TO: John Crow, Superintendent

North Carolina Department of Public Safety Prevent. Protect. Prepare.

Pat McCrory, Governor Kieran J. Shanahan, Secretary

MEMORANDUM

TO: John Crow, Superintendent Lincoln Correctional Center, #4525

FROM: Timothy D. Harrell

DATE: July 25, 2013

SUBJECT: Audit of Lincoln Correctional Center

Internal Audit has completed a Scheduled Audit of Lincoln Correctional Center. The audit report is attached.

The purpose of the audit was to evaluate the effectiveness of the systems of management control by:

 reviewing and appraising the adequacy, accuracy, and soundness of accounting, financial, and operating controls

 determining the extent of compliance with established policies and procedures

 determining the extent to which assets and resources are accounted for and safeguarded

We thank you and your staff for your assistance and cooperation during this audit. If you have questions or need further assistance, please contact our office.

Attachments

cc: Audit File #4525

MAILING ADDRESS: OFFICE LOCATION: 4201 Mail Service Center 512 N. Salisbury Street Raleigh, NC 27699-4201 Raleigh, NC 27604-1159 Telephone: (919) 733-2126 Fax: (919) 715-8477 www.ncdps.gov An Equal Opportunity employer

John Crow July 25, 2013 Page 3 ec: Bennie Aiken W. David Guice Tim Moose George Solomon Roger Moon Jean Burke Joan Taylor Saucier Roberta Morgart Council of Internal Auditing

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY...... 1

II. INTERNAL AUDIT RATING SCALE...... 3

III. FINDINGS AND RECOMMENDATIONS...... 8

A. SAFES...... 8

B. CANTEEN OPERATIONS...... 8

C. INMATES’ TRUST FUND...... 9

D. ACCOUNTS PAYABLE AND PROCUREMENT...... 10

E. FIXED ASSETS...... 11

F. INMATE WORK RELEASE FUND...... 12

G. INCENTIVE WAGE FUND...... 14

H. TELEPHONES...... 14

I. TRAVEL AND OTHER REIMBURSEMENTS...... 15

J. FOOD SERVICE...... 15

K. CLOTHES HOUSE...... 15

L. CENTRAL WELFARE FUND...... 16

M. AMMUNITION...... 16

N. CONTROL OF FIREARMS...... 16 I. EXECUTIVE SUMMARY

Lincoln Correctional Center is located in Lincolnton, North Carolina. The facility houses approximately 223 minimum custody inmates and has fifty-nine employees.

Internal Audit conducted a Scheduled Audit on February 18–25, 2013. The previous audit was conducted in July 2010. A Scheduled Audit is a full audit performed to ensure the adequacy and effectiveness of the facility’s internal controls and the quality of performance in carrying out assigned responsibilities in accordance with fiscal policies and procedures.

The scope of the audit included examination of the Safes, Canteen Operations, Inmates’ Trust Fund, Accounts Payable and Procurement, Fixed Assets, Inmate Work Release Fund, Inmate Service Clubs, Incentive Wage Fund, Telephones, Travel and Other Reimbursements, Food Service, Clothes House, Central Welfare Fund, Ammunition, and Control of Firearms areas.

Our audit disclosed no exceptions, strong internal controls, and a knowledgeable staff in the Safes, Incentive Wage Fund, Travel and Other Reimbursements, Food Service, Central Welfare Fund, Ammunition, and Control of Firearms areas.

A few exceptions, minor in nature, were noted in the Canteen Operations, Inmates’ Trust Fund, Accounts Payable and Procurement, Fixed Assets, Telephones, and Clothes House areas. In the Canteen Operations area, there was inadequate separation of duties with regard to the Canteen Accounting Supervisor, canteen inventories were not conducted in a systematic manner, and there was inadequate review of canteen reports. In the Inmates’ Trust Fund area, when removing holds on released inmates’ trust fund accounts, the facility head’s approval was not obtained and the cost of the money order was deducted from the former inmate’s trust fund balance. In the Accounts Payable and Procurement area, procurement card receipts were not properly signed, some goods and services were not properly receipted, several pre-approvals for purchases were not obtained, and supporting documentation was not available for two transactions reviewed. In the Fixed Assets area, the Equipment Report needed more information to improve the effectiveness of the report. In the Telephones area, monthly cellular phone bills were not reviewed and approved to certify correctness. In the Clothes House area, the Facility’s Designee Letter did not include a designee for responsibility of the Clothes House.

