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HomeMy WebLinkAboutBUDGET & FINANCE AGENDA 09-05-06 District BUDGET AND FINANCE COMMITTEE Chair Hockett Member Boneysteele Tuesday, September 5, 2006 3:30 p.m. CSO Conference Room 1250 Springbrook Road Walnut Creek, California 1. CALL MEETING TO ORDER 2. PUBLIC COMMENTS 3. OLD BUSINESS 4. CLAIMS MANAGEMENT 5. REPORTS/ANNOUNCEMENTS a. Internal Audit Reports - Report from Auditor Rosemary Belland. 6. REVIEW EXPENDITURES 7. ADJOURNMENT A i, Recycletl Paper ~ ~ ~ ~ Central Contra Costa Sanitary District September 1, 2006 TO: BOARD BUDGET AND FINANCE COMMITTEE FROM: RANDALL MUSGRAVES DEBBIE RATCLIFF ~l2. SUBJECT: July 31, 2006 Finance Committee Meeting There were several outstanding questions from the last Board Budget and Finance Committee meeting which required additional staff research. The questions and answers are provided below: Page 6, 161772 I.M.P.A.C. Government Services - What was the $24.95 charge for web site hosting? This is a monthly charge from Affinity Hosting to have the DistricYs website hosted on the Internet. 2. Page 11, 161807- PeoplePlus -What type of training was provided? This was teambuilding training for all new employees. There were two four-hour sessions to accommodate all the new employees. Each department budgets and pays for a part of the training. 3. Page 23, 161933 Zasio Enterprises, Inc. -What was the $216.50 invoice for? The District uses Versatile software for records management. 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Belland, CPA 3000 San Jose Avenue, Alameda, CA 94501 ~ ~ ~ ~ ROSEMARY C. BELLAND ~ Certifed Public Accountant 3000 San Jose Avenue Alameda, CA 94501 ~ [510] 865-2747 Central Contra Costa Sanitary District Audit Findings and Recommendations Agreements and Contracts Members of the Board of Directors of Central Contra Costa Sanitary District I have performed a limited internal compliance audit of Central Contra Costa Sanitary District ("CCCSD" or "District"). This internal audit was limited to Agreements and Contracts. The internal audit of this area included creation of an internal audit program for CCCSD's use in the internal audit of Agreements and Contracts, plus the study and "evaluation of internal controls as required by generally accepted auditing standards to determine the adequacy of the internal controls, compliance with internai control objectives and stated procedures, and tests to detect any control weaknesses. The study and evaluation was more limited than would be necessary to express an opinion on the system of internal control taken as a whole and was specifically geared to determine compliance with the DistricYs requirements with respect to policies and procedures for Agreements and Contracts. Management is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgements by management are required to assess expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the ~ preparation of financial statements in accordance with generally accepted accounting principles. ' Because of inherent limitations in any system of internal control, errors or irregularities may ~ nevertheless occur and not be detected. Also, projections of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. ~ The study and evaluation made for the limited purpose described in the first paragraph would . not necessarily disclose all material weaknesses in the system. Accordingly, I do not express an opinion on the system of internal accounting control of the District taken as a whole. ~ ~ 1- ~ ~ ~ Central Contra Costa Sanitary District Audit Findings and Recommendations Agreements and Contracts Audit Approach: Audit programs were developed from discussions with Jim Warrington and his staff and were designed to specifically to detect unusual patterns, contract splitting, vendor favoritism, a pattern of amounts just under the amounts requiring Board approval, and any incidents of non- compliance with policies and procedures of the District. Agreement and Contract Files: A random selection of 25 files from the Agreement and Contract file drawers was done. Each file was examined for completeness, proof of insurance, appropriate