Top Ten most common problems we note in municipal division audits:
10)Need for Pre-Numbered Forms: Any form or document used by the court or that could eventually come to the court and result in the collection of moneys need to be pre-numbered and accounted for. Examples include, receipt slips, bond forms, tickets or summonses, complaint forms, and payment agreements.
9)Follow-up on Outstanding Checks and Records and Collection of Accounts Receivable: Checks that have been written but not cashed promptly need to be investigated. These checks either need to be reissued if the payee can be found or designated as abandoned funds and forwarded to the state's unclaimed property section. Also, accurate records of amounts owed the court need to be maintained and follow-up procedures need to be established to help ensure collection.
8)Court Costs: Court costs need to be assessed consistently and inaccordance with state law. Furthermore, court costs need to be distributed to the appropriate parties in an accurate and timely manner.
7)Bank Reconciliations: Monthly bank reconciliations need to be performed on any bank account under the control of the court or that handles court monies. These bank reconciliations need to reviewed by someone independent of the court and all unusual items investigated.
6)Open Items Records: For any monies that are held in trust by the court or on behalf of the court, an open items listing needs to be maintained indicating each item being held, the reason it is being held, and the amount of moneys associated with each item. Monthly, the moneys held in trust need to be reconciled to the open items listing and all unusual items or exceptions investigated promptly.
5)Receipt Procedures: A pre-numbered receipt slip needs to be issued for all moneys received by the court, regardless of the source. These receipt slips need to note, at a minimum, the date received, the payee(s), the amount, and the mode of payment (cash, check, or money order). All collections need to be deposited intact, and the mode of payment recorded on the receipt slips need to be reconciled to the composition of deposits, with no exceptions.
4)Ticket Accountability: Traffic tickets are one of the major sources of collections for municipal divisions. The court, working with the police department, needs to account for the numerical sequence and ultimate disposition of all tickets assigned and issued by the police department.
3)Distribution of Collections: Fines and court costs collected by the court need to be distributed to the city, county, or state, as applicable, in a timely and accurate manner. There is no reason for these moneys to be retained by the court for any significant amount of time.
2)Deposit Collections Timely: All collections by the court should be recorded immediately upon receipt and deposited or transmitted daily, or when accumulated receipts exceed $100. There is no reason for moneys collected to be held by the court. Undeposited receipts only increases the risk of loss, theft, or abuse.
1)Segregation of Duties and Oversight or Monitoring of Court Operations: In many municipal divisions there are few, if any, internal controls. One or a few employees within the court have the ability or authority to perform too many conflicting duties without any supervisory or independent monitoring or oversight of the municipal division's records. If possible, the duties of receiving and depositing monies need to be segregated from the recording and disbursing of collections. If duties cannot be segregated, at a minimum, there should be a documented, independent comparison of receipts slips issued to the amount and composition of deposits, and an independent review of the bank statements and month-end reconciliations. Any unusual items or exceptions need to be investigated promptly.
Other items worthy of consideration:
* Non-monetary transactions
* Filing of required monthly reports
* Bonding of employees
* Recording of case disposition in case files and on dockets, and the Municipal Judge reviewing and approving the dockets