Some improvement was needed to strengthen controls and minimize risks in the Inmate Work Release Fund area. Inmate per diem and transportation charges were not calculated correctly, worker’s compensation certificates of insurance were not on file for some employers, there was inadequate endorsement of work release checks, and there was no log to control the receipt and issuance of Temporary Work Release Receipt Books.

These appraisals are reflected in the Internal Audit Rating Scale and the Findings and Recommendations included with this report.

1 I. EXECUTIVE SUMMARY

We held an exit conference on March 14, 2013, to inform facility management of our findings and recommendations. The following were present.

 John Crow, Superintendent  Chuck Thrift, Assistant Superintendent  David Mitchell, Western Region Operations Manager  Fran Perkins, Accounting Clerk  Harriett Edmisten, Regional Audit Supervisor  George Randlett, Internal Auditor

During the course of the audit and exit conference, we provided facility personnel with schedules as needed to explain exceptions and to serve as supporting documentation.

The Superintendent acknowledged agreement with all of our findings and recommendations.

In addition to our normal distribution, we may send excerpts from this report to other DPS managers as we deem appropriate.

2 II. INTERNAL AUDIT RATING SCALE

SCHEDULED AUDIT LINCOLN CORRECTIONAL CENTER #4525

Listed below are the major areas examined in this audit and overall ratings assigned by auditors. Major areas are comprised of individual categories as listed on the following pages. Ratings given to categories or major areas are not averages. Ratings are based on standard audit procedures, and reflect the auditors’ assessment of the facility’s performance in various categories. The risk associated with individual findings is a large component of this assessment and may significantly impact a rating.

Rating Scale Guidelines 1 - No exceptions, strong internal controls, staff appears knowledgeable of policies and prescribed procedures 2 - Meets expectations, a few exceptions minor in nature 3 - To minimize risk, some improvement needed to strengthen controls 4 - Below expected performance level, significant improvement needed

