Overview
Internal controls over special event revenue, which is obtained from fees, could be improved if the Bureau of the State House (BSH) reconciled special event bills generated by its Events Management System (EMS) to special event revenue recorded in the Massachusetts Management Accounting and Reporting System (MMARS). In addition, controls could be enhanced if the payments were collected by someone other than the State House events coordinator who maintains the events schedule, enters the fees in EMS, and prepares the invoices; in other words, the duties of fee collection and fee billing should be segregated to avoid potential losses or processing errors.
For the audit period, special event revenue recorded in MMARS totaled $125,200 and special event revenue from EMS totaled $118,500, a difference of $6,700. There were differences in each fiscal year under review (see table below), none of which BSH employees could explain.
|
|
Fiscal Year 2018 |
Fiscal Year 2019 |
Fiscal Year 2020* |
Total |
|---|---|---|---|---|
|
MMARS |
$69,600 |
$42,000 |
$13,600 |
$125,200 |
|
EMS |
63,200 |
44,500 |
10,800 |
118,500 |
|
Difference |
$6,400 |
$(2,500) |
$2,800 |
$6,700 |
* The amounts in this table for fiscal year 2020 only encompass the period July 1, 2019 through December 31, 2019.
Additionally, in fiscal year 2018, two clients were not billed ($200 each) for using space. If revenue recorded in MMARS had been reconciled with the EMS data, it is likely that the reconciler would have noticed scheduled events for which no payments were received. Without a proper reconciliation process, BSH cannot ensure that all events are billed correctly and all corresponding revenue is accounted for properly.
The Internal Control Guide issued by the Office of the Comptroller of the Commonwealth discusses the need for reconciliations:
Ongoing monitoring occurs during normal operations and includes regular management and supervisory activities, comparisons, reconciliations, and other actions people take in performance of their duties.
Regarding segregation of duties, BSH’s internal control plan (ICP) states,
- Individuals responsible for issuing billings should not be responsible for estimating, budgeting, collecting and processing receipts.
- The persons responsible for maintaining accounts receivable records should not be involved with receipts.
Although its ICP recognizes the importance of segregation of duties and reconciliations, BSH did not fully implement these principles when designing job functions and the monitoring process for billing and collections. BSH should have an employee with no billing, collection, or accounting job functions reconcile the EMS billing records with revenue recorded in MMARS. BSH should also separate the billing and collection functions for special event revenue.
Auditee’s Response
Regarding the internal controls and segregation of duties recommendations, BSH requests that the agency size and limited number of managers within the agency be considered and recognized.
Auditor’s Reply
We recognize that BSH has a limited staff, but to avoid losses and processing errors, it should consider having event payments sent to someone other than the State House events coordinator. In addition, BSH should perform a reconciliation of EMS billings and MMARS revenue to ensure that all events are billed correctly and all corresponding revenue is accounted for properly.
| Date published: | June 24, 2021 |
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