Prevent. Protect. Prepare.
Pat McCrory, Governor / Kieran J. Shanahan, Secretary
MEMORANDUM
TO:Ms. JudyBrandon, Superintendent
Caswell Correctional Center, #4415
FROM:Timothy D. Harrell
DATE:April 3, 2013
SUBJECT:Audit of Caswell Correctional Center
Internal Audit has completed a Scheduled Audit of Caswell Correctional Center. The audit report is attached.
The purpose of the audit was to evaluate the effectiveness of the systems of management control by:
reviewing and appraising the adequacy, accuracy, and soundness of accounting, financial, and operating controls
determining the extent of compliance with established policies and procedures
determining the extent to which assets and resources are accounted for and safeguarded
We thank you and your staff for your assistance and cooperation during this audit. If you have questions or need further assistance, please contact our office.
TH/dt
Attachments
cc:Audit File #4415
MAILING ADDRESS:OFFICE LOCATION:
4201 MailServiceCenter512 N. Salisbury Street
Raleigh, NC27699-4201Raleigh, NC27604-1159
Telephone: (919) 733-2126Fax: (919) 715-8477
An Equal Opportunity employer
Ms. Judy Brandon
February 10, 2013
Page 1
ec:Bennie Aiken
W. David Guice
Tim Moose
George Solomon
Ginger Chinnis
Todd Pinion
Marvin Mervin
Jean Burke
Joan Taylor Saucier
Roberta Morgart
Council of Internal Auditing
MAILING ADDRESS:OFFICE LOCATION:
4201 MailServiceCenter512 N. Salisbury Street
Raleigh, NC27699-4201Raleigh, NC27604-1159
Telephone: (919) 733-2126Fax: (919) 715-8477
An Equal Opportunity employer
TABLE OF CONTENTS
I...... EXECUTIVE SUMMARY 1
II...... INTERNAL AUDIT RATING SCALE 3
III.FINDINGS AND RECOMMENDATIONS...... 8
A.SAFES...... 8
B.CANTEEN OPERATIONS...... 8
C.INMATES’ TRUST FUND...... 8
D.ACCOUNTS PAYABLE AND PROCUREMENT...... 8
E.FIXED ASSETS...... 9
F.inmate service clubs...... 10
G.incentive wage FUND...... 11
H.TELEPHONES...... 11
I.TRAVEL AND OTHER REIMBURSEMENTS...... 12
J.FOOD SERVICE...... 12
K.CLOTHES HOUSE...... 12
L.CENTRAL WELFARE FUND...... 12
M.AMMUNITION...... 13
N.CONTROL OF FIREARMS...... 13
MAILING ADDRESS:OFFICE LOCATION:
4201 MailServiceCenter512 N. Salisbury Street
Raleigh, NC27699-4201Raleigh, NC27604-1159
Telephone: (919) 733-2126Fax: (919) 715-8477
An Equal Opportunity employer
i. executive summary
Caswell CorrectionalCenter is located in Yanceyville, North Carolina. The facility houses approximately 481 medium custody inmates and has approximately 171 employees.
Internal Audit conducted a ScheduledAudit of the facility November 6–15, 2012. The previous audit was completed in March 2008. A Scheduled Audit is a full audit performed to ensure the adequacy and effectiveness of the facility’s internal controls and the quality of performance in carrying out assigned responsibilities in accordance with fiscal policies and procedures.
The scope of the audit included examination of the Safes, Canteen Operations, Inmates’ Trust Fund, Accounts Payable and Procurement, Fixed Assets, Inmate Service Clubs, Incentive Wage Fund, Telephones, Travel and Other Reimbursements, Food Service, Clothes House, Central Welfare Fund, Ammunition, and Control of Firearms areas.
Our audit disclosed no exceptions, strong internal controls, and a knowledgeable staff in the Safes, Canteen Operations, Inmates’ Trust Fund, Incentive Wage Fund, Telephones, Travel and Other Reimbursements, Food Service, Clothes House, Ammunition, and Control of Firearms areas.
A few exceptions, minor in nature, were noted in the Accounts Payable and Procurement, Fixed Assets, Inmate Service Clubs, and Central Welfare Fund areas. In the Accounts Payable and Procurement area, Direct Processing Forms (DC-702s) were not properly completed or processed. In the Fixed Assets area, improvements were needed in the facility’s recycling procedures. Also, one asset valued at over $1000, was located at the facility, but not listed on the Equipment Report. In the Inmate Service Clubs area, sales tax was paid on the purchase of items intended for resale. In the Central Welfare Fund area, two expenditures for recreational supplies and yard supplies were over the $500 welfare expenditure limit.