OVERALL RATING Rating

SAFES 1

CANTEEN OPERATIONS 2

INMATES’ TRUST FUND 2

ACCOUNTS PAYABLE AND PROCUREMENT 2

FIXED ASSETS 2

INMATE WORK RELEASE FUND 3

INCENTIVE WAGE FUND 1

TELEPHONES 2

TRAVEL AND OTHER REIMBURSEMENTS 1

FOOD SERVICE 1

CLOTHES HOUSE 2

CENTRAL WELFARE FUND 1

AMMUNITION 1

CONTROL OF FIREARMS 1

SAFES 1 2 3 4

1. DROP-BOX SECURITY X

2. DROP-BOX DUAL LOCK CONTROL X

3. SAFE ACCESS MINIMIZED X

4. TRANSFER OF FUNDS X

CANTEEN OPERATIONS 1 2 3 4

1. SEPARATION OF DUTIES X

2. PURCHASES AND DISBURSEMENTS X

3. RECEIPTS AND DEPOSITS X

4. PRICING X

5. INVENTORY CONTROL X

6. MONTHLY REPORTING X

7. CANTEEN SECURITY, APPEARANCE, AND CLEANLINESS X

INMATES’ TRUST FUND 1 2 3 4

1. TRUST FUND ACCOUNT X

2. SIGNATURE CARD X

4. MAILROOM OPERATIONS X

5. DEPOSITS X

6. DISBURSEMENTS X

7. SPECIAL DRAWS X

8. ACCOUNT BALANCES AND RECONCILIATION X

ACCOUNTS PAYABLE AND PROCUREMENT 1 2 3 4

2. DIRECT PROCESSING (DC-702) PURCHASES X

3. PROCUREMENT CARD (P-CARD) PURCHASES X

4. PURCHASE ORDERS X

5. NCAS/E-PROCUREMENT SECURITY ACCESS X

FIXED ASSETS 1 2 3 4

2. ANNUAL FIXED ASSET INVENTORY X

3. QUARTERLY LAPTOP INVENTORY X

4. INVENTORY CONTROLS X

5. CHANGES, UPDATES, AND FOLLOW-UP X

6. TRANSFERS AND DISPOSITION OF ASSETS X

7. VEHICLE MILEAGE AND MAINTENANCE RECORDS X

INMATE WORK RELEASE FUND 1 2 3 4

1. INMATE ELIGIBILITY X

2. WORKERS’ COMPENSATION INSURANCE X

3. WORK RELEASE ACTION FORM (DC-190) X

4. WORK RELEASE SIGN OUT ROSTER (DC-306) X

5. PER DIEM AND TRANSPORTATION CHARGES X

6. RECEIPT OF WORK RELEASE EARNINGS X

7. PROCESSING OF WEEKLY EARNINGS X

8. PAYROLL DEDUCTIONS X

INCENTIVE WAGE FUND 1 2 3 4

1. PETTY CASH (IF APPLICABLE) X

2. PAY GRADES X

3. TIME REPORTING X

4. PAYROLL AND SUPPORTING DOCUMENTATION X

TELEPHONES 1 2 3 4

1. INTERNAL CONTROLS X

2. REVIEW AND APPROVAL X

3. CELLULAR PHONE PROCEDURES X

TRAVEL AND OTHER REIMBURSEMENTS 1 2 3 4

1. MILEAGE REIMBURSEMENT X

2. ALLOWANCE FOR MEALS, LODGING, AND OTHER X

3. COMPLETE AND ACCURATE DOCUMENTATION X

4. SIGNATURES AND APPROVALS X

FOOD SERVICE 1 2 3 4

1. CYCLE COUNT RECORDS X

3. DIRECT ISSUES X

CLOTHES HOUSE 1 2 3 4

3. DIRECT ISSUES X

4. INVENTORY CONTROL (MAX/MIN LEVELS) X

CENTRAL WELFARE FUND 1 2 3 4

1. REQUESTS AND APPROVALS X

2. INVOICES AND PACKING SLIPS X

3. INDIGENT INVENTORIES X

AMMUNITION 1 2 3 4

3. DIRECT ISSUES X

CONTROL OF FIREARMS 1 2 3 4

2. APPROVED MEMORANDUM RECEIPTS X

3. FOLLOW-UP AND RESOLUTION OF PROBLEMS X

7 III. FINDINGS AND RECOMMENDATIONS

A. SAFES We examined the facility’s internal controls to ensure the four safes and one drop-box provided secure storage for all currently authorized items. No exceptions were noted.

B. CANTEEN OPERATIONS We conducted a review of the canteen operations which included physical inventory test counts on February 18, 2013. We also observed the physical inventory process conducted by facility personnel in the canteen, Supervisor’s Store, and the Mailroom. All pertinent records and reports were examined to determine if canteen operations complied with the Prisons Cashless on the Net (CON) Users Manual and DPS Fiscal Policy and Procedure Manual at .0500. The following exceptions were noted.

1. SEPARATION OF DUTIES Condition: The Canteen Accounting Supervisor, who performed trust fund duties at the facility, also entered the results of the unannounced and month-end canteen inventories into the CON system. These responsibilities are a conflict and should be separated. This finding was noted in a prior audit and corrective action continues to be needed. Criteria: The Mailroom staff, Trust Fund staff, Canteen Supervisor or Canteen Supervisor Backup should not be involved in the count of inventory or enter inventory counts into the system. [Reference: CCM, Section 4, I.B. and D.] Cause: The Canteen Supervisor informed DPS Auditors that they were unaware of the policy requirements and that the Trust Fund staff was assigned the profile to enter the inventory results at the facility at the conversion to the CON system. Effect: The risk for misuse or misappropriation of canteen merchandise and funds increases without proper separation of duties. Recommendation: Facility Management should review canteen operations to establish proper internal controls. Facility Management should also assign appropriate responsibility, provide supervisory review, and ensure responsibilities are properly separated in accordance with DPS policy requirements.

