Audit of Hampshire Sheriff's Department Objectives, Scope and Methodology

An overview of the purpose and process of auditing the Hampshire Sheriff's Department.

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of certain activities of the Hampshire Sheriff’s Department (HSD) for the period July 1, 2016 through June 30, 2017. To satisfy our audit objective regarding our internal control plan (ICP) review, we extended our audit period through July 21, 2017.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Below is a list of our audit objectives, indicating each question we intended our audit to answer; the conclusion we reached regarding each objective; and, if applicable, where each objective is discussed in the report.

Objective	Conclusion
Do HSD’s current ICPs contain all eight components of the Committee of Sponsoring Organizations of the Treadway Commission’s (COSO’s) enterprise risk management framework, as required by the Office of the State Comptroller’s (OSC’s) Internal Control Guide?	Yes
Does HSD have a sufficient budget in place to ensure that its annual appropriation is sufficient to properly fund its operations and inmate services and programs?	Yes; see Other Matters
Does the HSD Civil Process Division have adequate controls over its receipt of revenue and disbursement of funds for expenses?	Yes

To achieve our audit objectives, we gained an understanding of the internal control environment related to our audit objectives by reviewing applicable HSD policies and procedures, reviewing laws and regulations, and interviewing HSD management.

Additionally, we performed the procedures described below.

ICPs

We obtained the current ICPs for the jail and house of correction and the Civil Process Division from HSD officials. We also obtained the OSC Internal Control Guide and reviewed the Internal Control Plan Checklist therein. We reviewed each of HSD’s ICPs to determine whether they contained all eight components of COSO’s enterprise risk management framework.

Budgeting

We obtained the fiscal year 2017 budget request sent by HSD officials to the Legislature, the spending plan created by HSD officials after they received notification of HSD’s appropriation amount, and expenditure data for fiscal year 2017 from the Massachusetts Management Accounting and Reporting System (MMARS) database. We compared the budget request, spending plan, and actual appropriation expenditures, noting variances. We also obtained and reviewed fiscal year 2018 MMARS expenditure data for the period July 1, 2017 through August 26, 2017 to ensure that expenditures were charged to the correct fiscal year.

Civil Process Division Internal Controls

We tested the Civil Process Division’s internal controls over the verification of accurate recording and invoicing of services provided and collection of overdue accounts. To test these controls, we obtained a revenue report from the CivilServe¹ information system for the period July 1, 2016 through June 30, 2017. Using statistical sampling, with a confidence level of 95% and a tolerable error rate of 5%, we obtained a random sample of 60 (totaling $2,876) of the 3,914 revenue transactions from that period (totaling $190,883). We compared this sample to hardcopy invoices and case files.

We tested the Civil Process Division’s internal controls over the verification of accurate recording and depositing of funds received. We tested these controls by obtaining the general ledger detail from HSD’s QuickBooks accounting system for the period July 1, 2016 through June 30, 2017. Using a nonstatistical random sample of 25 (totaling $61,251) of the 102 deposits from that period (totaling $239,481), we requested and compared the journal entry sheets, the bank deposit slips, and a cash report from the CivilServe system to ensure that all three sources matched.

We tested the Civil Process Division’s internal controls over the approval and timeliness of cash disbursements. To test these internal controls, we obtained the general ledger detail from the QuickBooks accounting system, identifying 221 accounts-payable transactions (totaling $150,582) from the audit period. Using a random nonstatistical sampling method, we selected 25 (totaling $27,805) of the 221 transactions for testing. We obtained the invoice and check stub for each of the selected transactions and compared them to the supporting expenditure documentation.

Data Reliability Assessment

To gain an understanding of general information system controls in place, we interviewed HSD’s information technology personnel. We reviewed certain general information technology controls over the Quicken accounting system, QuickBooks accounting system, and CivilServe system. To determine the reliability of data from the Quicken system, we ran data integrity tests on check registers provided by HSD officials, conducted reconciliations of data, and conducted trace sampling tests by verifying the accuracy of the data from the system using hardcopy invoices provided by HSD officials. To determine the reliability of data from the QuickBooks system, we ran data integrity tests on the check register provided, conducted reconciliations of the data, and conducted trace sampling tests. Additionally, we ran data integrity tests on the reports provided to determine the reliability of data from the CivilServe system. We determined that the data were sufficiently reliable for audit testing.

We used financial data from MMARS detailing HSD’s general expenditures from its appropriated funds. Based on our prior assessment of MMARS² and our current comparison of source documentation with MMARS information, we determined that the information obtained from MMARS for our audit period was sufficiently reliable for the purposes of our audit work.

When using nonstatistical sampling methods for testing, we did not project the results of our testing to the population. When our sampling was statistical, we determined that it was not necessary to extrapolate the results of our testing to the entire population.

1. The CivilServe information system is a computer program used by HSD’s Civil Process Division. It allows employees to document services performed, calculation and collection of fees, requestors of services, and statuses of documents served.
2. In 2014, the Office of the State Auditor performed a data reliability assessment of MMARS. As part of this assessment, we tested general information technology controls for system design and effectiveness. We tested for accessibility of programs and data as well as system change management policies and procedures for applications, jobs, and infrastructure.

Date published:	May 1, 2018