Office of the Washington State Auditor Pat McCarthy April 1, 2019 Board of Commissioners Whitman County Colfax, Washington ‘Management Letter This letter includes a summary of specific matters that we identified in planning and performing our accountability audit of Whitman County from January 1, 2017 through December 31, 2017. We believe our recommendations will assist you in improving the County’s intemal controls in these areas. We will review the status of these matters during our next audit. We have already discussed our comments with and made suggestions for improvements to Whitman County officials and personnel. If you have any further questions, please contact me at (509) 329-3701 ext. 102. This letter is intended for the information and use of management and the governing body and is not suitable for any other purpose. However, this letter is a matter of public record and its distribution is not limited. We would also like to take this opportunity to extend our appreciation to your staff for the cooperation and assistance given during the course of the audit. Sincerely, Vdla Saw) Alisha Shaw, Audit Manager Attachment 9 Inourance Building, P.O. Box 40021 + Olympia, Washington 88504-0021 « (360) 902.0570 + Pet McCarthy @sao.wa.govManagement Letter ‘Whitman County January 1, 2017 through December 31, 2017 Credit card and fuel card purchases State law (RCW 43.09.2855) allows local governments to issue credit cards, provided they adopt a system for distribution, authorization, control, and use of the credit cards and payment of the bills. County management is responsible for designing and following internal controls that provide reasonable assurance regarding compliance with state laws and County policies, and safeguarding, of public resources. However, the County has not established adequate internal controls over credit card and fuel card purchases and storage of unused cards. During 2017, the County's operating expenditures totaled $35 mil fuel-card purchases totaled $281,592 and $490,593, respectively. ion and its credit-card and We tested all 132 credit card purchases from April 2017, totaling $23,937, and found: ‘+ 53 purchases tested (40 percent), totaling $11,609, did not have adequate documentation to demonstrate the purchases were for valid business purposes ‘+ 14 purchases tested (10.6 percent), totaling $1,439, did not have sufficient documentation required by County policy or state law for an over-limit fee, meal and snack purchases, and purchases made by the Sheriff's Office We tested all 337 fuel card purchases from August 2017, totaling $13,318, and found: * No receipts or other documentation supported any purchases tested. However, as of December 2018, the County has established procedures requiring receipts to support fuel purchases. + The County lacked sufficient documentation and did not perform a review to demonstrate that all fuel purchases were for valid business purposes. We tested the storage of credit cards and fuel cards and found 35 of 42 cards were not properly stored in a secure location as required by County policy. We recommend the County: Strengthen its controls and follow its established policies for credit card and fuel card purchases Maintain adequate documentation to demonstrate purchases are for valid business purposes and comply with County policies and state laws Store credit and fuel cards not in use in a secure location as its policy requires 10Exit Recommendations Whitman County Audit Period Ending: December 31, 2017 We are providing the following exit recommendations for management's consideration. They are os teferenced in the audit report, We may review the status of the following exit items in our next audit. Accountability: Internal Service Fund - Information Technology The County should develop and follow a policy that governs how the County calculates and charges Internal Service Fund - Information Technology shared costs to all funds. The policy should specifically require the County to: © Document the rationale for charging shared services to each fund. ‘* Retain support of the actual charges to each fund and how they were calculated. ‘+ Maintain adequate support that ending fund balance reflects a level that is anticipated to assure continued operations of the fund. Continue to ensure that excess or deficit fund balances are addressed timely through annual rate adjustments + Review and update the policy and the cost allocation plan for charging shared services costs at Jeast annually. Petty Cash (District Court) The District Court should establish appropriate procedures for the stamps petty cash fund as prescribed by the BARS Manual section 3.8.8.20 to ensure: + The stamps on hand are reconciled to the authorized balance. + The reconciliation is periodically reviewed by someone other than the custodian. Tracking and Safeguarding Assets (Parks & Recreation Department) ‘The Parks and Recreation Department should establish and follow policies and procedures to: + Monitor and track the purchase, disposal and location of assets to ensure the inventory list is complete and accurate, + Ensure assets are properly tagged and identified as County property. iL