NorCo Controller Annual Report 2015

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COUNTY OF NORTHAMPTON

EASTON PENNSYLVANIA

January 1, 2015 - December 31, 2015

Stephen J. Barron, Jr., CFE

County Controller


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STEPHEN J. BARRON, JR., CFE

FRANK S. KEDL, CIAAudit Manager

TIMOTHY P. BRENNAN, ESQ.Solicitor

January 22, 2016

Dear Friends:

This report is my 8th as Northampton County Controller. The excitement of

a 3rd term and 4 more years makes one look back on the good and badand plan for a better and brighter future.

Thankfully the audits and investigations that my office has performed havebeen a bright light and positive for Northampton County. Though we areconstantly looking to improve and be more efficient and keep up withauditing trends you will see more of the same from my office in the next 4years.

There may be a new face or two that comes to visit during audits, but youwill always be treated with dignity, respect and as a professional. This issomething my office prides itself on and will always be the cornerstone of aproductive relationship between the Controllers Office and the rest of the

county.

I look forward to the upcoming year and my 3rd term as NorthamptonCounty Controller.

All the Best,

Stephen J. Barron, Jr.

CONTROLLER OF NORTHAMPTON COUNTYNORTHAMPTON COUNTY COURTHOUSE

669 WASHINGTON STREETEASTON, PENNSYLVANIA 18042

PHONE (610) 559-3186FAX (610) 559-3137


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Table of Contents

PAGE(S)

The County Controllers Office 1-5

Summary of Reports Issued:

Performance Audits 6-16

Financial Audits 17-20

Agreed Upon Procedure Engagements 21-28

Summary of Follow-Up Reports Issued 29-33

Summary of Nonaudit Services 34-36

Summary of Other Work 37

Work in Process 38

Office Improvements 39


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1

Mission Statement

Our purpose is to audit County

departments and entities receiving

County funds in accordance with

the Home Rule Charter and to

make recommendations to County

management that will improve the

economy and efficiency of County

operations, ensure compliance with

laws and regulations, and

strengthen internal controlssafeguarding County assets.


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2

Office Staff

Stephen J. Barron, Jr., CFECounty Controller

BA Government and PoliticsJD Law

Timothy P. Brennan, Esq.Solicitor

BA Political Science and EnglishJD Law

Frank S. Kedl, CIAAudit ManagerBS Account ing

Paul L. Albert, CIALead AuditorBA Account ing

Kathleen A. Kuzma, MBA, CPA, CGMALead Auditor

BS Account ing and BusinessMBA Acc ountin g and Finance

Anthony D. Sabino, CIALead Auditor

BA Journal ism and Account ing

Stacy L. DukeAuditor

BS Account ing

Gary M. Krall, MBA, CMAAuditor

BA Account ing


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3

Professional and Community Involvement

Staff members belong to many professional organizations:

American Institute of Certified Public Accountants

Association of Certified Fraud Examiners

Association of Local Government Auditors

Institute of Internal Auditors

Institute of Management AccountantsPennsylvania Institute of Certified Public Accountants

Pennsylvania Society of Tax and Accounting Professionals

Pennsylvania State Association of County Controllers

Employees are active in several other service organizations:

Gift of Life Donor Program

Greater Bethlehem Soccer League

Heights Athletic Association

Honorary First Defenders, Allentown ChapterFinance Officer

Lehigh Valley Coalition for Organ & Tissue Donation

Musikfest/Christkindlmarkt

National Sokols Association

North Whitehall Township Recreation Board

Pennsylvania Interscholastic Athletic Association

St. Joseph the Worker Parish FestivalCommittee Chairperson

St. Joseph the Worker Parish Womens Guild

South Bethlehem Historical SocietyPresident

Southside Film Festival - Treasurer


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4

Quality Control Review

Organizations conducting audits in accordance with Government Auditing Standardsmust have an external quality control review at least once every 3 years. The purpose ofthe quality control review is to determine whether an audit organizations internal qualitycontrol system is in place and operating effectively, and to provide assurance thatestablished policies and procedures and applicable auditing standards are beingfollowed.

