_________________________________
David E. Sundstrom, Auditor-Controller
1.
POLICY
County officers may be relieved of accountability
for a cash loss in any of their accounts pursuant
to Government Code Sections 29390 through 29390.1.
Officers’ accountability for cash losses is
to the Board of Supervisors. The Auditor-Controller
is authorized to perform the functions of the Board
of Supervisors in providing relief of accountability
and replenishing losses not exceeding $2,500 in County
funds. For losses exceeding $2,500 in County funds,
the Auditor-Controller submits applications for
replenishment to the Board of Supervisors.
All requests for replenishment of cash losses are
made in writing to the Auditor-Controller. The Auditor-Controller
forwards copies of all reported cash losses to the
Internal Audit Department. Upon receipt of cash
loss information, the Auditor-Controller reviews
the adequacy of the department/agency’s request
and the circumstances of the loss, and determines
whether an investigation is needed. Once appropriate
investigative steps have been completed, the Auditor-Controller
may provide relief of accountability and replenishment
of the loss or may submit a request to the Board.
1.1
Purpose
1.1.1
Cash Loss
The purpose of this procedure is to
assist County officers with replenishing
and obtaining relief of accountability
for a loss in any of their accounts
as allowed by Government Code Sections
29390 through 29390.1.
California Government Code Sections
29390 and 29390.1 provide for the Board
of Supervisors to relieve officers of
accountability for cash losses and
to delegate the function to the Auditor-Controller.
1.2.2
Board Resolutions
Board of Supervisors Resolutions No.
83-354, dated March 8, 1983, and No. 05-003,
dated February 15, 2005, authorize
the Auditor-Controller to perform the
functions of the Board to replenish
cash losses not exceeding $2,500.
1.3
Definitions
1.3.1
Officer
"Officer of the County"
includes any elective or appointive
officer of the County, and any person
in charge of any office, department,
service, or institution of the County,
or a division or branch thereof, and
as enumerated in Section 24000 of the
Government Code.
1.3.2
Cash Shortage
Cash shortages are different than
cash losses; they are deficits that
occur from employee mishandling of cash
receipts or disbursements. These deficits
may occur during daily operations such
as accepting money and making change
in over-the-counter transactions. Cash
shortages are covered by Procedure C-2, Cash
Difference Fund.
1.3.3
Cash Loss
Losses or deficits occurring due to
a theft or mysterious disappearance
or from an unintentional receipt of
counterfeit money.
1.3.4
Reimbursement
As used in this procedure, the term
"reimbursement" encompasses the Auditor-Controller
recordation of entries to book revenue and
offsetting expenditure amounts, and the check
payments to replenish cash fund losses (e.g.,
losses from petty cash).
2.
PROCEDURE
2.1
Relief of Accountability for Cash Losses
of Less Than $1,000
2.1.1
Immediate Report to Sheriff/Law Enforcement
and CEO/Risk Management
Visual or suspected evidence of burglary,
theft, or mysterious disappearance of
County funds should be immediately reported
to the Sheriff or the appropriate law
enforcement agency and CEO/Risk Management.
Any cash loss, regardless of amount,
should be reported to CEO/Risk Management.
After notifying the Sheriff (or appropriate
police agency), the department/agency must contact
CEO/Risk Management. The County purchases a
number of commercial insurance policies, and
deductibles vary. Additionally, smaller losses
at one point in time may develop into larger
losses. Therefore, it is important to report
the loss to CEO/Risk Management because it
may be covered, partially or entirely, by
commercial insurance. Comments regarding
insurance coverage should be addressed in
the department/agency's letter to the
Auditor-Controller (see
Section 2.1.5).
2.1.2
Counterfeit Bills
Counterfeit bills should be immediately
reported and transmitted to the Department
of the Treasury/United States Secret
Service. It will provide a written
receipt for the counterfeit bill(s).
The department/agency should contact
the County Treasurer’s Office
for the address of the Department of
the Treasury. If a bank identifies counterfeit
bills in a County deposit, it forwards
them directly to the Secret Service
and deducts the amount from the department/agency’s
deposit.
2.1.3
Employee Fraud or Gross Negligence
If employee fraud or gross negligence
is suspected, separate action is required.
