personnel shall document the discrepancy on the applicable cashier’s cash drawer fund reconciliation documentation as part of the daily deposit reconciliation documentation. p. Court personnel shall not correct an original entry to any financial document or instrument by erasing or masking the erroneous entry. To correct an error, court personnel making the correction shall strikethrough the original entry, and initial and date the corrected entry. q. Prohibits the use of signature stamps when signing financial documents such as checks. Courts may use check signature software or a check signing machine to imprint authorized signatures on checks. RESULTS: No material exceptions were noted as a result of applying these procedures. Segregation of Duties Procedures 1. Determine through interviews, observation and a review of documentation, if the court provides internal controls for financial functions, ensures the safety of public monies and the reliability of court records, and allows for the detection of errors, as follows: a. Documents the preparation of daily cash counts and their corresponding reconciliations, deposit reconciliations, monthly reconciliations, the review of outstanding bonds over 90 days, and quarterly reconciliations using a method that identifies the preparer such as initials or signatures and includes the date of document preparations. The preparer must not also be the second person verifier of the document. b. Documents the verification of daily cash counts and their corresponding reconciliations, deposit reconciliations, issued and voided manual receipts, monthly reconciliations, and quarterly reconciliations using a method that identifies the verifier such as initials or signatures and includes the date of document verification. The second person verifier must not also be the preparer of the document. c. Signs checks prepared by someone else, unless the check requires two signatures. Checks must not be made out to “Cash” and the signing of blank checks is prohibited. For courts with electronic disbursements, ensure that the person who entered and authorized the electronic disbursement is not the same person who verified the electronic disbursement. Independent Internal Audit Program Independent Review of Glendale Court 8 d. Has a second authorized person verify, void, or reverse (adjusted) automated receipts in the automated financial management system if a correction is needed. The verification must be documented. e. For courts that do not have sufficient staffing to provide for a second person verifier at all times, determine if the court has adopted written financial policies and procedures to control the risk of unauthorized financial transactions. These written financial policies and procedures must detail arrangements made with designated local government employees authorized by the court to verify transactions in accordance with the requirements in this section. RESULTS: No material exceptions were noted as a result of applying these procedures for (a), (b), or (d). Procedures (c) and (e) were not applicable. Cash Handling and Receipting Procedures Acceptance of Payment 1. Observe the court’s practice for accepting payments to determine if only court authorized personnel or electronic interfaces receipt payments on behalf of the court. Online Transaction Retrieval 1. Determine if the court has a manual retrieval process for online transactions. If so, the court must retrieve and receipt the transactions to the case financial management system no later than the end of the next business day. 2. Determine if the court has an automated retrieval process for online transactions. If so, the court must retrieve and receipt the transactions to the case financial management system no later than the end of the next business day. 3. Verify that in addition to the receipting elements listed in Automated and Manual Receipting Requirements (4)(a) through (j), receipts associated with online transactions include: a. Online transaction date; b. Online transaction number; and c. Name and address of cardholder, if available; however, there shall be at a minimum, an audit trail to identify the cardholder’s information for disbursement purposes. Independent Internal Audit Program Independent Review of Glendale Court 9 Endorsement of Checks 1. During the observation of the daily cash count of the cash drawer fund and when court personnel open the daily mail, determine: a. For courts that do not utilize an automated financial management system that electronically endorses checks: i. If all checks payable to the court are properly and clearly endorsed with a restrictive endorsement stamp that reads “For Deposit Only – Payable To (account’s name)” no later than the end of the business day on the date the check is receipted into the automated financial management system. b. For courts that utilize an automated financial management system that electronically endorses checks when an automated receipt is generated: i. If the court receipts all checks immediately when received. If the court was unable to receipt the checks when received, that the checks are immediately secured for safeguarding purposes, with receipting into the automated financial management system to be completed no later than the end of the next business day. ii. That the automated financial management system properly and clearly endorsed all checks payable to the court with a restrictive endorsement stamp that reads “For Deposit Only – Payable To (account’s name)” when an automated receipt is generated. 2. Determine through interviews that the court does not endorse checks payable to another court and sends the checks to the proper court within two business days. Receipting of Unidentified Monies 1. Determine, by reviewing the court’s “Unidentified Monies” file, if the court has a process for handling monies that are received without information identifying the party’s name, case number, and sender information if the court is unable to identify the party and case number for which the monies are received, and if the process includes the following: a. Receipting the unidentifiable monies into a suspense or hold account within the automated financial management system, no later than the end of the next business day and depositing the monies to the local treasurer or bank accordingly. b. Endorsing checks received without information identifying the party’s name, case number, and sender information in accordance with the Endorsement of Checks guidelines identified above. c. Retaining copies or an electronic image of a cash log that details the breakdown and total of any monetary denominations received, the checks received, the credit card transaction details received, Independent Internal Audit Program Independent Review of Glendale Court 10 receipts generated by the automated management system, and any additional necessary supporting documentation in the “Unidentified Monies” file. Automated and Manual Receipting Requirements 1. Determine if the court is receipting all monies no later than the end of the next business day. 2. Determine if the receipts generated by the court reflect the date the monies were receipted. 