signatures, etc. All of the files appeared to be in order and no exceptions were noted. It was also noted that "out cards" were being used wheri files were removed from the drawers and a random check of the information on the "out card" was found to be correct and the file located. No further testing of this area seemed warranted. Review of Expenditures: Utilizing a report showing all vendor expenditures between calendar years 1996 and 2006, each vendor listed was analyzed to determine if there were any unusual patterns, instances of contract splitting, obvious "vendor favoritism", a pattern of amounts just under the amounts requiring Board approval, etc. Based upon this, 40 vendors were selected for further investigation. Utilizing the HTE system, PO's were viewed on line to examine details. Where necessary, paper files were examined. Detailed notes on the examination of these 40 vendors are contained in the audit work papers and copies were provided to Jim Warrington and Debbie Ratcliff. The following is a summary of the audit findings. 1. Years 1996 to 2001: Noted numerous instances of the use of emergency/confirming PO's where a"blanket PO" existed with funds available. Noted numerous small PO's, all emergency/confirming where a"bianket PO" could be used to reduce paper work. ~ Noted several "blanket PO" for same vendor. _ 2. Years 2002 to 2006: ~ Problems noted above related to emergency/confirming PO's and "blanket PO" appear to be resolved as well as instances of unusual and numerous transactions involving the same vendor. Much of this is due to the change in Purchasing &~Materials Manager. ~ ~ 2 p _ _. _ _ . -- :-- - - - -- -- ' ~ ~ ~ ~. ~ Central Contra Costa Sanitary District Audit Findings and Recommendations ~ Agreements and Contracts Conclusion: Exceptions noted during this audit were confined to the years 1996 to 2001 when various problems existed in the Purchasing Division. The division is now running smoothly and many of the problems have been resolved. It was also noted that the division is now effectively tracking expiring contracts and taking appropriate action. Finally, this audit revealed no evidence in the past five years of contract splitting, vendor favoritism, or non-compiiance with the policies and procedures of the District. ~ Enclosed for your review and comments are the following items 1. Internal Control Checklist for Agreements and Contracts ~ 2. Audit Program for Agreements and Contracts ~ I would be pleased to discuss these recommendations/suggestions further with you at your convenience. I also wish to express my appreciation for the excellent courtesy and cooperation r extended to me by Debbie Ratcliff, Jim Warrington, and their staff during this engagement. /~q$ Errc,alrc:~/ C . /~e.l.Cavrz~ , C PA 4" August 31, 2006 ~ -3- ~ ~ CENTRAL CONTRA COSTA SANITARY DISTRICT Index INTERNAL CONTROL CHECKLIST . AGREEMENTS & CONTRACTS Yes No Comments INTERNAL CONTROL OBJECTIVES 1. Proper authorization of transactions and activities. 2. Segregation of duties to reduce the opportuniry for any person to be in a position both to perpetuate and to conceal errors or irregularities in the normal course of his/her duties. 3. Design and use of adequate documents and records to help ensure the proper recording of transactions and events. 4. Adequate safeguards over access to and use of assets and records. 5. Independent checks on performance and proper valuation of recorded amounts. AGREEMENTS & CONTRACTS a. Are Agreements and Contracts entered into in accordance with applicable legal requirements? What are those requirements? b. Are assigned numbers or PO's used in all cases? c. Are competitive bids required and bid copies retained on file for purchases over $10,000? d. Is the purchasing function pertormed by, and purchase orders prepared by personnel independent of: 1. Receiving and shipping functions? 2. Payables and disbursing functions? 3. Cash receipts function? ~ e. Is there a current and adequate manual of purchasing procedures? N ~ C~ CENTRAL CONTRA COSTA SANITARY DISTRICT ~ INTERNAL CONTROL CHECKLIST AGREEMENTS & CONTRACTS Index Yes No Comments f. Are copies of the purchase orders distributed to: 1. Vendor? 