Prevent. Protect. Prepare.
Pat McCrory, Governor / Kieran J. Shanahan, Secretary
MEMORANDUM
TO:Donnie Watkins, Superintendent
Buncombe Correctional Center, #4675
FROM:Timothy D. Harrell
DATE:May 22, 2013
SUBJECT:Audit of Buncombe Correctional Center
Internal Audit has completed a Change of Command Audit of Buncombe Correctional Center. The audit report and a completed Certificate of Responsibility are 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/he
Attachments
cc:Audit File #4675
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
Donnie Watkins
May 22, 2013
Page 1
ec:W. David Guice
Tim Moose
George Solomon
Ginger Chinnis
Roger Moon
Bennie Aiken
Marvin Mervin
Jean Burke
Joan Taylor Saucier
Roberta Morgart
Council of Internal Auditing
TABLE OF CONTENTS
I...... EXECUTIVE SUMMARY 1
II...... INTERNAL AUDIT RATING SCALE 3
III.FINDINGS AND RECOMMENDATIONS...... 7
A.SAFES...... 7
B.CANTEEN OPERATIONS...... 7
C.INMATES’ TRUST FUND...... 9
D.ACCOUNTS PAYABLE AND PROCUREMENT...... 11
E.FIXED ASSETS...... 11
F.INMATE work release FUND...... 12
G.inmate service clubs...... 13
I.TELEPHONES...... 14
i. executive summary
BuncombeCorrectionalCenter is located in Asheville, North Carolina. The facility houses approximately 170 minimum custody inmates and has forty-six employees.
Internal Audit conducted a Change of Command Audit December 3–6, 2012. The previous audit was conducted in April 2012. The Change of Command Audit is requested by management due to a change in facility head or management.
The scope of the audit included examination of the Safes, Canteen Operations, Inmates’ Trust Fund, Accounts Payable and Procurement, Fixed Assets, Inmate Work Release Fund, Inmate Service Clubs, and Telephones areas.
Our audit disclosed no exceptions, strong internal controls, and a knowledgeable staff in the Safes, Accounts Payable and Procurement, and Inmate Service Clubs areas.
A few exceptions, minor in nature, were noted in the Inmates’ Trust Fund, Fixed Assets, Inmate Work Release Fund, and Telephones areas.
In the Inmates’ Trust Fund area, a Questionable Deposits Log was not maintained and several individuals no longer employed or incarcerated within the facility had active trust fund accounts. Also, local welfare DC-440s and invoices were not stamped ‘paid’ when payments were made. In the Fixed Assets area, an Equipment Suspense System was not maintained and several updates and changes were needed on the Equipment Report. In the Inmate Work Release Fund area, one inmate was charged the incorrect number of per diem days, and a register was not maintained for Temporary Work Release Earnings Receipt Books (DC-303A). In the Telephones area, several cellular telephone charges were not approved by the cell phone holder’s supervisor.
Some improvement was needed to strengthen controls and minimize risks in the Canteen Operations area. There was inadequate storage of canteen inventory, and some canteen merchandise was donated to the chaplain, but was not deducted from the perpetual inventory. Also, the unannounced inventories were not varied sufficiently to maintain the element of surprise, some month-end reports were either not maintained or not signed, and some Warehouse and Pharmacy pick tickets were not signed by the Facility Head/designee. In addition, the Approved Canteen List was not approved by the current Superintendent.
Due tothe significance ofour findings in the Canteen Operations area, we will schedule a Follow-up to verify corrective action has been implemented.
These appraisals are reflected in the Internal Audit Rating Scale and theFindings and Recommendations included with this report.
We held an exit conference on January 8, 2012, to inform facility management of our findings and recommendations. The following were present.
- Donnie Watkins, Superintendent
- David Mitchell, Western Region Operations Manager
- Crystal Cromer, Programs Supervisor
- Jeff Blackmore, Correctional Officer
- Marty Cantrell, Correctional Officer
- Mary Herila, Processing Assistant
- Leon Regan, Food Service Manager
- Andrea Millington, Internal Audit Manager
- Harriett Edmisten, Regional Audit Supervisor
- George Randlett, Internal Auditor
- Libby Elder, 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 of our findings and recommendations.
In addition to our normal distribution, we may send excerpts from this report to other DPSmanagers as we deem appropriate.