2. INVENTORY PROCEDURES Condition: The physical inventories in the canteen were not conducted in a systematic manner. Items were counted from the inventory sheet to the shelves. This finding was noted in a prior audit and corrective action continues to be needed. Criteria: The canteen should be counted from left to right, beginning in the same area for each inventory count and in the order of actual arrangement of the canteen. Count sheets shall be arranged by shelf location to ensure a systematic count. [Reference: CM, Section 4, I.C.7.] Cause: The Canteen Supervisor informed DPS Auditors that he was unaware of the report for count sheets arranged by shelf location.

Effect: Failure to count in a systematic manner could result in the employee overlooking merchandise or counting items twice, which increases the risk of over or understating the actual inventory. This weakness in controls reduces the ability to detect theft by the inmate operator. Recommendation: Facility Management should ensure that a systematic pattern of left to right counting is followed when conducting an inventory. Count sheets are to set up by shelf location. Staff should conduct the inventory from the shelves to the inventory sheets. All staff conducting the physical inventory should be properly trained to perform the duties accurately.

3. INADEQUATE APPROVAL OF REPORTS Condition: The Approved Vendor List and Canteen Price List were signed as approved by the Canteen Supervisor, instead of the Facility Head. Criteria: The facility head shall be responsible for approving any new vendors and shall sign and date the approved vendor lists. Signed approved vendor lists shall be maintained at the facility for audit purposes. The canteen supervisor shall ensure that an accurate merchandise price list is signed and approved by the facility head or designee and posted at each canteen where they are visible to canteen customers. [Reference: .0503 A.3.c., .0505 C.4.] Cause: The Canteen Supervisor informed the DPS Auditors that he was unaware of these requirements. Effect: Failure to properly review reports and maintain adequate documentation results in inadequate management oversight. Recommendation: Facility Management should ensure the approved vendor list and canteen price list are signed in accordance to DPS policy requirements.

C. INMATES’ TRUST FUND We examined the Inmates’ Trust Fund disbursement bank account to determine if check signers were duly authorized and the bank signature card was accurate. We agreed deposits and disbursements recorded by the facility to Inmate Banking System (IBS) reports. Our examination also included review of the facility’s internal controls to ensure trust fund operations were in compliance with the DPS Fiscal Policy and Procedure Manual at .0100 and .1000, and the Prisons IBS Manual. The following exception was noted.

TRUST FUND ACCOUNT HOLDS Condition: When holds were placed on inmates’ trust fund accounts, written approval by the Facility Head or designee was not obtained prior to removing the holds. Additionally, inmates were inappropriately charged the cost of a money order when the balance of their Trust Fund account on hold was mailed to their forwarding addresses. A finding regarding written approvals was noted in the prior audit and corrective action continues to be needed.

Criteria: A hold will be placed on an inmate’s trust fund account automatically by inmate banking for large deposits ($300.00 or more) or when an inmate is releasing or paroling and receives a deposit of $100.00 or more within 15 business days or less. Once the 15 business days have expired, the hold can be removed with written approval from the Facility Head or designee. When inmates are released, the trust fund staff should close out the inmate’s trust fund account and convert the funds to a money order. The cost of the money order for funds that the facility held due to the 15 business day rule should be paid for by the Department. [Reference: IBS Manual, Section 6, I.I.] Cause: The Accounting Clerk informed the DPS Auditors that she was unaware of the policy requirements. Effect: Failure to assume the cost of the money order resulted in incorrect compensation to the inmate. Without the required approval to remove holds on inmates’ funds, the risk of misappropriation of inmate funds increases. Recommendation: Facility Management should implement procedures to ensure staff obtains written approval prior to removing a hold on an inmate’s funds. Facility Management should also ensure that the cost of money orders for disbursed funds placed on hold is paid for by the facility as required. A review should be performed by Facility Management to determine if the cost of the money orders for the identified inmates should be refunded.

D. ACCOUNTS PAYABLE AND PROCUREMENT We reviewed the procedures used for purchase orders and local purchases processed on Direct Processing Forms (DC-702s) and Procurement Cards (P-Cards) for compliance with the DPS Fiscal Policy and Procedure Manual at .2600. The following exceptions were noted.