2. The acquiring department and filed in historical vendor files? 3. Accounting? 4. Receiving? 5. Other (list)? g. Are purchase orders: 1. Prenumbered and used in sequence? 2. Inftiated after the approval of requisitions/requests? 3. Who can authorize requisitions/requests? 4. Limited to purchases less than $10,000 without prior approval of the Finance Director or other authorized District official? h. Do purchase orders require independent approval that: 1. Money is budgeted for the purchase contemplated? ~ 2. A sufficient amount is available in the budgeted account to which the purchase is chargable? i. Is numerical sequence of purchase orders checked, and appropriate action taken, on those open beyond the usual processing time by an employee independent of initiation of purchases? j. Is there a proper cutoff of purchases at month end? ~ ~ CENTRAL CONTRA COSTA SANITARY DISTRICT INTERNAL CONTROL CHECKLIST AGREEMENTS & CONTRACTS Index Yes No Comments Documentatlon a. Are the policies and procedures of the District maintained in written fortn? b. Are these policies and procedures reviewed and updated at least annually? c. Are the procedures documented in flowchart format? Conclusion Based upon the foregoing, the DistricPs system of intemal accounting control for Agreements and Contracts, as documented in the foregoing interal control questionaire, is suitably designed to prevent and detect errors or irregularities, and the related specific control objectives stated above are being achieved. Recommendations for improvements in internal control procedures can be found at workpaper ~ ~ ~ CENTRAL CONTRA COSTA SANITARY DISTRICT ~ndex AUDIT PROGRAM FOR AGREEMENTS & CONTACTS Audit Objective Audit Procedures N/A Perfarmed by Workpaper Index FINANCIAL STATEMENT ASSERTIONS 1. Existence or occurance 4. Ealuation or allocation 2. Completeness 5. Presentation 3. Rights and obligations AUDIT OBJECTIVES A. Recorded expenditures and cash disbursements are for goods or services authorized and received (Assertion 1). B. Expenditures incurred for goods or services and related accounts payable have all been ident'rfied (Assertion 2). C. 6cpenditures for goods or services are authorized and in accordance wfth the budget and other regulations or requirements (Assertion 3). D. 6cpenditures for goods or services and related disbursements and liabilities have been recorded correctly as to account, fund, budget, category, period, and amount (Assertion 4). E, Expenditures for goods or services and.related liabilities are properly presented by fund type and budget category and related disclosures are adequate (Assertion 5). BASIC PROCEDURES A. Evaluatlon of Internal Control Structure 1. Review the documentation and conclusion resulting from the steps taken to understand and test the internal control structure, policies, procedures, and records relevant to planning the audit of Agreements and Contracts. These include the intemal control checklist, purchasing system documentation, and relevant flowcharts. 2. Consider the understanding obtained of the intemal control structure, the assessed level of control risk (together with the assessment of inherent risk), and the acceptable level of substantive tests. ~ ~ CENTRAL CONTRA COSTA SANITARY DISTRICT Index AUDIT PROGRAM FOR AGREEMENTS & CONTACTS Audit Ob~ective AUdlf PfOCedUf@S N/A Performed by Warkpaper Index 3. Revise the aud'R program, as appropriate, following the consideration of the internal control structure and related audft risks. 4. Review CCCSD's procedures and related statutes and ordinances for purchasing goods or services. AUDIT PROCEDURES A. Review of Agreement & Contract Files 5. From the five Agreement file drawers and the one for open Contracts, randomly select a representative number of files (approximately 25) and review for: a. Completeness b. Insurance documents c. Signatures 6. Verify that "out cards" are being used. B. Review of Expenditures 7. Obtain a detailed listing of expenditures by vendor for the past severalyears. 