1
II. Internal Audit Rating Scale
Change of Command Audit
Buncombe Correctional Center
#4675
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 /3
Inmates’ Trust Fund /2
Accounts Payable and Procurement /1
Fixed Assets /2
Inmate Work Release Fund /2
Inmate Service Clubs /1
Telephones /2
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
- DC-440 Administration
- 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
- Vehicle Mileage and Maintenance Records
Inmate Work Release Fund
/ 1 / 2 / 3 / 4- Inmate Eligibility
- Workers’ Compensation Insurance
- Work Release Action Form (DC-190)
- Work Release Sign Out Roster (DC-306)
- Per Diem and Transportation Charges
- Receipt of Work Release Earnings
- Processing of Weekly Earnings
- Payroll Deductions
Inmate Service Clubs
/ 1 / 2 / 3 / 4- Establishing/Approving an Account
- Deposits And Withdrawals
- Reporting of Sales Tax
- Inventory Controls
Telephones
/ 1 / 2 / 3 / 4- Internal Controls
- Review and Approval
- Cellular Phone Procedures
1
IIi. FINDINGS and recommendations
A.SAFES
We examined the facility’s internal controls to ensure the three 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 December 3, 2012. We also observed the physical inventory process conducted by facility personnel in the one canteen, Supervisor’s Store, and the Mailroom. 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. The following exceptions were noted. Internal Audit will conduct a Follow-up to ensure appropriate corrective action has been implemented.
1.Inadequate Storage of Inventory
Condition: Two rolls of stamps (totaling $90) were included in the perpetual inventory for the Canteen, but were located in the Canteen Supervisor’s office. The Canteen Inmate Operator did not have direct control of this merchandise.
Criteria: Canteen items shall be stored in the canteens or the canteen warehouses. [Reference: CCM Canteen Operations II.T.]
Cause: The Canteen Supervisor informed DPS Auditors that he kept two rolls on reserve in his office as a back-up in case the canteen sold out.
Effect: Failure to properly store or maintain custody of canteen merchandise increases the risk of loss or misappropriation of merchandise.
Recommendation: Facility Management should implement procedures to ensure all items on the canteen inventory aremaintained to ensure canteen merchandise is properly accounted for.
2.Canteen Merchandise Inappropriately Donated to the Chaplain
Condition: On October 30, 2012, five bottles of mouthwash, totaling $11.35, were listed on the “Spoiled or Damaged Merchandise” form with the notation that they were “donated to the Chaplain”.
Criteria: The inmate canteen operator shall scan merchandise in accordance with established POS Operating Instructions. The facility shall sell all indigent items through CON. Local welfare funds should be used to purchase items which would be of benefit to the inmates. [Reference: CCM Section 5 VII; CCM, Canteen Operations, I.G; .1204 C.]
Cause: The Canteen Supervisor informed DPS Auditors that the prior Canteen Supervisor donated this merchandise to the Chaplain, but had never deducted the items from inventory. In order to remove these items from the perpetual inventory, the current Canteen Supervisor included them on the Spoiled or Damaged Merchandise form and deducted them from the CON System.
Effect: Distributing canteen merchandise without payment for the goods reduces the amount of welfare funds generated by the canteen.
Recommendation: Facility Management should ensure that local welfare funds are used to purchase items for the benefit of inmates instead of being distributed/donated without a charge being assessed by the canteen.
3.Unannounced Inventory not Varied
Condition: The timing of the unannounced inventory was not varied sufficiently to provide adequate control over the canteen inventory. A review of canteen inventory reports from June through November 2012 disclosed five of the six inventories were conducted between the fifteenth and nineteenth of the month.
Criteria: The date of the unannounced inventory should be conducted on various days (within the time period covered by the first week through the third week of the month) in order to maintain an element of surprise. [Reference: CCM Section 4, I.A.3.]
Cause: The Canteen Supervisor informed DPS Auditors that he thought the unannounced inventories should be conducted around the middle of the month.
Effect: Failure to vary dates of inventories could enable the inmate operator to be aware of the approximate date of the unannounced inventory, allowing a dishonest operator time to adversely impact the outcome of the inventory. Accordingly, inmates may circumvent or delay discovery of stolen inventory.
Recommendation: Facility Management should implement procedures to ensure unannounced inventories are varied throughout the month to decrease the risk of loss and theft.
4.Month-End Reports not Maintained
Condition: A review of CON month-end reports from August through October 2012 revealed:
- The Sales Summary Report (DC-263) was not available for August and not signed for September.
- The Monthly Canteen Report (DC-194) was not available for August and not signed for September.
