OPA finds gaps in govt’s cash intake

The Office of the Public Auditor has found that 16 Department of Finance-sanctioned collection points on Saipan lack standard operating procedures to ensure that daily collections are adequately accounted for, and this has resulted in untimely reconciliation and remittance of daily collections at the Treasury, and not properly secured daily collections and Manual Official Cash Receipts at five collection points.

In its report yesterday, OPA also determined that the absence of an SOP has resulted in a lack of segregation of duties at one collection point; cash overages and shortages at five collection points were noted during a surprise collection count; and change fund was not consistently provided to all the collection points.

OPA said the finding indicates a lack of accountability and oversight of daily collections.

OPA did the audit on Finance’s sanctioned collection points on the island for the period of Dec. 14, 2022, through Dec. 16, 2022, to determine if daily collections are properly accounted for.

In Finance’s response to the audit, Finance Secretary Tracy B. Norita said the department has met with key personnel involved in the process of cash handling to acknowledge the findings of the draft audit report and implement measures to resolve the matters cited.

Norita said the Division of CNMI Treasury has begun efforts to finalize and disseminate an official cash handling SOP, along with other agency-specific SOPs being compiled for all Finance-sanctioned collection points on Saipan. The target completion date is Aug. 31, 2023. She also outlined steps that the department is taking to address all concerns cited in the audit.

OPA said that Finance provided them with the listing of collection points, but did not have an SOP. Consequently, OPA extended its audit procedures to include interviews with key personnel, walkthroughs of processes, and observations at each collection point to gain an understanding of the daily collection activities.

OPA also performed surprise collection counts at all collection points. OPA said that five collection points did not perform daily reconciliation procedures and timely remittance of collections to Treasury.

At one collection point, OPA was unable to validate collections totaling $3,650 as reconciliation and supporting documents were not provided.

OPA found that daily collections and MOCRs were not properly secured at five collection points. Two of the collection points neither had a security system nor a locked safe/cabinet to properly secure the MOCRs and unremitted collections.

One collection point did not secure collections and unused MOCRs in a locked cabinet through the day until the end of the business day.

Another collection point used a locked cabinet to store collections, but the key was not adequately secured.

One collection point did not secure its unused MOCRs despite having a safe.

At one collection point, the reconciliation of daily collections and remittance to Treasury were performed by one individual due to the nature of operations and frequency of services provided. OPA said an essential control over collections is the segregation of duties. OPA said the basic premise should be that at least two individuals handle daily collections and related activities of any task or transaction to ensure that no single person is solely in control.

OPA said that during surprise collection counts at all 16 collection points from Dec. 14 to 16, 2022, cash overages and shortages were noted at five collection points. Two collection points had an overage totaling $1, and three had a shortage totaling $254.

During interviews with authorized custodians/cashers at the collection points, OPA noted that the overages and shortages were due to either an oversight, the customer leaving change behind, or collections being secured at an off-site location.

Six of the 16 collections sites did not have a change fund. OPA interviews, walkthroughs, observations, and the surprise collection count revealed that change funds were not consistently provided to all collection points.

Consequently, authorized custodians/cashiers have requested customers to pay the exact amount due or resorted to using their personal funds to make or give change for cash sales.

On prior audit coverage, on Dec. 28, 2021, OPA published its audit of cash report, which encompasses the results of the collection points at the Department of Finance-Treasury, the Mayor’s Offices, and the Municipal Treasurers on Tinian and Rota.

OPA said the audit result showed no significant discrepancies, but notable observations and recommendations to improve collection accountability were communicated to the Finance secretary.

OPA performed follow-up procedures to determine if corrective actions were taken to address the outstanding recommendations on the audit of cash on Tinian and Rota.

However, OPA said, Finance did not provide a status update on its corrective actions as of Dec. 31, 2022.