8. Review each vendor listed and look for: a. Unusual pattems b. Contract splitting c. Vendor "favoritism" d. Pattem of amounts just under Board approval limft e. Non-compliance with policies and procedures 9. Utilizing the HTE system, view the PO's on line to examine details. i - - • • CENTRAL CONTRA COSTA SANITARY DISTRICT Index I AUDIT PROGRAM FOR AGREEMENTS & CONTACTS Audit Objective ' Audit Procedures N/A Performed by Workpaper Index 10. Where warrented, examine the paper files 11. Document resutts of audR observations in workpapers. 12. Verify that purchasing is monitoring expiring agreements and contracts and notifying the appropriate people. OTHER PROCEDURES 13. Consider the need to apply one or more additional procedures. 14. Conclude regarding the achievement of audit objectives. If you are unable to conclude on any objective, prepare a memo documenting your reason. CONCLUSION I have performed procedures sufficient to achieve the audit objectives for Agreements and Contracts, the results of these procedures are adequately documented in the accompanying workpapers. .~ . • • ~ Central Contra Costa Sanitary District Audit Findings and Recommendations Collection System Operations (CSO) ~ Rosemary C. Belland, CPA ~ 3000 San Jose Avenue, Alameda, CA 94501 ~ ~ ROSEMARY C. BELLAND CeRifted Public Accountant 3000 San Jose Avenue Alameda, CA 94501 [510] 865-2747 ~ Central Contra Costa Sanitary District Audit Findings and Recommendations Collection System Operations (CSO) ~ ~ ~ Members of the Board of Directors of Central Contra Costa Sanitary District I have performed a limited internal compliance audit of Central Contra Costa Sanitary District ("CCCSD" or "District"). This internal audit was limited to Collection System Operations ("CSO"). The internal audit of this area included creation of flowcharts and an internal audit program for CCCSD's use in the internal audit of CSO, plus the study and evaluation of internal controls as required by generally accepted auditing standards to determine the adequacy of the internal controls, compliance with internal control objectives and stated procedures, and tests to detect any control weaknesses. The study and evaluation was more limited than would be necessary to express an opinion on the system of internal control taken as a whole and was specifically geared to determine compliance with the DistricYs requirements with respect to CSO policies and procedures. Management is responsible for establishing and maintaining a system of internal accounting control. In fulfilling this responsibility, estimates and judgements by management are required to assess expected benefits and related costs of control procedures. The objectives of a system are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with managemenYs authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting principles. Because of inherent limitations in any system of internal control, errors or irregularities may nevertheless occur and not be detected. Also, projections of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the degree of compliance with the procedures may deteriorate. The study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the system. Accordingly, I do not express an opinion on the system of internal accounting control of the District taken as a whole. -1- ~ ~ ~ ~ Central Contra Costa Sanitary District Audit Findings and Recommendations Collection System Operations (CSO) Audit Approach: Audit programs and flowcharts were developed from discussions with Warren Gains and Dolly Flanders. Two separate visits were made to CSO in Walnut Creek to review procedures and areas used to store inventory and supplies. On the first occasion, the vehicle maintenance area was also visited. Collection System Operations (CSO) inventory Records: Approximately 135 different inventory items having a value of roughly $85,000 are stored at the CSO facility. Inventory items are also stored on the work crew vehicles. Each morning work crews pick up the inventory items needed for that day's work and note the items on a stock removal form which is later given to Dolly Flanders who enters the information into the inventory system. When the stock on hand reaches the reorder point, it is automatically reordered. After