The Northampton County Controllers Office underwent its most recent quality controlreview in May 2013 by a review team from the Association of Local Government

Auditors (ALGA). Reports issued during the period January 1, 2010 through December31, 2012 were reviewed.

We are pleased to have once again received a favorable opinion from the review team.Their report, dated May 16, 2013, can be found on the following page.


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5


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Summary of Reports Issued

Performance Audits

6

The overall purpose of our audit was to reviewArticle XIII for possible modifications to make theProcurement process more efficient, and to reviewrecently awarded contracts to determine the level ofcompliance with the Code.

In order to perform a comprehensive review ofcompliance, we reviewed all Executive Orders fromJanuary 2013 through October 2014, whichincluded contracts awarded by two separateadministrations.

AUDIT RESULTS

There are many aspects of Article XIII of theAdministrative Code which are unclear,inconsistent, and in some cases, overlyrestrictive. As a result, it does not always provideclear and reasonable guidance for theprocurement of goods and services for theCounty of Northampton.

We did find a number of exceptions in theawarding of contracts and compliance with the

Code, but a number of these were caused bymisinterpretations of unclear Code provisions.

A comprehensive revision of Article XIII ismerited; this should be a cooperative effortbetween representatives of both the

Administration and County Council. This shouldbe combined with an effort to complete andpublish a revision to the Procurement Manual,which will refine the broad guidance provided bythe Code into a set of detailed and easy-to followprocedures.

Report i ssued

February 9, 2015

Auditor:

Tony Sabino, CIA

ProcurementArticle XIII Compliance


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Performance Audits

7

Detectives in the District Attorneys office areresponsible for maintaining four bank accounts thatare included in the DA Drug Forfeiture AgencyFund. Since we conduct a separate annual audit ofthe Controlled Substance Forfeitures account, thisaudit concentrated on the remaining threeaccounts: Drug Task Force Fund, GeneralForfeitures and Federal Forfeitures.

The audit objectives were to:

Determine if internal controls over the

handling of Drug Forfeiture Agency Funds areadequate.

Determine if the Drug Forfeiture Agency Fundis in compliance with Federal, State andCounty regulations.

AUDIT RESULTS

Due to the Detective Offices staffing andconfidentiality issues; the County Detectiveremains responsible for the all asset custody andrecord keeping functions listed above.

Therefore, to reduce the risk of errors andirregularities the Controllers office will annuallyreview all receipts for proper documentation andverify that deposits were made.

The County Detective should document theprocedures for processing Drug Forfeiture

Agency Fund transactions.

Report issued

February 27, 2015

Auditor:Stacy Duke

District AttorneyDrug ForfeitureAgency Fund


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Performance Audits

8

Report issued

March 6, 2015

Auditor:

Kathleen Kuzma, MBA,

CPA, CGMA

Public Works employees are covered by either theCareer Service (CS) Regulations or the AFSCMEResidual Non-Professional Unit collectivebargaining agreement (CBA).

The Kronos computer system maintains eachemployees typical work schedule. Changes to thatschedule due to leave time, overtime and specialpay situations are entered into Kronos bytimekeepers. Once all data entry of exception itemshas been updated in Kronos, payroll is approvedand processed, and paychecks are issued.

The purpose of our audit was to:

Determine the adequacy of internal controlsin place for the Public Works payroll process.

Determine the accuracy of amounts paid toemployees for leave time and time worked byagreeing to employee time reports.

Determine adherence to CBA and CSRegulations with regard to other paymentsmade to employees.

AUDIT RESULTS

A department policies and procedures manualwould be a useful tool to detail what is expectedof those involved in the payroll process.

Consistency in payroll processes, adequatesegregation of duties, and supervisory approvalwould provide controls that are needed toachieve the overall goals for the Departmentspayrollthat employees report accurate timeworked, that supervisors review and approve

time worked for their employeesresulting in anenvironment of confidence in the integrity ofpayments to the employees.

We were unable to reach a conclusion about theoverall accuracy of payroll in the Public WorksDepartment due to the lack of adequatedocumentation, and supervisory review andapproval.

