HILO — The Department of Parks and Recreation has plugged a leak in its cash-handling procedure following an audit that pointed to lax security.
It’s not known how much money might not have found its way into the county coffers that should have been deposited there.
“That’s part of the problem,” Legislative Auditor Bonnie Nims said Wednesday. “There’s no way to know.”
The program rents out pavilions, buildings and other parks and recreation spaces for community celebrations. Three offices maintain the reservation books: the Kona Permit Office, Hilo Main Office Administration and the Recreation Division. The program reported it collected $176,000 for 1,297 permits in the 2014-15 fiscal year.
The auditor focused on this particular area because she sees cash receipts as an “inherently high-risk process.”
The audit reviewed 138 facility use permits from July through September 2015 at the Hilo and Kona locations, plus an additional nine from June 2015 at the Kona location.
“We welcomed the audit,” said James Komata, deputy director of the department. “It gave us the opportunity to improve on the situation.”
Inadequate accounting of shortages and overages was one of the problems cited. The Hilo office, for example, kept an envelope in the cash drawer where overages were deposited. When there was a shortage, money was taken from the envelope to balance the books.
The Kona office reported no shortages or overages at all, considered a red flag by auditors. Another red flag in Kona were blocks of three or four days where no reservations were issued or money apparently collected, an anomaly in the very popular program.
Best practices for cash handling state that when an overage or shortage is identified, a supervisor should recount the deposit, the audit noted. If it is a valid overage or shortage, an accounting entry should be made immediately to document the difference in the general ledger.
Other problems identified in the audit were numerous miscellaneous errors, deposits not always made or posted timely and pre-numbered facility use permits were not used.
“Individually, errors or irregularities may not be significant. However, when combined, they demonstrate that policies and procedures are not adequately followed, or understood, as well as a lack of monitoring by management,” the audit said. “Undetected errors may result in: financial misstatements, inaccurate or incomplete information, uninformed operational decisions and the inability to detect irregularities including theft or misappropriation.”
The facilities rented from the Hilo Main Office Administration are Bayfront Parking Lot 1 & 2, Bayfront Canoe Area, Coconut Island, Honolii Isaac Hale, Kalakaua Park, Liliuokalani Gardens, Mooheau Park Bandstand and Mooheau Concession Area.
The Kona Permit Office handles Kona Imin Center and Old Kona Airport Runway North and South.
The audit recommended segregation of duties so the same person taking the money isn’t also the one who balances the books at the end of the day. Parks and Recreation Business Manager Reid Sewake said limited staff makes it difficult to have a total segregation of duties, but employees’ supervisors are now overseeing the process.
In addition, Sewake said, the department has switched to a new software system that puts data into the accounting system when the permit information is input, rather than a dual-input system.
The department has also started accepting credit cards, adding another layer of paper trails, enhanced training and it began conducting surprise cash counts for double-checking.
Nims praised department officials’ cooperation during the audit.
“They were very proactive. It’s not that they didn’t care,” she said. “It’s more like they didn’t know, and now that they know, they’ve taken steps to correct it.”
The 35-page audit, completed June 30 and posted on the auditor’s website, http://records.co.hawaii.hi.us/weblink/1/doc/80098/Page1.aspx, will be presented to the County Council in early August.