June 2005, various items have been flagged for "no reorder~ to prevent ordering unnecessary items. Physical inventory counts are conducted twice a year. In the past, annual physical inventory counts resulted in adjustments of some $20,000 or nearly 25%. In reviewing these procedures, it was learned that the automatic reorder system is not used because the inventory records are not current. Instead, Greg Ziegler visits CSO on a regular basis and physically counts items to determine if they need to be reordered. This is because Dolly Flanders enters the issues into the inventory system only every four to six weeks. Recommendation: For the automatic reorder system to work properly, the inventory records need to reflect the current inventory on hand. It is recommended that the information on the stock removal forms be entered into the inventory system on a daily basis. This would result in more accurate inventory records and no longer necessitate physically counting the items to determine if items need to be reordered. Inventory Storage: The areas where the inventory items are stored are not totally secure but the open yard is monitored by cameras. The warehouse is unlocked to allow work crews access to needed items and certain "desirables" (rain gear, etc.) are kept in a locked area. -2- ~ Central Contra Costa Sanitary District Audit Findings and Recommendations Collection System Operations (CSO) Recommendation: ~ It has been discussed that a person from MCB be on hand in the momings at CSO to handle the issuance of inventory items to the work crews. This would seem an unnecessary expense. Much of what is stored at CSO is specific to repair, maintenance, and construction projects of the District and not usable for other things. It would seem that a better solution would be to determine all items that are considered "desirables" and not specific to District projects such as rain gear, shovels, small tools, etc. These items would then be placed in the locked area and the keys in the possession of a responsible employee. Issue of these iterris would then be tracked by this employee with the name of the employee being issued the items noted. This will allow for tracking of issues to employees to determine if such issues are in line with normal usage. Supplies: Supplies such as gloves, safety glasses, batteries, etc. are kept in two locked cabinets in the CSO building. The keys to these cabinets are in the possession of Dolly Flanders. Dolly issues these supplies but keeps no record of to whom such supplies are given. When these items appear low in quantity, she reorders them from MCB. A full list of these items is available. Recommendation: Utilizing the current list of supplies, an issues form should be developed. As supplies are _ issued, the items should be noted on the form along with the name of the employee who received these items. This will allow for tracking of issues to employees to determine if such issues are in line with normal usage. Physical Inventory: Currently, it is the practice to physically count the inventory at CSO twice a year and adjust inventory accordingly. Recommendation: It is recommended that this practice be continued. Security: Currently, the gates to the warehouse and yard where inventory is stored remain open throughout the day. There are security cameras covering the outside area but they do not appear to be monitored on an ongoing basis throughout the day. -3- ~ ~ Central Contra Costa Sanitary District Audlt Findings and Recommendations Collection System Operations (CSO) ~ Recommendation: Although employees need easy access to the inventory in order to perform their job, it is recommended that consideration be given to having the gate to the area locked. Access could possibly be allowed via a device such as a card inse.Red in a gate opener such as those used in parking garages. Card access systems have the additional benefit of providing records of who accessed the area and when. Vehicle Maintenance: Security: The area where vehicle maintenance and repair parts are stored is unlocked throughout the work day. Recommendation: Although employees need easy access to this