3. Determine if the court issues a sequentially numbered receipt or transaction for each payment. 4. Using the cash receipts journal as the source document, select a random sample of at least 20 individual receipts (for bonds, fines, fees, surcharges, and restitution for all court levels; add child support, probate, and other trust monies for superior court). Determine if the individual receipts contain the following information a. Name of the court; b. Case number, if applicable; c. Defendant's name, if applicable; d. Plaintiff's name, if applicable; e. Date payment was receipted; f. Amount received; g. Name and address of the third-party payor making the payment, if available, and if not included on the case financial records; h. Identification of person receiving the payment; i. Method of payment such as cash, check, payment card or EFT; and j. Unique sequential receipt/transaction number. 5. Sample 10 defensive driving school payments and verify if the monies from the defensive driving schools were receipted by the end of the next business day and payment was recorded in each defendant’s case financial record. Determine (Independent Contractors section of MAS) if payments received from defensive driving schools are received in the form of business check, cashier’s check, money order, EFT, or wire transfer. This item is not applicable to probation departments reviewed. 6. Determine if the court is receipting overpayments as an overpayment and not as a fine, surcharge, bond, or restitution. Independent Internal Audit Program Independent Review of Glendale Court 11 Issued and Unissued Manual Receipting Requirements 1. Determine if manual receipts are only used when the court's automated financial system is inoperable. This item is not applicable to probation departments reviewed that do not have access to the clerk of court’s case management system. 2. Determine if manual receipts are entered into the automated financial management system by the end of the business day or as soon as the system is operable. This item is not applicable to probation departments reviewed that do not have access to the clerk of court’s case management system. 3. Review the court's manual receipt book and sample 10 manual receipts to verify the following: a. Manual receipts are at least a two-part form, pre-printed with unique sequential numbers and the name of the court on each receipt. This item is not applicable to probation departments reviewed that do not have access to the clerk of court’s case management system. b. Manual receipts are issued in sequence within each book and are cross-referenced; the manual receipt number issued is referenced on the automated receipt or recorded in a docket entry in the automated financial management system; and the automated receipt number is referenced on the manual receipt. This item is not applicable to probation departments reviewed that do not have access to the clerk of court’s case management system. c. A second person reviews the manual receipts no later than the end of the next business day following receipt issuance, verifies that the receipts were issued in sequence, recorded in the automated financial management system, and that all receipts have been issued. This item is not applicable to probation departments reviewed that do not have access to the clerk of court’s case management system. d. The court has established written policies and procedures to account for and reconcile all unissued manual receipts at least quarterly and that the court documents the reconciliation of all unissued manual receipts. Automated and Manual Voided Receipts 1. Select a sample of 10 automated voided receipts, 10 automated reversed (adjusted) receipts, and 10 manual voided receipts to determine that all voided receipts are not altered in any way and to verify the following: a. If an error is made or a correction is needed that “VOID” or “Reverse” (adjusted) is indicated on the automated receipt; the reason for the void Independent Internal Audit Program Independent Review of Glendale Court 12 or reversal (adjusted) is indicated on the automated receipt or in the case financial record; and the voided or reversed (adjusted) receipt number is cross-referenced on the replacement automated receipt , if applicable, in the case financial record. b. If an error is made or a correction is needed that “VOID” and the reason for the void is indicated on all retained copies of the manual receipt; that the voided manual receipt number is cross-referenced on the replacement manual receipt, if applicable; and that the second person review of voided manual receipts takes place no later than the end of the next business day following receipt void. Counterfeit Cash 1. Determine if the court has established written policies and procedures on identifying and handling counterfeit cash in accordance with U.S. Department of the Treasury, Office of Domestic Finance, Advanced Counterfeit Deterrence guidelines. Petty Cash 1. If the court uses a petty cash fund, verify the court is following local policies and procedures regarding usage and reimbursement of the petty cash funds. Also, review and verify the monthly reconciliation of the petty cash fund. RESULTS: The following procedures listed in this section were not applicable: Endorsement of Checks (1b); Receipting of Unidentified Monies (all); sample testing for manual voided receipts as there was only one manual receipt issued in period under review and it was processed properly; and, Petty Cash (all). For all remaining items in the Cash Handling and Receipting section, no material exceptions were noted as a result of applying these procedures. Disbursement Processing Procedures 1. Sample at least 10 disbursements to determine if disbursements were made only in the form of a check, credit to the payment card originally used to make the payment, or an EFT and that all checks or payment card adjustments or reversals were signed by authorized signers. 