system found internal control weaknesses related to cash reconciliations,
check stock and document retention.
ODOC awards for prison labor and programming are credited to prisoner
trust accounts and all funds prisoners receive from community sources are
deposited in their respective trust accounts. As of January 1, 2004, more
than 12,250 prisoners were confined in ODOC prisons. As of December 31,
2003, the cash balance in inmate trust funds totaled almost $3 million.
ODOC prisoners may utilize their trust account funds for canteen
purchases, family support and other purposes. The department deducts
money from trust funds to reimburse the department for medical expenses,
postage, [photocopies], and disciplinary fines. Any amount remaining in
an inmate's trust fund is paid out to him upon discharge. Prisoners also
receive interest on the balance of their trust funds.
In order to properly account for the trust funds, [ODOC] utilizes the TAG
system to process transactions and calculate...trust balances. The TAG
system recorded approximately 1.2 million transactions per year in calendar
years 2002 and 2003.
The Audit Division of the Oregon Secretary of State audited the ODOC trust
account system to determine in ODOC had adequate controls over [prisoner]
trust funds and maintain[ed] adequate supporting documentation for recorded
transactions. Between February and June 2004, auditors reviewed a sample
of trust fund transactions recorded...January 1, 2002 through December 31,
2003. ODOC employees were interviewed and all relevant policies,
procedures, rules and law were reviewed.
Auditors found that ODOC adequately segregated most trust fund duties and
implemented Procedures to ensure trust fund disbursements are properly
authorized. Additionally, prisoner employment point awards were properly
recorded in...trust funds.
Three weaknesses were found. First, ODOC had not performed
reconciliations between the inmate trust fund balance and the corresponding
Oregon State Treasury...account since July 2001. This increase[d] the
risk errors for fraud can go undetected for long periods of time, making
remediation potentially more problematic. Auditors recommended that ODOC
make cash reconciliations a priority, to be performed on a monthly
basis. Second, the ODOC had not taken appropriate action to secure
inmate trust fund check stock in accordance with [The Oregon Accounting
Manual (OAM)] and Oregon State Treasury Cash Management Manual policies.
Finally, auditors found some transactions that were not supported by
documentation signed by the prisoner, making it difficult to determine if
[the] transaction was a legitimate charge against the...trust fund. See:
OR Secretary of State Audit Report No. 2004-31 (10/29/04). Copies of the
report are available on line at: www.sos.state.or.us/audits/audithp.htm, or
by calling 503-986-2255.
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