1. PROCUREMENT CARD (P-CARD) PURCHASES Condition: Our review of fifteen P-Card statements and sixteen transactions for the period October through December 2012 revealed receipts/invoices were not signed by the supervisor, and five (31%) of these transactions were not signed by the cardholder. Also, one (6%) transaction did not have supporting documentation to show proper receipt and prior approval for the purchase. Criteria: A pre-approval worksheet for P-Card purchases is required by fiscal policy and the DC-704 or a similar form may be used for this purpose. Original receipts should be signed and dated by the cardholder. All original documents relating to a purchase should be given to the cardholder’s supervisor for signature acknowledging the purchases. After supervisor review, all documents are then given to the individual designated as ‘Reconciler’ for the facility/section. [Reference: .2608 E. and E.4.c.] Cause: The Accounting Clerk informed DPS Auditors that the Supervisor always applied his initials rather than signing the itemized receipts. One Cardholder

informed the Auditors that one vendor’s receipts always printed his electronic signature and it was surprising that one of these receipts did not include the electronic signature. The other transactions were due to a lack of oversight. Effect: Failure to process P-Card purchases within the guidelines of DPS policy results in a lack of accountability and increases the risk of improper use of P- Cards. Recommendation: Facility Management should ensure all procurement policies and procedures are followed as stated in DPS policy requirements.

2. DIRECT PROCESSING FORMS (DC-702S) AND PURCHASE ORDERS Condition: Our review of ten DC-702s and ten purchase orders revealed three (30%) DC-702s were not approved prior to initiating the purchase. One (10%) purchase order did not have an invoice/packing slip available, and six (30%) invoices were not signed to denote receipt of goods or services. A finding regarding prior approval was noted in the prior audit and corrective action continues to be needed. Criteria: Proof of receipt is either a dated delivery ticket with the signature of the employee receiving the items or a dated signature on the original invoice. Each division/section shall require a pre-approval form for DC-702 purchases. The DC-704 or similar form may be used for this purpose. Upon successful ‘Receipt’ of the goods, the packing slip (or substitute) shall be filed at the facility/section with the Purchase Order, and available for audit purposes. [Reference: .2606 E.1.f., .2609 B., .2610 C.1.] Cause: The Accounting Clerk informed DPS Auditors that these discrepancies were due to an oversight. Effect: Failure to properly receipt goods, obtain prior approval for purchases, and maintain supporting documentation may result in unauthorized purchases, loss of assets, and increases the risk of improper payments. Recommendation: Facility Management should ensure purchase documents are processed and maintained in accordance with DPS policy requirements.

E. FIXED ASSETS We conducted a 22 percent test count of fixed assets, valued at $1,000 and over, to provide assurance that assets were properly accounted for. In addition, we inventoried 100 percent of the laptops. We reviewed fixed asset records to verify internal controls and to ensure compliance with the DPS Fiscal Policy and Procedure Manual at .2700. Copies of all schedules relative to our physical inventories were provided to facility personnel. The following exception was noted.

UPDATES AND CHANGES Condition: Our test count of thirty-four assets disclosed five (15%) requiring updates and changes. Corrective action was needed to add manufacturers, serial number, models, and descriptions. In addition to the test count assets, an overall review of the Equipment Report disclosed an additional seven assets that needed more complete information (manufacturers, serial number, models, and descriptions). Criteria: All equipment should be properly identified on the Equipment Report to facilitate control over the assets and to improve the effectiveness of the report. Facilities/Sections are responsible for their own fixed asset reporting and should follow up with the Equipment Control Section, if their request has not been processed. [Reference: .2710 A.2.–4.] Cause: The Correctional Officer informed DPS auditors that he sent this information to the Controller’s Office, Equipment Control Section in 2010, but the information had not been added and he had not adequately followed up on the request. Effect: Inaccurate identification of assets may cause a loss of accountability of assets and make conducting a physical inventory more time consuming. Recommendation: When conducting an inventory of equipment, care should be taken to ensure a complete and accurate description of each item is included on the Equipment Report. Any exception to physical inventories should be noted and forwarded by separate memorandum and accompanied by the proper forms to the Equipment Control Section and to Internal Audit. The facility should follow-up on any requests not completed after thirty days. Corrective action was initiated during our audit.