2. Verify that checks issued by the court are pre-printed with unique sequential numbers, or electronically signed, and disbursed in sequential order. Independent Internal Audit Program Independent Review of Glendale Court 13 3. For all sampled disbursements, verify that disbursements were recorded in the court’s automated financial management system by the end of the next business day and disbursed within the time period prescribed in the court’s written policies and procedures. 4. For all sampled disbursements, verify that each automated disbursement record contains the following: case number; case party names; date check issued; name of payee; court check number; type of payment disbursement (such as fines, surcharges, suspense, hold, restitution, bond, or bond amount converted to court assessments); amount disbursed; and electronic fund transaction number, if applicable. 5. Sample 10 bond disbursements and verify that bond monies were disbursed according to written court order by a judicial officer and only to the individual who posted the bond or to the third party authorized to receive the bond monies by the person posting the bond. If bond monies were converted to pay court-ordered monetary obligations verify that the express written permission of the bond poster was received, unless the bond poster is the defendant. Determine if the court has established written policies and procedures for refunding and disbursing bond monies within a prescribed time period. This item is not applicable to probation departments reviewed. 6. Sample 10 restitution payments and verify restitution payments were disbursed to victims within the time requirements of ACJA § 5-204. 7. Sample 10 overpayments and verify that overpayment monies were disbursed according to the policies and procedures set forth by the court. Determine if the court has established written policies and procedures that include a reasonable threshold amount for refunding overpayments within a prescribed time period. 8. Sample 10 suspense or hold monies and verify that the monies were applied or disbursed according to the policies and procedures set forth by the court. Determine if the court has established written policies and procedures to account for monies held in a suspense or hold account on a monthly basis, and to apply these monies to a party’s case financial record or disburse them to the appropriate party with a prescribed time period. Independent Internal Audit Program Independent Review of Glendale Court 14 9. Verify that disbursement checks voided due to error are flagged void/stop payment in the court’s automated financial management system. Verify that disbursement checks reported lost or stolen are flagged void/stop payment in the court’s automated financial management system, unless this function is performed by a city, county, or state treasurer (in the case of appellate courts). 10. Verify that when the court issues replacement disbursement checks for void/stop payment, outstanding, lost, or stolen disbursement checks, that the new disbursement check is issued following normal disbursement procedures. 11. Determine if the court identifies all checks outstanding over 180 days, unless this function is performed by a city, county, or state treasurer (in the case of appellate courts) and verify the following: a. Checks outstanding over 180 days are flagged void/stop payment in the court’s automated financial management system; and b. Determine if the court investigates all checks outstanding over 180 days, documenting the action taken or disposition of the investigated checks outstanding in the court’s automated financial management system and on the court’s monthly reconciliation documentation. 12. Verify void/stop payment disbursement checks have “VOID” or “Stop Payment” written across both the physical face and signature line of the void/stop payment disbursement check and that all applicable void/stop payment disbursement checks are available for retention (for example, checks issued via electronic disbursement, lost in the mail, or stolen would not be available for retention). 13. Determine if, pursuant to A.R.S. §§ 44-302(10) and (11), 44-307, and 44-308 for municipal courts and A.R.S. § 22-116 for justice courts, the court reports and remits unclaimed (abandoned) funds to the Department of Revenue or county treasurer, unless this function is performed by a city, county, or state treasurer (in the case of appellate courts) the following: a. Any unidentified monies received which remain unclaimed; b. Any disbursement checks outstanding over 180 days which remain unclaimed; and c. If the court retains documentation of all monies reported and remitted to the Department of Revenue or county treasurer as unclaimed funds in accordance with the retention schedule. Independent Internal Audit Program Independent Review of Glendale Court 15 RESULTS: Procedures (2), (9), (10), (11), (12), and (13) are performed by the City’s Budget and Finance office. The remaining procedures are performed by the City Court. For both departments, no material exceptions were noted as a result of applying these procedures. Bank Accounts and Deposits Procedures 1. Unless bank accounts are maintained by the city, county or, in the case of appellate courts, the state treasurer, and are established in the name of the city, county, or state: a. Examine a recent bank statement for each account and verify that all checking, investment, or other bank accounts are established under the name of the court. For co-located courts, confirm that the courts do not share a bank account and that individual bank accounts are established under the name of each court; b. Determine if the court maintains a current list of all checking, investment, and other bank accounts which includes the following: the name and address of the banking institution, the account number, the account name, and the names of persons authorized to sign checks or make withdrawals from each account; c. Determine if the court maintains current signature cards for all bank and investment accounts involving court monies; and d. Determine if the court maintains a record of all bank accounts closed, including the date the bank account was closed and the reason the bank account was closed. 