These appraisals are reflected in the Internal Audit Rating Scale and the Findings and Recommendations included with this report.
We held an exit conference on December 3, 2012, to inform facility management of our findings and recommendations. The following were present.
- Judy Brandon, Superintendent
- Todd Pinion, Piedmont Region Director
- Shannon Walker, Administrative Officer
- Tim Harrell, Internal Audit Director
- Andrea Millington, Internal Audit Manager
- David Thompson, Regional Audit Supervisor
- Siew Lee, Internal Auditor
- Pat Sloop, Internal Auditor
During the course of the audit and exit conference, we provided facility personnel with schedules as needed to explain exceptions and to serve as supporting documentation.
The Superintendent acknowledged agreement with all findings and recommendations.
In addition to our normal distribution, we may send excerpts from this report to other DPS managers as we deem appropriate.
1
II. Internal Audit Rating Scale
Scheduled Audit
Caswell Correctional Center
#4415
Listed below are the major areas examined in this audit and overall ratings assigned by auditors. Major areas are comprised of individual categories as listed on the following pages. Ratings given to categories or major areas are not averages. Ratings are based on standard audit procedures, and reflect the auditors’ assessment of the facility’s performance in various categories. The risk associated with individual findings is a large component of this assessment and may significantly impact a rating.
Rating Scale Guidelines
1 -No exceptions, strong internal controls, staff appears knowledgeable
of policies and prescribed procedures
2 -Meets expectations, a few exceptions minor in nature
3 -Some improvement needed to strengthen controls or minimize risks
4 -Below expected performance level, significant improvement needed
Overall Rating
Rating
Safes /1
Canteen Operations /1
Inmates’ Trust Fund /1
Accounts Payable and Procurement /2
Fixed Assets /2
Inmate Service Clubs /2
Incentive Wage Fund /1
Telephones /1
Travel and Other Reimbursements /1
Food Service /1
Clothes House /1
Central Welfare Fund /2
Ammunition /1
Control of Firearms /1
1
II. Internal Audit Rating Scale
Rating Scale Guidelines
1 -No exceptions, strong internal controls, staff appears knowledgeable
of policies and prescribed procedures
2 -Meets expectations, a few exceptions minor in nature
3 -To minimize risk, some improvement needed to strengthen controls
4 -Below expected performance level, significant improvement needed
Safes
/ 1 / 2 / 3 / 4- Drop-box Security
- Drop-box Dual Lock Control
- Safe Access Minimized
- Transfer of Funds
Canteen Operations
/ 1 / 2 / 3 / 4- Separation of Duties
- Purchases and Disbursements
- Receipts and Deposits
- Pricing
- Inventory Control
- Monthly Reporting
- Canteen Security, Appearance, and Cleanliness
Inmates’ Trust Fund
/ 1 / 2 / 3 / 4- Trust Fund Account
- Signature Card
- Separation of Duties
- Mailroom Operations
- Deposits
- Disbursements
- Special Draws
- Account Balances and Reconciliation
Accounts Payable and Procurement
/ 1 / 2 / 3 / 4- Separation of Duties
- Direct Processing (DC-702) Purchases
- Procurement Card (P-Card) Purchases
- Purchase Orders
- NCAS/E-Procurement Security Access
Fixed Assets
/ 1 / 2 / 3 / 4- Separation of Duties
- Annual Fixed Asset Inventory
- Quarterly Laptop Inventory
- Inventory Controls
- Changes, Updates, and Follow-up
- Transfers and Disposition of Assets
- Solid Waste Recycling Program
- Vehicle Mileage and Maintenance Records
Inmate Service Clubs
/ 1 / 2 / 3 / 4- Establishing/Approving an Account
- Deposits and Withdrawals
- Reporting of Sales Tax
- Inventory Controls
- Closing Accounts
Incentive Wage Fund
/ 1 / 2 / 3 / 4- Pay Grades
- Time Reporting
- Payroll and Supporting Documentation
Telephones
/ 1 / 2 / 3 / 4- Internal Controls
- Review and Approval
- Cellular Phone Procedures
Travel and Other Reimbursements
/ 1 / 2 / 3 / 4- Mileage Reimbursement
- Allowance for Meals, Lodging, and Other
- Complete and Accurate Documentation
- Signatures and Approvals
Food Service
/ 1 / 2 / 3 / 4- Cycle Count Records
- Inventory Control
- Direct Issues
- Separation of Duties
Clothes House
/ 1 / 2 / 3 / 4- Cycle Count Records
- Inventory Control
- Direct Issues
- Inventory Control (Max/Min Levels)
- Separation of Duties
Central Welfare Fund
/ 1 / 2 / 3 / 4- Requests and Approvals
- Invoices and Packing Slips
- Welfare Expenditure
Ammunition
/ 1 / 2 / 3 / 4- Cycle Count Records
- Inventory Control
- Direct Issues
- Separation of Duties
Control of Firearms
/ 1 / 2 / 3 / 4- Inventory Control
- Approved Memorandum Receipts
- Follow-up and Resolution of Problems
- Separation of Duties
1
IIi. FINDINGS and recommendations
A.SAFES
We examined the facility’s internal controls to ensure the four safes and one drop-box provided secure storage for all currently authorized items. No exceptions were noted.
