Audit of the Essex Sheriff’s Department Objectives, Scope, and Methodology

An overview of the purpose and process of auditing the Essex Sheriff’s Department

Overview

In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor (OSA) has conducted a performance audit of certain activities of the Essex Sheriff’s Department (SDE) for the period July 1, 2015 through December 31, 2016.

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 audit findings.

Objective	Conclusion
Has SDE developed an internal control plan (ICP) that is consistent with the requirements of the Office of the State Comptroller’s (OSC’s) Internal Control Guide?	No; see Finding 2
Did SDE comply with Chapter 647 of the Acts of 1989 by reporting all instances of unaccounted-for variances, losses, shortages, or thefts of funds or property to OSA?	No; see Findings 3 and 4
Did the incoming Sheriff have sufficient appropriated funds remaining to properly fund operations and inmate services and programs for the rest of fiscal year 2017?	No; see Other Matters
Did SDE ensure that purchased goods and services that totaled $10,000 or more from a single vendor in a single fiscal year were procured in compliance with its procurement policy?	No; see Finding 1
Were SDE’s business activities that were related to the Police Detail Fund (PDF) self-sufficient, and did they comply with SDE’s cash receipt and disbursement policies and procedures?	No; see Findings 5 and 7 and Other Matters
Were SDE’s business activities that were related to the Civil Process Enterprise Fund (CPEF) self-sufficient, and did they comply with SDE’s cash receipt and disbursement policies and procedures?	No; see Findings 5 and 6 and Other Matters
Did SDE comply with its cash receipt and disbursement procedures for the Inmate Benefit Canteen Fund (IBCF) to ensure that funds were used for inmates’ benefit?	No; see Findings 5 and 6
Were SDE’s inmate account balances reconciled as of December 31, 2016?	Yes

To achieve our audit objectives, we gained an understanding of the internal controls we determined to be relevant to our audit objectives by reviewing applicable laws, regulations, and agency policies and procedures, as well as conducting inquiries with SDE staff and management. We evaluated the design and effectiveness of controls over budgeting and procurement, and we determined whether they operated as intended during the audit period.

Additionally, we performed the procedures described below.

ICP

We obtained and reviewed SDE’s current ICP (dated December 2016) to determine whether it met OSC’s compliance requirements, including the eight components of enterprise risk management.

Chapter 647

To determine whether SDE complied with Chapter 647 reporting requirements, we determined whether any reports were filed; determined whether any reportable incidents of variances, losses, shortages, or thefts of funds or property occurred that had not been reported to OSA; and obtained and reviewed SDE’s internal affairs report on an inmate’s missing funds. We consulted OSA records to determine whether SDE submitted any Chapter 647 reports during the audit period. We requested SDE’s inventory list for fixed assets to test whether an annual physical inventory was performed during the audit period to determine whether any fixed assets were determined to be lost or stolen.

Budgeting

We requested and obtained SDE’s budget and financial reports from the audit period. We performed analytical procedures to review budget and expenditure totals as of December 31, 2016 to assess whether the incoming Sheriff had received sufficient funds to cover expenses for the last six months of fiscal year 2017. We then compared expenditure totals for the first six months of fiscal years 2016 and 2017 to assess spending patterns. We completed a historical analysis for fiscal years 2015 through 2017 to assess budget appropriations, supplemental funds, and expenditures. We requested and reviewed financial data regarding activity costs that were not part of SDE’s core function but were supplemented by its main operational budget.

Procurement

We obtained from the Massachusetts Management Accounting and Reporting System (MMARS) database a list of vendors from SDE’s appropriation account who were paid a total of $10,000 or more in a single fiscal year between July 1, 2015 and December 31, 2016, and we selected a nonstatistical judgmental sample of 19 vendors from a population of 93 to determine whether procurements were conducted in accordance with SDE policies. We requested the procurement files for these vendors to assess whether procurements were properly conducted and whether required procurement-file documentation was maintained.

PDF

We examined a judgmentally selected nonstatistical sample of 8 of 18 monthly account reconciliations to bank statements for discrepancies, unreconciled variances, and timeliness of completion.

We judgmentally selected a nonstatistical sample of 60 police details (paid a total of $21,592) out of 1,615 (paid a total of $571,197) during the audit period. We determined whether the billing documentation and amounts paid by the hiring companies agreed with the general ledger entries; the receipt amounts agreed with deposit records and bank statements; and SDE administration fees were properly collected.

We selected a random nonstatistical sample from the general ledger of 50 disbursements (totaling $32,572) from of a population of 784 disbursements (totaling $608,044). The 50 disbursements represented 117 work details performed. We requested and reviewed supporting documentation to determine whether the disbursements were supported by adequate documentation; the hours worked and payment amounts agreed with the work detail slips; and the work detail slips were properly signed.

We requested and analyzed all documentation of payroll activity for the PDF to determine whether administrative payroll processing fees were properly charged to the fund. We reviewed SDE payroll records for the audit period to determine whether SDE had collected sufficient funding from receipts to cover Medicare and Social Security tax payments it was required to pay for its share of employee taxes.

CPEF

We examined a judgmentally selected nonstatistical sample of 8 of 18 monthly account reconciliations for discrepancies, unreconciled variances, and timeliness. We selected a random nonstatistical sample of 60 receipts (totaling $5,021) out of 13,450 receipts in the CivilServe¹ database (totaling $1,450,418). We reviewed whether the receipt dates and amounts agreed with the deposit records and bank statements to determine whether the receipts were properly processed and deposited. We selected a random nonstatistical sample of 50 expenditures (totaling $115,182) out of 759 expenditures from the general ledger (totaling $1,575,327) and reviewed their supporting documentation to determine whether they were supported by adequate documentation and properly authorized.

 

IBCF

We examined a judgmentally selected nonstatistical sample of 8 monthly account reconciliations, out of 18 performed during the audit period, for discrepancies, unreconciled variances, and timeliness. We judgmentally selected a nonstatistical sample of 15 receipts (totaling $930,651) out of 97 (totaling $2,450,652), reviewing whether the receipts were accurate and properly processed based on the supporting documentation. We selected a random nonstatistical sample of 50 expenditures (totaling $200,391) out of 822 (totaling $2,565,646). We reviewed their supporting documentation to determine whether they were reasonable, properly approved, and supported by adequate documentation and whether they benefited the inmates.

Inmate Accounts

We reviewed the December 31, 2016 account reconciliation completed by the Keefe Commissary Group, the third-party vendor hired to perform inmate commissary services, for unreconciled variances.

Data Reliability

We obtained general ledger data for the PDF, CPEF, and IBCF from QuickBooks, SDE’s electronic accounting system for these funds. We conducted interviews and observations and determined whether authorized users had access to these systems. To determine the reliability of the data, we traced certain electronic transactions for the IBCF receipts and the PDF, CPEF, and IBCF expenditures to original source documents and traced original source documents for the PDF, CPEF, and IBCF receipts to QuickBooks electronic transactions. We compared these documents for accuracy. We determined that the data from the system were sufficiently reliable for the purposes of this audit.

To determine the reliability of data obtained from the CivilServe database, we conducted interviews and observations and determined whether authorized users had access to the system. To determine the reliability of the data, we traced 60 randomly selected original case records to the electronic case records. We determined that the data from the system were sufficiently reliable for the purposes of this audit.

We used financial data from MMARS detailing SDE’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.

Whenever sampling was used, we applied a nonstatistical approach, and as a result, we were not able to project our results to the entire population.

 

1.    CivilServe is SDE’s system of record for Civil Process Division cases and fees charged.

2.    In 2014, OSA 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:	August 27, 2018