The department/agency should obtain
as much relevant information as possible
regarding the incident, and if further
investigation is warranted, it should
inform the appropriate departments (e.g.,
District Attorney, Sheriff, local law
enforcement agency, Internal Audit Department,
CEO/Risk Management, and County Executive
Office). At a minimum, it should notify
the District Attorney and the Sheriff
(or appropriate law enforcement agency).
They can suggest additional steps to
be taken.
2.1.4
Restitution for Thefts of Funds
Occasionally departments/agencies receive restitution
for their cash losses. Even when restitution appears
to be available and forthcoming, departments/agencies
should submit requests for relief of accountability.
They should not postpone their requests until after all
restitution payments have been received. Once a loss
has been investigated by a department/agency and by other,
appropriate agencies, it should promptly submit its
request for relief of accountability and reimbursement
to the Auditor-Controller (see Section 2.1.5).
The amount specified for relief and reimbursement should
be the amount of unrecovered loss (i.e., original cash
loss minus insurance recoveries and minus restitution
payments already received). This amount should disregard
and not be reduced for possible future restitution.
When the Auditor-Controller prepares final documents for
relief of accountability and reimbursement of loss, it
will contact the department/agency to obtain an updated
amount of unreimbursed loss.
After obtaining relief of accountability and reimbursement,
departments/ agencies may receive additional restitution
payments. If so, they should account for these restitution
payments as revenue.
2.1.5
Submittal of Documentation to Auditor-Controller
To obtain relief of accountability
and reimbursement for a cash loss, departments/agencies
must prepare and submit a letter
to the Auditor-Controller’s Cost
Studies/Mandated Audits Unit describing the circumstances
of the loss. The letter must be signed by the
department/agency head, or in his/her absence, by the
Chief Deputy or Assistant Director. The letter must
reference the following:
Management has reviewed circumstances of the loss,
and there is no evidence of employee fraud or gross
negligence. Or, if there is employee fraud and/or
gross negligence, describe the steps taken to recover
County funds.
The unit/section in which the loss occurred does
not have a history of losses. Or, if it has a history
of cash losses, the department/agency has provided
employees of the unit/section with additional counseling
or training.
The loss did not involve the department's executive personnel.
The loss is not reimbursable by insurance.
Where necessary, procedures have been modified and
controls increased to help preclude similar instances from
occurring in the future. Specifically describe any new or
revised procedures the department has implemented.
2.1.6
Auditor-Controller Action
Upon receipt of a department/agency’s
written request and cash loss information,
the Auditor-Controller reviews its adequacy.
The Auditor-Controller provides a copy of
the request to the Internal
Audit Department.
2.1.7
Relief of Accountability and Replenishment
of Loss
Based upon the department/agency’s remediation
of related control weaknesses, the Auditor-Controller
grants relief of accountability to the
officer and replenishes the cash loss.
For most reimbursements of deposit or
revenue losses, a journal voucher is
prepared, charging expenditure object
1702, "Cash Losses," of the
department/agency that incurred the
loss and crediting the deposit account
or the revenue source. For most reimbursements
of petty cash losses, a check is prepared
charging the department/agency’s
expenditure object 1702 and crediting
cash. The Auditor-Controller’s
General Ledger Unit sends a copy of
the relief of accountability statement
and of the replenishment document (e.g.,
journal voucher or request for check)
to both the department/agency and the
Internal Audit Department. See
Procedure B-2, Discharge of
Accountability for Collections, for additional
information regarding relief of accountability.
2.2
Relief of Accountability for Cash Losses
of $1,000 to $2,500
Procedures for handling cash losses of $1,000
to $2,500 correspond to those for relief of
accountability for cash losses of less than $1,000
(see Section 2.1), with the following
additional requirements:
2.2.1
Submittal of Documentation to Auditor-Controller
In addition to documentation required under section 2.1.5,
departments/agencies must provide the Auditor-Controller with
copies of any Sheriff or police reports and with other internal
department documentation regarding the cash loss.