- The Disbursement Report (DC-195) was not available for August and not signed for September.
These reports are required to be maintained. A finding regarding month-end reports was noted in the prior audit and corrective action continues to be needed.
Criteria: Copies of the DC-194, DC-195, and DC-263 should be maintained on file at the facility. [Reference: CCM Canteen Operations Section IV]
Cause: The Canteen Supervisor informed DPS Auditors that he was new to the position and his failure to maintain the reports was an oversight.
Effect: Failure to properly review reports and maintain adequate documentation results in lack of management oversight for the canteen operations.
Recommendation: Facility Staff should implement procedures to ensure that the month-end reports identified above are properly signed and maintained on file.
5.Warehouse and Pharmacy Pick Tickets were not Signed
Condition: Six (75%) of eight pick tickets for the month of October 2012 were not signed by the Superintendent or his designee.
Criteria: Warehouse and Pharmacy pick tickets should be signed by the Canteen Supervisor, inmate canteen operator, initialed by the driver, stamped with the facility head stamp, and signed by the facility head/designee. [Reference: CCM Section 3 VII.]
Cause: The Canteen Supervisor informed DPS auditors that the lack of signature was an oversight.
Effect: Failure to sign vendor receipts and properly approve invoices results in lack accountability for pick tickets and increases the risk of loss.
Recommendation: All canteen invoices, including Warehouse and Pharmacy Pick Tickets, should be signed and dated according to the above criteria.
6.Vendor List not Approved
Condition: The Approved Vendor List had not been signed and dated to reflect approval by the current Superintendent.
Criteria: The Approved Vendor List should be signed and dated by the facility head and maintained on file for audit purposes. [Reference:CCM Section 2, I.D.]
Cause: The Canteen Supervisor informed DPS Auditors that he was not aware that the Vendor List was required to be signed by the current Superintendent.
Effect: Failure to maintain an Approved Vendor List that is signed by the current facility head increases the risk of vendors being added and possibly used without the proper approval.
Recommendation: Facility Management should ensure that the Approved Vendor List is signed by the current Superintendent. Corrective action was taken during our audit.
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. The following exceptions were noted.
1.Inactive Trust Fund Accounts
Condition: The Trust Fund Balances Report (J62), dated December 4, 2012, reflected balances, totaling $7.17, for three terminated employees and two inmates no longer housed at this facility.
Criteria: The balance remaining in the inmate’s trust fund will be given to the inmate at the time of his/her release. If an inmate fails to receive his trust fund balance upon transfer or release, a money order should be mailed to his current location or forwarding address. If an inmate is released prior to receiving their trust fund account balance and the amount is less than the cost of a money order, move the funds into the UNCLAIMaccount. When an employee is separated from DPS, the trust fund staff should be notified. The trust fund staff should prepare a close out check, cash the check, and give the cash to the employee. Should the employee not receive the funds prior to departing the facility, the balance should be deposited into the UNCLAIM account. [Reference: .1007 C., D., and IBS Manual Section 7, XL.]
Cause: The Administrative Services Assistant informed DPS Auditors that the closed Trust Fund account balances for the separated employees and released inmates were oversights.
Effect: Failure to disburse funds when they are due increases the potential for misappropriation of these funds and results in the inmates and staff not receiving their funds in a timely manner.
Recommendation: Facility Management should implement procedures to ensure that the trust fund office is immediately notified upon the termination of an employee and transfer or release of an inmate. Funds due to the inmate or employee should be immediately paid. Additionally, the trust fund staff should regularly review the trust fund balances to ensure that all inmates and employees receive their funds timely.
2.Questionable Trust Fund Deposits
Condition: A log was not in place to document the processing of questionable trust fund deposits. This finding was noted in a prior audit and corrective action continues to be needed.
Criteria: Facility staff forwarding questionable funds should maintain a log of the questionable deposits, showing the date received and the ultimate disposition of funds. Documentation of research efforts and the findings should be maintained. [Reference: .1006 B.11.c.]
Cause: The Mailroom Officer informed DPS Auditors that he was unaware of this requirement.
Effect: Failure to log or record questionable deposits while being researched could result in the loss or misappropriation of funds.
Recommendation: Facility Management should ensure a log is maintained to strengthen internal controls for monitoring and researching questionable deposits.
3.Improper Processing of DC-440 Purchases
Condition: A review of ten Local Welfare Fund Expenditure Requests (DC-440) purchases and payments disclosed DC-440s and four invoices were not stamped “PAID” upon payment.