area in order to perform their job, it is recommended that consideration be given to having the area locked. Access could be allowed via a key or card device. Card access systems have the additional benefit of providing records of who accessed the area and when. Physical Inventory: Currently no physical inventory is taken of the repair and maintenance parts. These items are expensed when purchased. The annual expense is approximately $75,000. Recommendation: It is recommended that consideration be given to taking a physical inventory of these items twice a year. Usage Records: Currently no record is kept of the usage of the repair and maintenance parts since they are expensed when purchased. Recommendation: It is recommended that issue tickets or check out sheets be developed to track usage. This will help determine if issues are in line with normal usage. -4- 1 Central Contra Costa Sanitary District Audit Findings and Recommendations Collection System Operations (CSO) Enclosed for your review and comments are the following items: FlowchaR of CSO Procedures 2. Internal Control Checklist for CSO 3. Audit Program for CSO I would be pleased to discuss these recommendations/suggestions further with you at your convenience. I also wish to express my appreciation for the excellent courtesy and cooperation extended to me by Debbie Ratcliff, Jim Warrington, Warren Gains and their staff during this engagement. 1QoIl~ C.. ~E~GNtaQ. ~ Cp/a August31,2006 -5- V b N ~ r ~ .~ m ~ 0 m c 0 U ~ c d U N N m ~ a r m L 3 0 LL Z 0 c d > c O N U H$ s s~ a m` d~ ~~~~ ~~ S ~~~ ~~ ~ ~ ~ ~~~~ a' ~ ~ ~ ~ e~~~~ ~ E p ¢ N ~$ % E ~ m q $ 4 ~ ~ge ~ ~~~ ~.~E~ 8~~~ ~ ~ d L N Q 3u ~B yE € ~ S S ~ 6 ~~ '0a$ m ~~~~ s 5 a 3 ~ C~ ~ U ~ ~ ~ c ~ ~ ~ N U m c 0 U ~ .~.J C d U N N N O1 !0 a C N t U ~ ~ Z 0 c N > C ~ ~ U ~ v N m C S~ ~ to ~ V ~ C y A L U J a m ~{ Q ' a c ~ N 4 ~ ~ 'o N U ~b2 S~~ ~ ~ $ j m ~~ ~~~ ~ • ~d =~$ ~~~ m V U f U ~ ~C OI y ~ _ a o ~ ~ m ~ U C 3 N O ~ LL O y U f`0 Z+ c ~ o ~ U ~ ~ c . c O d ~ U U ~ ~ w ~ w x x ~ y~~ ~~~ ~~ ~ ~~ C C H y ~ ~ € LL y ~ 2 ~ ~ y C4~ ~ ~ C~ ~ m~ ;a ' N ~ m U ~ ~.1 ~ N ~ a r m L U 3 0 LL N ~ m N d n a ~ ~ O ~ ~ N 0 ~ ~ ~C m ~ ~ 0 U ~ C O U m b c N U U ~ ~ E ~ w . ~ O ~' = if ~ ~ti ~~ ~~ ~~ ~~ ~~ c2 y~ f~ f/1C ~~ `s ~ ~ ~ a a ~ 2 C~p `~ ~ ~i Cp 6 J d U CL ~ 7 ~ ~ ~ • CENTRAL CONTRA COSTA SANITARY DISTRICT Index ~ INTERNAL CONTROL CHECKLIST CSO INVENTORY & SUPPLIES ~ ~ , 1 ~ ~ ~ ~ ~ B ' 1 ' ' Yes No Comments INTERNAL CONTROL OBJECTIVES 1. Proper authorization of transactions and activities. 2. Segregation of duties to reduce the opportunity for any person to be in a position both to perpetuate and to conceal errors or irregularities in the nortnal course ot his/her duties. 3. Design and use of adequate documents and records to help ensure the proper recording of transactions and events. 4. Adequate safeguards over access to and use of assets and records. 5. Independent checks on perfortnance and proper valuation of recorded amounts. A. BASIC PROCEDURES 1. Are procedures for ordering, receiving and issuing inventory and supplies at the CSO facflity being followed? (Use the flowcharts as a guide). 2. Review the desk manual of the Technical Services Coordinator. Is R up to dae7 B. ORDERING OF INVENTORY & SUPPLIES 1. How is it detertnined when to order Inventory and supplies? 2. Are there predetermined reorderleve~s? 3. Who is responsible for ordering inventory and supplies? 4. What cantrols are in place to prevent ordering by unauthorized personnel? C. RECEIVING 1. When inventory or supplies are received at the CSO facility, who is ~ responsible for notifing the appropriate departments of its receipt? 2. How is this accomplished? ~ ~ ~ Index CENTRAL CONTRA COSTA SANITARY DISTRICT ~ ~ ~ ~ ~ INTERNAL CONTROL CHECKLIST AGREEMENTS & CONTRACTS Yes No Camments 3. What paperwork is completed, 'rf any? 4. When the inventory or supplies are received, who is in charge of seeing that the items are safely stored in their proper place? D. STORAGE 1. Are "desirable: inventory and supply Rems placed in a secure area or locked cabinet? 2. Who has access to these areas? 