B.CANTEEN Operations
We conducted a review of the Canteen operations which included physical inventory test counts on November 6, 2012. We also observed the physical inventory process conducted by facility personnel in the two canteens. All pertinent records and reports were examined to determine if canteen operations complied with the Prisons Cashless on the Net (CON) Users Manual and DPS Fiscal Policy and Procedure Manual at .0500. No exceptions were noted.
C.INMATES’ TRUST FUND
We examined the Inmates’ Trust Fund disbursement bank account to determine if check signers were duly authorized and the bank signature card was accurate. We agreed deposits and disbursements recorded by the facility to Inmate Banking System (IBS) reports. Our examination also included review of the facility’s internal controls to ensure trust fund operations were in compliance with the DPS Fiscal Policy and Procedure Manual at .0100 and .1000,and the Prisons IBS Manual. No exceptions were noted.
D.ACCOUNTS PAYABLE AND PROCUREMENT
We reviewed the procedures used for purchase orders and local purchases processed on Direct Processing Forms (DC-702s) and Procurement Cards (P-Cards) for compliance with the DPS Fiscal Policy and Procedure Manual at .2600. The following exceptionwas noted.
Direct Processing Forms (DC-702s)
Condition: A review of twenty-fiveinitiated but not completedand twenty-four completed DC-702s disclosed the following:
- The log maintained for processed and voided DC-702s by the Medical Section was incomplete. The invoice date and the date processed and sent to the DPS General Accounting Section were missing and invoice numbers were not always recorded. DC-702 numbers were recorded out of sequence and no DC-702s were recorded after October 12, 2012.
- Four (8%) DC-702s in the Medical Section were completed prior to receipt of invoices. One of the four DC-702s was processed for an incorrect payment amount of $75; however, the Controller’s Office - General Accounting Section identified the error and processed the correct payment of $65.
- Two (4%) DC-702 invoices in the Medical Section were not processed and sent to DPS General Accounting for payment in excess of thirty days.
Criteria: DC-702 numbers should be issued in numerical sequence and recorded in a log that contains the DC-702 number, requestor’s name, date of issue, vendor name, vendor number, invoice date, invoice number, invoice amount and date processed. Upon completion of the transaction and receipt of the invoice, and the Direct Processing Form DC-702 has been completed and approved, the appropriate copy shall be forwarded to the General Accounting Section with all applicable documentation substantiating and/or authorizing the purchase. All Direct Processing Forms DC-702 shall be sent to General Accounting within twelve calendar days after receipt of invoice, or seven calendar days from due date. [Reference: .2610 A.–D.]
Cause: The Administrative Officer informed DPS Auditors that the Medical Records Assistant had not received adequate training in the Accounts Payable and Procurement procedures.
Effect: Failure to maintain a current and complete log results in inaccurate and unreliable documentation for the DC 702’s processed. Failure to pay obligations timely could result in the loss of discounts, vendors terminating services, and bad credit ratings for the Department.
Recommendation: Facility Management should implement procedures to ensure all procurement policies and procedures are followed as stated in the criteria above and ensure logs are accurate, completed, and current at all times. Management should also ensure that adequate training is provided to facility personnel.
E.FIXED ASSETS
We conducted a 34 percent test count of fixed assets, valued at $1,000 and over, to provide assurance that assets were properly accounted for. We performed additional testing to verify internal controls and to ensure compliance with the DPS Fiscal Policy and Procedure Manual at .2700. Our sample included high-risk items such as computers, maintenance and medical equipment. Copies of all schedules relative to our physical inventories were provided to facility personnel. The following exceptions were noted.
1.Equipment not Listed on the Report
Condition: A gas dryer (Serial #1011995176)similar to other like assets valued at over $1,000, was located at the facility but not listed on the facility’s equipment list. The asset was not assigned to any other location.