2.2.2
Request for Investigation by the Internal Audit Department
The Auditor-Controller requests that the Internal Audit Department
investigate the incident. The Internal Audit Department reviews documents
and correspondence pertaining to the loss and interviews employees and/or
department/agency management. Depending on the circumstances and the amount
of the loss, the Internal Audit Department may visit the site where the loss
occurred. If controls are determined to be inadequate, the Internal Audit
Department makes specific recommendations to the department/agency to
strengthen controls and provides a copy of the recommendations to the Cost
Studies & Mandated Audits Unit. The department/agency provides a letter to
the Internal Audit Department, with a copy to the Cost Studies & Mandated
Audits Unit, describing its implementation of the recommendations or of
satisfactory alternatives to rectify identified control weakness(es).
2.2.3
Internal Audit Department Opinion
and Recommendation
The Internal Audit Department provides
the Auditor-Controller with an opinion
on the adequacy of the department/agency’s
cash controls in the area where the
loss occurred. It also recommends whether
the Auditor-Controller should provide relief of
accountability and approval for replenishing the loss.
If the Internal Audit Department does not recommend relief of
accountability and reimbursement of the loss, the department/agency
may need to prepare an ASR to the Board of Supervisors.
2.2.4
Auditor-Controller Action
The Auditor-Controller, upon receiving the Internal Audit
Department’s recommendation, issues a payment or prepares a journal
voucher. The Auditor-Controller’s General Ledger Unit sends a copy
of the relief of accountability statement and of the replenishment
document (e.g., journal voucher or request for check) to both the
department/agency and the Internal Audit Department.
2.3
Relief of Accountability for Cash Losses in Excess
of $2,500
Procedures for handling cash losses in excess
of $2,500 correspond to those for relief of
accountability for cash losses of $1,000 to $2,500 and
(see Section 2.2), with the following
additional requirements:
2.3.1
District Attorney Review
The Auditor-Controller submits cash loss documentation to
the District Attorney for review and evaluation as to whether the loss
resulted from employee fraud or gross negligence. The results of the
District Attorney’s review are submitted along with other
documentation to the Internal Audit Department for its review and
recommendation.
2.3.2
Preparation of ASR Approving Relief
of Accountability/Loss Reimbursement
Based on the Internal Audit Department
recommendation to grant relief, the Auditor-Controller’s
Cost Studies & Mandated Audits Unit
prepares an ASR. The ASR includes a
brief description of additional controls
established by the department/agency,
or a statement regarding adequacy of
existing controls, and the
following two recommended actions:
Relieve the County officer of
accountability for the loss.
Approve reimbursement for the
loss and direct the Auditor-Controller
to issue a payment or prepare a
journal voucher.
If the Internal Audit Department
does not recommend relief of accountability
and reimbursement of the loss, the
department/agency may need to prepare
its own ASR to the Board of Supervisors.
2.3.3
Board of Supervisors Meeting
The Cost Studies & Mandated Audits Unit
informs the department/agency of the
scheduled date for the agenda item.
A representative of the department/agency
where the loss occurred must be present
at the Board of Supervisors meeting
to answer any questions regarding the
incident.
2.3.4
Board Action
The Board of Supervisors may provide relief of accountability
and authorize the Auditor-Controller
to reimburse the officer.
2.3.5
Auditor-Controller Action
The Auditor-Controller, on receipt
of a certified copy of the Board’s action
granting relief, issues a payment
or prepares a journal voucher. The Auditor-Controller’s
General Ledger Unit sends a copy of
the relief of accountability statement
and of the replenishment document (e.g.,
journal voucher or request for check)
to both the department/agency and the
Internal Audit Department.
2.4
Auditor-Controller Reporting of Cash Loss Reimbursements
2.4.1
Quarterly Reporting Requirements
After a calendar quarter during which the Auditor-Controller
reimburses an individual cash loss that exceeds $1,000, it prepares
a written report to the Board of Supervisors giving an account of
each cash loss reimbursement that exceeded $1,000.
2.4.2
Annual Reporting Requirements
The Auditor-Controller prepares a written report to the Board of
Supervisors giving an account of cash loss reimbursements it made
during the fiscal year. This report shall be made after the end of
each fiscal year and at such other times as the Board of Supervisors
directs or the Auditor-Controller deems necessary.
Legal