3. What type of security is employed over these areas? E. ISSUANCE 1. Are stock removal fortns used? 2. Who completes these forms and what is done with the information? 3. How frequently is the information entered into the HTE system? F. PHYSICAL INVENTORY 1. How ftequently is a physical inventory conducted? 2. Are the inventory records adjusted for the resutts of the pFiysicai inventory? 3. Are adjustments approved by a responsible supervisor? CONCLUSION Based upon the foregoing, the District's system of intemal accounting control for CSO inventory and supplies, as documented in the foregoing intemal control checklist, is suitably designed to prevent and detect errors or irregularities, and the related control objectives stated above are being achieved. Recommendations for improvements in intemal control procedures can be found at workpaper ' Signed & Dated ~J ~ CENTRAL CONTRA COSTA SANITARY DISTRICT ~"d~ AUDIT PROGRAM FOR CSO INVENTORY & SUPPLIES objecu e Audit Procedures ' performed by Wo ~~ FlNANCIAL STATEMENT ASSERTIONS 1. Existence or occurance 4. Valuation or allocation 2, Completeness 5. Presentation and disclosure 3. Rights and obligations AUDIT OBJEC7IVES A. Recorded expenditures and cash disbursements are for goods or services authorized and received (Assertion 1). B. Expendftures incurred for goods or services and related accounts payable have ail been fdent~ed (Assertion 2). C. Expend'Rures for goods or services are authorized and in accordance with the budget and other regulations or requirements (Assertion 3). ' D. F~cpendRures for goods or services and related disbursements and IlabilRies have been recorded correctly as to accourrt, fund, budget, category, perfod, and amount (Assertion 4). E. Expenditures for goods or services and related liabilities are properly presented by fund type and budget category and related disclosures are adequate (Assertion 5). BASIC PROCEDURES A. Evaluatlon of Intemal ConVol Structure 1. Review the documentatfon and conclusion resutting from the steps taken to understand and test the Intemal control stucture policies, procedures, and records relevant to planning the audR of inventory and supplies. These include the intemal control checklist, accounting system documentation, procedures manual, and relevant flowcharts. 2. Consider the understanding obtained of the intemal control structure, the assessed level of control risk (together with the assessment of inherent risk), and the acceptable level of substantive tests. ~ ~ ~ j CENTRAL CONTRA COSTA SANITARY DISTRICT ~"d~ AUDIT PROGRAM FOR CSO INVENTORY & SUPPLIES ~ ~ q ~ ~ ~"d~ ObjectNe Audit Procedures N~A Pertormed Dy W°`~°8` IrWex 3. Revise the audit program, as appropriate, following the consideration of the intemal control structure and related aud'R risks. 4. Review CCCSD's procedures and related statutes and ordfnances for purchasing goods. AUDIT PROCEDURES A. inventory 5. Obtain a current listing of inventory at the CSO facility 6. Obtain a current inventory status report which shows the resutts of the most recent physical inventory. 7. Scen both reports looking for unusual ftems. 8. Inquire about the frequency of cycle counts and obtain a copy of the results of several recent cycle counts. 9. Obtain copies of "Stock Issues Forms" for the last week or so and verify that the information has been entered in the inventory system. 10. Physically tour the facilities and observe security measures in use. B. Supplles 11. Obtain a current Iist of supplies on hand. 12. Observe security procedures in place and issuance procedures. 13. Inquire about re-order procedures. OTHER PROCEDURES 14. Consider the need to apply one or more additional procedures. 15. Conclude regarding the achievement of aud'R objectives. N you are unable to co~clude on any objective, prepare a memo documenting your reason. ~ ~ ~ CENTRAL CONTRA COSTA SANITARY DISTRICT ~"d~ AUDIT PROGRAM FOR CSO INVENTORY & SUPPLIES ~ ~ ~~ ~ ~ ~ ~ ~ ~ ~ ~ A~K ob~~.,;~ Audit Procedures WA Perfomred by Workpeper i~ CONCLUSION I have performed procedures suificient to achieve the audR objectives for CSO Inventory and Supplies, the resutts of these procedures are adequately documented fn the accompanying workpapers.