2. Note: This item is not applicable to probation departments reviewed. Determine if the court deposits currency, coins, and checks with the bank or local treasurer by the next business day the court and the bank or local treasurer are open, unless the total is less than $300. If the total is less than $300, at a minimum the funds shall be deposited on a subsequent business day when the accumulated undeposited funds reach or exceed $300, or deposited once per week, whichever is earlier. For deposits made with the local treasurer determine the following: a. The court retained documentation that confirms that court monies were delivered to or retrieved by the local treasurer for deposit within the required timelines. The court and the local treasurer shall initial or sign and date the documentation acknowledging receipt of the court monies deposited, unless court monies are transported by armored car, in which case a log shall be maintained. Independent Internal Audit Program Independent Review of Glendale Court 16 3. Compare bank or local treasurer deposits to the cash receipts journal to determine if the monies were deposited in the same form as received. 4. Determine through interviews and observations that checks scanned by the court for electronic deposit are retained not more than 30 days after the completion of the bank reconciliation for the month in which the checks were deposited, and that personal mobile devices were not used to scan checks. Shredding is the preferred method of disposal. RESULTS: Procedure (4) was not applicable; for items (1), (2), and (3), no material exceptions were noted as a result of applying these procedures. Reconciliation of Financial Records Procedures Select two weeks of financial records and consistently use the same month of the two-week period selected to review reconciliations. Daily Reconciliations 1. Determine through interviews and observation that: a. Each cashier responsible for a beginning change fund counts the beginning change fund provided before usage, as either the preparer or second person verifier; b. The court change fund is counted by two separate authorized court personnel at least daily; and c. Each cashier responsible for a cash drawer fund counted all monies received, including any beginning change fund monies, after each shift to ensure balance and reconciliation with the receipts journal. d. At least two separate authorized court personnel are involved in the deposit balance and reconciliation process. One authorized personnel acting in the capacity of preparer and one additional authorized person acting in the capacity of verifier to ensure the balance and reconciliation of the daily deposit with the receipts journal. The verification of the deposit preparation must occur at the time of the deposit preparation and prior to the depositing of funds with the bank or local treasurer; and (Bank Accounts and Deposits section of MAS). e. During the observation of the preparation of the daily deposit balance and reconciliation process, using the cash receipts journal as the source document, verify the total daily receipts to the cash receipts journal to determine these totals tally to the daily cash receipts summary report or Independent Internal Audit Program Independent Review of Glendale Court 17 deposit ticket. 2. Determine for the two-week period selected for review that the total receipts (for all payment types received) for each day match the bank account statement or the daily funds’ transmittal report and receipt issued by the local treasurer. Monthly Reconciliations 1. Review and verify the following: a. The reconciliation of the of the receipts journal for the month to the monthly remittance report submitted to the local treasurer (city, county, or state as applicable) and compare to the disbursement check issued; b. The reconciliation of the deposits with the receipts journal; c. The reconciliation of the disbursement checks written with the disbursements journal; d. The reconciliation of the court’s record of open items to the automated financial management system report to all bank accounts and cash balances; and e. The reconciliation of all bank accounts maintained by the court. 2. Determine if the court monthly reviews all bonds posted outstanding over 90 days and bond records. Sample 5 bonds posted more than 90 days to verify if the court determined the status of the bond based on court order, took appropriate action, documented the disposition of the bond reviewed, and retained the documentation. This item is not applicable to probation departments reviewed. 3. Review all reconciliations and supporting documentation for the month selected to determine if the reconciliations were performed monthly and accurately. Verify that the court did not simply add a fictional amount to the monthly reconciliations in order to force the reconciliation into balance and if there was a variance it was clearly documented as a line item on the reconciliation and resolved within no more than 30 days from the reconciliation. Financial Record Retention 1. Determine if the court retains the following records for each bank account as required by the records retention schedule: Independent Internal Audit Program Independent Review of Glendale Court 18 a. Bank account reconciliations; b. Bank statements; c. Records of deposits in transit; d. Bank issued debit and credit memos; e. Canceled deposit slips; f. Canceled checks; and g. Any documentation that requests the adjustment or void of a case financial record. 2. Determine if the court retains the records of the daily and monthly financial reconciliations performed and supporting documentation in accordance with the records retention schedule. RESULTS: Procedure (1) under the Financial Record Retention sub-section is performed by the City’s Budget and Finance office; for that procedure and all remaining items in the Reconciliation of Financial Records section, no material exceptions were noted as a result of applying these procedures. Reporting Procedures 1. Select one month’s remittance report to determine if the report identified the allocation and distribution of the monies, that the monies have been remitted to the local treasurer (city, county, or state as applicable), and that the court received documentation acknowledging the submission of the report from the local treasurer. This item is not applicable to probation departments reviewed. RESULTS: No material exceptions were noted as a result of applying these procedures.