F. INMATE WORK RELEASE FUND Four inmates at this facility were participating in the Inmate Work Release Program. We reviewed 100 percent of these inmates’ work release records for the period January 26 through February 1, 2013. The purpose of our examination was to determine that work release earnings were receipted and reported properly, and to evaluate the effectiveness of the internal controls for compliance with the DPS Fiscal Policy and Procedure Manual at .0300. The following exceptions were noted.

1. INACCURATE CALCULATION OF PER DIEM AND TRANSPORTATION CHARGES Condition: Per diem and transportation charges were based on the inmate’s number of hours shown on the check stub, instead of information from the Sign In/Out log as required. Criteria: The actual time the inmate left for work (departure) and the time he or she returned (arrival) should be recorded on the DC-306 for each day worked during the work-week. All per diem and transportation charges deducted from an inmate’s earnings are based on the hours and days recorded therein. At the end of each workweek, the total hours worked by each inmate should be divided by 8 hours to determine the number of days actually worked. Any fraction less than .5

days should not be counted as a day, and any fraction equal to or greater than .5 days should be counted as a full day. Transportation should be posted to the inmate’s account based on the number of days transportation is provided. [Reference: .0308] Cause: The Accounting Clerk informed DPS auditors that she was trained by another facility to base per diem and transportation charges on the hours on the inmate’s pay stub. Effect: Inmates are charged incorrect per diem and transportation charges when the hours on the paystub are the basis for the calculations. Recommendation: Facility Management should ensure per diem charges are calculated as required by DPS Policy requirements. Facility Management should also take steps to ensure that staff is updated with policy and any related changes.

2. WORKER’S COMPENSATION Condition: Current workers’ compensation certificates of insurance were not on file at the facility for two (66%) of the three current work release employers. Criteria: Each facility should verify and periodically monitor compliance and maintain a copy of the certificate of insurance at the facility. [Reference: .0306] Cause: The Program Supervisor informed DPS auditors that he was unaware that the certificates of insurance had expired. Effect: Failure to verify and document that work release employers have current workers’ compensation insurance could result in increased liability for the Department. Recommendation: Management should ensure all work release employers are required to establish and maintain a current workers’ compensation certificate of insurance as a condition of employment for inmates. The facility should verify compliance, at a minimum annually, and maintain a copy of the certificate of insurance at the facility that reflects the company’s policy number and expiration date. Corrective action was taken during our audit.

3. INADEQUATE ENDORSEMENT OF INMATE WORK RELEASE CHECKS Condition: The Facility did not have the “For Deposit Only to Credit of Department of Correction Work Release Fund For (insert inmate’s name)” stamp. This stamp is required to be used when the inmate is not available to endorse their work release check. Criteria: The work release check should be endorsed with the inmate’s signature upon receipt. In the absence of the inmate signature, a qualified endorsement should be stamped and completed to read: “For Deposit Only to Credit of Dept. of Corr. Work Release Fund For (insert inmate’s name)”. [Reference: .0316 A.1.] Cause: The Accounting Clerk informed DPS Auditors that she has not had this stamp since the facility began the work release program over a year ago. Effect: Failure to obtain an inmate’s signature on the work release payroll check could result in the misappropriation of inmate funds.

Recommendation: Facility Management should ensure that a qualified endorsement stamp is obtained and used when the inmate is not available to endorse their work release checks. Corrective action was taken during our audit.

4. CONTROL LOG FOR TEMPORARY WORK RELEASE RECEIPT BOOKS Condition: A log was not maintained to control receipt and issuance of Work Release Temporary Receipt books (DC-303A). Criteria: A register (log) shall be maintained to control the receipt and issuance of DC-303A receipt books. The register should show date of receipt from Central Supply Warehouse, the beginning and ending numbers of the DC-303As, and the issuance of books to users at the Facility. [Reference: .0316 B.1.c.] Cause: The Accounting Clerk informed DPS Auditors that she was unaware of this requirement. Effect: Failure to maintain a log creates a lack of control over surrendered checks and increases the risk of impropriety relative to inmates’ Work Release accounts. Recommendation: Facility Management should implement procedures to ensure a control register for all blank temporary receipt books is maintained at the Facility. Corrective action was taken during our audit.