Public WorksTimekeeping Process


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Performance Audits

9

Report issued

March 18, 2015

Auditor:Paul Albert, CIA

AdministrativeServices

Postage Account

Postage activities at the GovernmentCenter/Courthouse complex are generallycentralized in the Administrative Services Division.

Divisions that are located away from theGovernment Center/Courthouse complex usuallyhave their own postage machines. Those divisionspay for the lease or rental of their postagemachines and also for the postage.

The purpose of the audit was to determine if:

Controls over Postal Permit #142 and otherpostal activities are adequate. Processes are in compliance with County

policy, if applicable. Processes are efficient and effective.

AUDIT RESULTS

Savings could be attained by the County in thehandling of postage machine leases. Somemachines arent necessary, such as the one atthe Jail and one of the machines at the Human

Service building. Mail that could be processedthrough the Mailroom should flow through thereas it will reduce the need for manpower tooperate the offsite machines, andcorrespondence would be mailed at a cheaperrate.

Greater oversight is needed for Postal Permit#142. Account usage isnt monitored resulting ina large balance in the postal account; thebalance should be kept at a minimum. Theaccount should be reconciled regularly before

more money is deposited, and policies andprocedures for that account should be developedand documented.

Policies and procedures of the office should bedocumented.


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Performance Audits

10

The Countys Procurement Card Program began inApril 2002 and currently has129 cardholders.During the twelve months ended June 30, 2014,there were 4,382 transactions totaling $913,902.The program is administered by the ProcurementDivision with the assistance of a Fiscal Affairsaccountant assigned to the program.

The audit objectives were to:

Determine if controls over the processing ofp-card transactions are adequate.

Determine if the program is in compliancewith County regulations. Determine if the program is being run

economically and efficiently. Determine if corrective action was taken on

findings reported in the 6/30/13 p-card audit.

AUDIT RESULTS

The Procurement Card Program continues to bean efficient, cost-effective method of paying forpurchases without the need for petty cash, small

purchase orders or accounts payable checks.Overall the program is working as intended.

Procurement could further enhance theefficiency of the review process by taking aproactive approach to common cardholdersmistakes, working with other departments toutilize additional internal systems for easiertracking of cardholders, and verifying the use ofthe Works systems built-in review functions.

ProcurementP-Card Program

Report i ssued

March 23, 2015

Auditor:

Brandon Dunstane


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Performance Audits

11

Fiscal AffairsTax Claim Agency Fund

Report i ssued

May 27, 2015

Auditor:

Stephanie Rath-T ickle,

MLIS

The Tax Claim Agency Fund is used to account fortaxes owed, property acquired at sale, and thereceipts and disbursement of moneys collected.Moneys collected are owed to School Districts,Municipalities, and other lien holders.

This audit is one in a series of periodic audits of allagency funds performed for the purpose ofsupplementing the year-end work prescribed by theCountys external auditor. The focus of the auditwas on the receipt and disbursement functions andon compliance with laws and regulations of the Tax

Claim function.

The purpose of the audit was:

To determine the adequacy of internalcontrols.

To test internal controls and compliance withlaws, regulations, policies, and procedures.

To determine whether the Tax Claim AgencyFund is maintained economically andefficiently.

AUDIT RESULTS

Overall, internal controls for the Tax ClaimAgency Fund appear to be working properly, andwe did not discover any areas for improvementin regard to economy and efficiency.

Most procedures appear to be in compliancewith the Real Estate Tax Sale Law. However, wedid note that taxes recovered through Upset andJudicial Sales are disbursed prior to obtaining anorder confirming distribution from the court, in

violation of Section 205 (3) of the Real EstateTax Sale Law.


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Performance Audits

12

The Recorder of Deeds office is one of severaldivisions under the direction of the Department ofFiscal Affairs. This office is responsible forrecording, filing, imaging, retrieval and maintenanceof deeds, mortgages and miscellaneous papersfiled in Northampton County.

This audit is one in a series of periodic audits of allagency funds performed for the purpose ofsupplementing the year-end work prescribed by theCountys external auditor. The focus of the auditwas on the receipt and disbursement functions, and

on compliance with laws and regulations for thevarious fees and taxes.