Criteria: All equipment purchased with a value over $1,000 should be added to the facility’s Equipment Report. [Reference: 2703 B.]
Cause: The Superintendent informed DPS Auditors that the equipment was transferred without complete documentation from another facility that was closed.
Effect: Failure to have all equipment listed on the Equipment Report results in a lack of accountability for the assets located at the facility and may result in loss or theft of the equipment.
Recommendation: Facility Management should ensure a proper review is conducted and appropriate forms are properly completed and submitted to the Controller’s Office - Equipment Control Section. This practice will ensure any assets not shown on the equipment list will be properly added. Facility management should also followup with the Equipment Control Section to verify that the asset was added as requested.
2.Recycle Program Documentation
Condition: Our review of the facility’s recycle program documentationdisclosed the following:
- The “Department of Public Safety” and the required DPS account funding information was not recorded on the receipt.
- There was no documentation to supportthat competitive bids were obtained or that there was only one vendor available in the area for the service required.
- One of two recycling check copies was not available for review.
Criteria: Recycle program funding information and “Department of Public Safety” should be recorded on the vendor’s receipt sent to the State Surplus Office to ensure proper credit. The Facility shall sell recyclable material directly to a local vendor. If more than one vendor is available in the area, the competitive bid process should be used. If only one vendor is available, it should be noted on the documentation provided to State Surplus. [Reference: .2715 B.1.b., D.1. and 2.]
Cause: The Administrative Sergeant informed DPS Auditors that the recycling receipt referenced “State Surplus” and he was unaware of the policy requirement for competitive bids tobe obtained when there is more than one vendor. The Sergeant was also unaware of the policy reference requiring an operating fund account on the receipt.
Effect: Failure to maintain and submit proper documentation of funds received increases the risk of error and may result in the misappropriation or loss of State funds. Failure to obtain competitive bids results in a weakness in providing fair and open solicitation for services.
Recommendation: Facility Management should implement procedures to ensure all recycleprogram requirements are completed as stated in the above criteria. The individual responsible for the facility’s recycle program should be properly trained on recycling procedures and have access to Fiscal Policy.
F.INMATE SERVICE CLUBS
The facility had two inmate service clubs as listed below.
Date of
Account NameBalanceLast Activity
SERVCE1 $7,611.19 October 31, 2012
RELIGI2 $4.47 October 25, 2012
We examined these accounts to determine compliance with the DPS Fiscal Policy and Procedure Manual at .2100 relative to establishing an account, making deposits and withdrawals, sales tax treatment, inventory controls, and closing accounts. The following exception was noted.
Sales Tax Overpayment
Condition: Sales tax of $13.70 was paid to one vendor for five purchases of merchandise for resale during the period of August 1 through October 31, 2012 for the SERVCE1 account. Also, sales tax was charged to the purchaser when the merchandise was resold.
Criteria: Purchases for resale are not subject to sales tax at the time of purchase from individual vendors. The Streamlined Sales Tax Agreement Certificate of Exemption (Form E-595E) exempts payment of sales tax to vendors when purchasing merchandise for resale. [Reference: .2103 D.3.a.]
Cause: The Correctional Programs Supervisor informed DPS Auditors that Form E-595E had been provided to the vendor; however, vendor management had not authorized exemption for payment of sales tax.
Effect: Failure to provide vendors with Form E-595E authorizing vendors not to collect sales tax on merchandise purchased for resale resulted in the overpayment of sales tax to the North Carolina Department of Revenue.
Recommendation: Facility Management should implement procedures to ensure staff furnishes vendors with the Form E-595E authorizing vendors not to collect sales tax on purchases. Copies of Form E-595E should be maintained on file at the facility. The DPS Controller’s Office should be contacted by staff for guidance and assistance regarding the overpayment.
G.InCENTIVE WAGE FUND
We reviewed incentive wage operational and accounting procedures for compliance with the DPS Fiscal Policy and Procedure Manual at .0200 and Prisons Policy and Procedure Manual. No exceptions were noted.
H.TELEPHONES
We reviewed internal controls over telephones and cellular phones assigned to the facility for compliance with the DPS Fiscal Policy and Procedure Manual at .2400 and .3200. We examined telephone records for the months of July, August, and September 2012 for evidence that charges were reviewed for appropriateness. No exceptions were noted.
I.TRAVEL AND OTHER REIMBURSEMENTS
We examined reimbursements to employees for the period July 22 through October 22, 2012, to determine accuracy and compliance with the DPS Fiscal Policy and Procedure Manual at .1400 and .4000. No exceptions were noted.
J.FOOD SERVICE