G. INCENTIVE WAGE FUND We reviewed incentive wage operational and accounting procedures for compliance with the DPS Fiscal Policy and Procedure Manual at .0200 and Prisons Policy and Procedure Manual. No exceptions were noted.

H. TELEPHONES We reviewed internal controls over telephones and cellular phones assigned to the facility for compliance with the DPS Fiscal Policy and Procedure Manual at .2400 and .3200. We examined telephone records for the months of October, November, and December 2012 for evidence that charges were reviewed for appropriateness. The following exception was noted.

REVIEW AND APPROVAL OF CELLULAR TELEPHONE CHARGES Condition: Monthly cellular phone bills were not reviewed and approved to verify the accuracy of the charges billed. The employees assigned cellular phones did not review, date, and sign the cell phone EBill page and the supervisor’s signature for approval was not obtained. This finding was noted in the prior audit and corrective action continues to be needed. Criteria: Employees should review the charges and certify that his/her cellular phone calls are valid and accurate by signing the pages of the EBill which list his/her cellular phone charges. Once the responsible employee has signed the EBill, the designated employee should obtain the supervisor’s signature to denote review and

approval. The signed EBill pages of cellular phone charges should be retained at the facility for audit purposes. [Reference: .2404 A.3.e.] Cause: The Assistant Superintendent informed DPS Auditors that the majority of the cell phones were the flat rate phones which only provided thirty minutes of air time each month and no one ever used them. Effect: Inadequate monitoring of cellular phone charges could result in excessive or inaccurate charges made to the Department. Recommendation: Facility Management should ensure cellular telephone charges are reviewed and approved as required by DPS policy.

I. TRAVEL AND OTHER REIMBURSEMENTS We examined reimbursements to employees for the period November 4, 2012 through February 4, 2013, to determine accuracy and compliance with the DPS Fiscal Policy and Procedure Manual at .1400 and .4000. No exceptions were noted.

J. FOOD SERVICE We conducted an examination of food service operations and performed physical inventory test counts on February 20, 2013, to determine compliance with the DPS Fiscal Policy and Procedure Manual at .2000 and Prisons Usage Order and Inventory Manual. No exceptions were noted.

K. CLOTHES HOUSE We conducted an examination of clothes house operations and performed physical inventory test counts on February 20, 2013, to determine compliance with the DPS Fiscal Policy and Procedure Manual at .2900 and Prisons Usage Order and Inventory Manual. The following exception was noted.

CLOTHES HOUSE DESIGNEE Condition: The day-to-day responsibilities of the Clothes House operations were not designated in the Facility Head’s Designee Letter. Criteria: Control of prison clothing shall be the responsibility of the Facility Head, but may be delegated to a Clothes House Officer. [Reference: .2903 A.] Cause: The Superintendent informed DPS Auditors that he was unaware of this policy requirement. Effect: Failure to designate a specific employee for the oversight of the Clothes House procedures and inventories could result with processes not consistently maintained. Recommendation: The Facility Head should ensure that day-to-day operations in the Clothes House are designated to a specific employee as identified in DPS policy. Corrective action was taken during our audit.

L. CENTRAL WELFARE FUND We examined the Welfare Fund Expenditure Requests (DC-440s), for the time period November and December 2012, and January 2013, to determine compliance with the DPS Fiscal Policy and Procedure Manual at .1200. No exceptions were noted.

M. AMMUNITION We conducted a 100 percent physical inventory of ammunition on February 21, 2013, to provide assurance that all ammunition was properly accounted for. We reviewed ammunition records to verify internal controls and to ensure compliance with the Prisons Usage Order and Inventory Manual. No exceptions were noted.

N. CONTROL OF FIREARMS We conducted a 100 percent physical inventory of firearms to provide assurance that all firearms were properly accounted for. We performed additional testing to verify internal controls and to ensure compliance with the DPS Fiscal Policy and Procedure Manual at .1700. Copies of all schedules relative to our physical inventory were provided to facility personnel. No exceptions were noted.