To test the adequacy of internal controls.

To test compliance with laws, regulations,and policies and procedures.

AUDIT RESULTS

The Recorder of Deeds office maintains a

comprehensive Policies and Procedures Manual(Manual) that addresses many of the dailyissues faced by the staff. This Manual would bemore useful and internal controls would bestrengthened if there were regular updates to theManual, and if the Manual were expanded toinclude procedures for supervisors. It would alsobe a benefit to the office if the Manual wereavailable electronically to the staff.

Another means for management to improveinternal controls would be to perform more

frequent random cash drawer verifications.

Fiscal AffairsRecorder of DeedsAgency Fund

Report i ssued

November 17, 2015

Auditor:Kathleen Kuzma, MBA,

CPA, CGMA


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Performance Audits

13

JailPrimeCare Contract

On September 6, 2012, the County entered intoContract 12-168 with PrimeCare Medical Inc. ofHarrisburg to provide healthcare to inmates housedat the Jail. The five-year contract, with the option oftwo one-year extensions, has an annual baseamount of $2,695,726.77.

The audit was conducted at the request ofNorthampton County Council via ResolutionNumber 13-2015.

The purpose of the audit was to:

Analyze operating, labor and administrativecosts.

Provide comparisons to other Third ClassCounties.

Analyze spending trends for the last 5 years.

AUDIT RESULTS

Overall we found that PrimeCare was complyingwith the terms of the contract in the delivery ofhealthcare to the inmates.

The estimated population in the Request forProposal (RFP) was much higher than the actualpopulation. Proposals were based on thosehigher population figures, which made thecontract more expensive than it would havebeen with more accurate population estimates.

The Inmate Healthcare Self-Insurance TrustFund was established to pay amounts thatexceed caps established in the contract.However, the fund hasnt been used for that

purpose in the last 15 years and has a balancein excess of $300,000.

Act 22 of 2011 greatly lowered the cost of in-patient and out-patient medical costs for Jails inPennsylvania, and in particular the cost of thiscontract with PrimeCare.

Report i ssued

November 25, 2015

Auditor:

Paul A lbert, CIA


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Performance Audits

14

Community andEconomic Development

Hotel Tax Distribution

On May 5, 2008 County Council enacted OrdinanceNo. 484 authorizing that 12.5% of Hotel Taxrevenues be allocated equally to ArtsQuest andLehigh Valley Public TelecommunicationsCorporation (PBS-39), until a total of $1,000,000each is reached.

The audit was performed to comply with therequirements of Ordinance No. 484.

AUDIT RESULTS

The Northampton County Department ofCommunity and Economic Development shouldensure that these grants are monitored forcompliance with Ordinance 484 and the terms ofthe grant agreements. Monitoring is a valuabletool that could have resulted in the avoidance orcorrection of non-compliance issues that wereexperienced by ArtsQuest.

ArtsQuest did not submit their annual report in atimely manner as required by the grantagreement under Article 6 Fiscal

Responsibilities, Records and Audit. In addition,ArtsQuest and NCDCED did not resolve the prioryear audit finding with regard to compliance with

Article 3 Payment Provisions, Section 3.1.

Lehigh Valley Public TelecommunicationsCorporation (PBS-39) was in compliance withthe requirements listed in Ordinance No. 484and the grant agreement during the audit period.

ArtsQuest has received a total of $728,395through 12/31/2014 and PBS-39 has received atotal of $794,393 through 6/30/2015.

Report issued

December 2, 2015

Auditor:Kathleen Kuzma, MBA,

CPA, CGMA


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Performance Audits

15

Human ResourcesMedical Claims

Capital Blue Cross (CBC) has been the Countysthird party administrator for health benefits since2007. Since the County is self-insured, CBC paysthe providers as they receive claims and bills theCounty the following week for the amount paid toproviders.

In 2014, the County spent just under $22.8 millionto pay for medical and prescription claims forenrolled employees, retirees and eligible familymembers, and an additional $1,213,535.66 inadministrative fees to CBC for third-party

administration and stop loss insurance.


