OPA cites NMC’s weakness in control over collections

There is a need for the Northern Marianas College Business Office to adopt and implement clear policies and administrative sanctions in order to ensure better control over cash collections, according to the Office of the Public Auditor.

OPA’s recommendation came following the conclusion of its investigation on the alleged embezzlement of funds collected at the NMC-Business Office between Nov. 5 and 9, 1999, involving $10,500 in total collections.

An audit report released yesterday disclosed the former NMC Business Office cashier failed to deposit the full amount of daily collections, and to account for cash funds in his custody.

According to Public Auditor Leo LaMotte, this incident was caused by the absence of adequate internal controls over cash collections. He said $9,943 in total cash and $557 in change funds were unaccounted for and appeared to be misappropriated.

Due to the absence of sufficient control over collections at the College, Mr. LaMotte said funds can easily be misappropriated without immediately being detected.

“There has been no genuine concern by NMC management on how the Business Office operates, although the function of the office is very critical for sound financial management,” he added.

The OPA also mentioned that the NMC management failed to implement existing policies, and to evaluate existing procedures to determine which areas need further improvement in order to prevent such incidents as embezzlement.

“Management failed to detect that recorded cash receipts were more than what were actually deposited and cash funds were missing,” the OPA investigation report disclosed.

Mr. LaMotte said the NMC Board of Regents should install measures that would assure the proper turnover of cashiering duties, as well as proper custodianship for the cash safe’s combination and key.

OPA has also suggested the use of control features in computerized accounting system such as passwords or log-on identifications. It noted the need to limit the access to specific users and key officials.

It called for the adoption of periodic audits or surprise cash counts for handlers of petty cash and change funds, as well as requiring cash vouchers and other supporting documents for payments in the files at all times.

“[A procedure should also be implemented to] require the comptroller to implement and enforce effective internal controls over cash. The comptroller must also identify the specific Business Office supervisor who will perform certain duties,” the report said.

NMC President Jack Sablan, in his response to the audit investigation, said the Business Office is now in the process of formulating clear and documented policies and procedures for employees including those handling cash transactions.

A system of internal controls has also been set up by the NMC comptroller to properly segregate the duties of each employee at the College’s Business Office, according to Mr. Sablan.

The College now reviews and verifies the daily cash collections and related official receipts and deposit slips, in fresh efforts to prevent the repetition of such an incident that even warranted an OPA investigation.