Petty cash audit turns up $28,000 in unaccounted cash
A cash handling audit found that nearly $28,000 of the city’s petty cash is unaccounted for, according to a June 29 report.
City Auditor Dona Newman said she’s asked the financial services department to reconcile the differences.
Newman said she’s doesn’t believe malfeasance has occurred.
“The view you need to take, is it’s not money missing, it’s money misclassified,” Newman said. “It really should be called something else.”
Mayor John Sullivan said he felt the situation was “quite serious.”
If money were to be stolen, he said, then petty cash would be the most obvious, and easiest place to hit.
He added that he may ask council to consider a forensic audit when members reconvene from their hiatus.
“Maybe we need to have the whole city audited,” Sullivan said. “If this turned up there’s no telling what else is out there.”
Newman said this is the first time, to her knowledge, that “imprest funds” — which includes petty cash — have been audited, possibly since the city’s incorporation in 1970.
At present, Newman doesn’t suspect that fraud is occurring, but the system of checks and balances to deter theft is not being adhered to, she said.
According to June 29 report, Newman’s office found that internal controls over those funds are not effective.
“There’s a policy in place and it isn’t being followed,” Newman said. “If you don’t enforce them, it sends a message that they can be selectively followed.”
Among other things, the audit found that at least one employee borrowed $60 for personal use, cash had been reimbursed without a supervisor’s signature, more than one person was in control of petty cash funds, petty cash purchases that exceeded $50, and no documented procedures for collecting vending machine revenue.
Councilmember Marty McClain said the petty cash discrepancies need to be addressed.
While he’s not willing to go as far as to say the money is missing, he did say a better system needs to be in place.
“I don’t know if anything has been inadvertently done wrong … but a better system does need to be in place to keep track of thing,” McClain said.
Newman said department heads have also been asked to determine if petty cash funds are even necessary for their particular departments.
While there is no “bucket of money” waiting to be discovered, Newman did say the financial services department will determine if the petty cash policy is viable, and what needs to be done to make adjustments.
(They) need to look at the policy, and if it’s not workable, change it,” she said.