To determine if medical claims are beingprocessed accurately and on a timely basisby the third-party administrator.

To determine that payments are made onlyon behalf of eligible enrollees and for coveredservices.

AUDIT RESULTS

We noted few errors or procedural deficienciesin this audit. There has been significantimprovement since our prior audit in 2010.

We did note some errors in this audit that, onceaddressed, can result in the recovery of somefunds and the further strengthening of internalcontrols.

Claims totaling $4,624.58 were paid for sevenineligible terminated individuals.

Two out-of-network claims totaling $540.33that were improperly paid by CBC.

We noted one individual that had beengranted a COBRA extension, but was stillpaying only 100% of the premium costinstead of 150% per County policy.

Report issued

December 9, 2015

Auditor:

Tony Sabino, CIA


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Performance Audits

16

AdministrationConservation District

The Northampton County Conservation District(NCCD) is responsible for reviewing permit andplan applications, monitoring these applications forcompliance with laws and regulations, and reportingresults of these various programs to the State on aquarterly and annual basis. In order to comply withthese reporting requirements, the NCCD must trackand account for the various applications throughoutthe entire application process.

The purpose of this audit was to evaluate theapplication tracking process from an economy and

efficiency standpoint, and assist the NCCD indeveloping a comprehensive application trackingsystem to improve the efficiency of the office.

AUDIT RESULTS

The application tracking process involves eightdifferent logs covering approximately 113different data fields. The number of logsmaintained results in inefficiencies in the officeas it is a duplication of effort.

NCCD management should consult with Xerox,the Countys InformationServices Division, todetermine the best computer program to utilizefor their future database, and to determine howthe data from the various logs can be accuratelyimported into the new database.

The Access data tables allow for information tobe easily changed by simply entering informationinto each field. There is no warning screen thatprompts the user to verify the change whenexisting data is altered.

NCCD should consult with Xerox to set upoptions within the database for improving thedata security of the data files in Access.

Report i ssued

December 21, 2015

Auditor:


CPA, CGMA


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Financial Audits

17

In 1991, the State established a monthlysupervision fee for all active adult probation andparole cases. The Department of Adult Probationand Parole administers the program and theCriminal Division collects the monthly fees.

State Supervision Fee regulations require anannual audit of the Countys Supervision Feeaccount. In order to comply with this requirement,we conducted an audit of the Offender SupervisionFee Program for the fiscal year ended June 30,2014.

AUDIT RESULTS

In our opinion the Statement of Revenues andExpenditures of the Offender Supervision FeeProgram present fairly, in all material respects,the financial position of the Northampton CountyOffender Supervision Fee Program for the fiscalyear ended June 30, 2014 in conformity withaccounting principles generally accepted in theUnited States of America except for the effectsof not assessing supervision fees on defendants

under the supervision of the Driving Under theInfluence (DUI) Program.

Offender supervision fees were not assessed ondefendants under the supervision of the DUIOffice. Defendants under the supervision of DUIare charged a $30 monthly DUI Parole Feewhich amounted to $307,036 for the fiscal yearended June 30, 2014.

Probation and ParoleSupervision Fee 6/30/14

Report issued

May 14, 2015

Auditor:

Paul Albert, CIA


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Financial Audits

18

In 1999, the State Conservation District revisedtheir audit standards to require annual audits of allCounty Conservation Districts. The audit must becompleted by October 1stof the year following theclose of the calendar year being audited.

In order to comply with this requirement, weconducted an audit of the Northampton CountyConservation District as of December 31, 2014.

AUDIT RESULTS

In our opinion, the financial statement presentsfairly, in all material respects, the results ofoperations of the Conservation District of theCounty of Northampton for the year endedDecember 31, 2014.

The results of our tests disclosed no instances ofnoncompliance that are required to be reportedunder Government Auditing Standards. Wenoted no matters involving the internal controlover financial reporting and its operation that weconsider a material weakness.

We did recommend that management reviewand update their procedure manual on a regularbasis to ensure it accurately reflects all criticalareas of the actual fiscal policies andprocedures.

