Purpose of Audit

The purpose of our audit was to evaluate the Department’s cash receipt collection process for the period July 1, 2012 through March 27, 2014.

Background

The City of Corning is located in Steuben County and has a population of approximately 11,000. It is governed by a Mayor and an eight-member City Council. The Council appoints a City Manager who serves as chief executive officer. The Finance Department, which manages and accounts for the City’s financial resources, reported cash receipt collections of approximately $4.6 million for the 2012-13 fiscal year.

Key Findings

• Because City officials did not establish adequate internal controls that properly segregated the former senior account clerk’s duties, and they did not provide adequate oversight of her duties, the Department’s weak control environment was manipulated and misappropriations of more than $5,000 in cash receipts occurred over a three-month period.
• We identified weaknesses in collecting, recording and depositing the fees for code enforcement, parking permits, water and sewer services, parking ticket fines, tax searches and garbage bags as well as gross utility receipts, which allowed for the misappropriation of City funds without detection.
• There were significant information technology weaknesses due to the use of shared usernames and passwords at the window terminals as well as the ability to overwrite transactions within the financial accounting program.

Key Recommendations

• Review cash receipt policies and procedures to ensure they are up-to-date and include provisions for adequate segregation of collecting, recording and depositing cash receipts while providing sufficient supervision. Seek restitution for amounts identified as misappropriated.
• Implement policies and procedures for various City departments, including the Code Enforcement and the Water and Sewer Departments, to reconcile receivables to Department collections.
• Ensure employees access systems and applications using individually assigned usernames and passwords and review the financial accounting program and implement mitigating controls for the weakness identified.