AdministrationConservation District

Report issued

August 28, 2015

Auditor:


CPA, CGMA


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Financial Audits

19

The Northampton County District Attorneys Officeadministers the Controlled Substances ForfeitureAct. Forfeited property is transferred to the custodyof the District Attorney and can only be used for thepurpose of enforcing the provisions of theControlled Substance, Drug, Device and Cosmetic

Act.

Our audit was conducted for the purpose ofcomplying with Pennsylvania State regulations thatmandate an annual audit of the ControlledSubstances Forfeiture Program.

According to Pennsylvania law, results of our auditare to remain confidential.

District AttorneyControlled SubstancesForfeiture Act

Report issued

September 30, 2015

Auditors:Tony Sabino, CIA

Stephanie Rath-Tickle,

MLIS


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Financial Audits

20

Reports issued

throughout 2015

Auditors:Stacy Duke

Stephanie Rath-Ti ckle, MLIS

Court Administration

Magisterial DistrictJustices

Pennsylvania State law requires the Controller toaudit the accounts of the fifteen magisterial districtcourts in Northampton County.

Audit reports issued for the years ended December31, 2013 and December 31, 2014:

03-1-04 James J. Narlesky, Esq. 03-2-03 Joseph K. Barner 03-2-04 David W. Tidd, Esq. 03-2-05 Antonia Grifo, Esq. 03-2-06 Daniel G. Corpora 03-2-07 Diane M. Marakovits, Esq. 03-2-10 Nancy Matos-Gonzalez 03-3-03 Todd M. Strohe

AUDIT RESULTS

The financial statements present fairly in allmaterial respects, the financial position of thedistrict courts.

Some of the internal control and complianceissues reported included:

Constables were overpaid for server fees. Constable payment sheets were not signed. Voided transactions were not approved by the

MDJ. Duties were not rotated often enough. Administrative closures were not properly

documented.


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Agreed Upon Procedure Engagements

21

Internal Controls - CashWeights and Measures

Report issued

May 20, 2015

Auditor:

Brandon Dunstane

The purpose of this agreed upon procedure was toevaluate the Countys cash collection process inthe Weights and Measures Division.

The specific procedures were to:

Review cash collection work assignments todetermine if a proper segregation of duties isin place.

Determine if deposits are made on the daycash is received.

AUDIT RESULTS

Based on our review, proper segregation ofduties appears to be in place.

For all five receipts, the amount of the depositmatched the Revenue receipt, and thecash/check breakdown agreed.

Four of the five receipts were deposited on thesame day as received.

One deposit was split between cash andchecks. The cash was deposited on the morningfollowing the date received per the datestamped invoice. The timeliness of the depositof the checks could not be determined as thesupporting documentation was not datestamped upon receipt.


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22

Internal Controls - CashCoroner

Report i ssued

June 1, 2015

Auditor:

Stacy Duke

The purpose of this agreed upon procedure was toevaluate the Countys cash collection process inthe Coroners Office.




AUDIT RESULTS

Segregation of duties with regard to cashcollection work assignments provides foradequate control.

For one of the deposits tested, there was nodocumentation of the date the check wasreceived; therefore, it was not possible todetermine the timeliness of the deposit.

Four of the deposits were made more than a

week after they were received and one wasmade three days after the check was received.

One deposit was made on the day the checkwas received.

All receipts were in the form of checks andagreed to the validated deposit slip.


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23

Internal Controls - CashPublic Works

Report issued

June 18, 2015

Auditor:


CPA, CGMA

The purpose of this agreed upon procedure was toevaluate the Countys cash collection process inthe Public Works Department.




AUDIT RESULTS

Segregation of duties with regard to cashcollection work assignments provides foradequate control in all areas. However,procedures with regard to Farm Rentalpayments have not yet been centralized in theRevenue office.

Deposits are not always made on the day cashis received.


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24

This agreed upon procedure was performed at therequest of the Area Agency on Aging Director.

The agreed upon procedures were as follows:

Perform a proof of cash reconciliation for theOld York Road Senior Center bank accountfor the National Penn non-profit checkingaccount #21690-347-5 as of June 30, 2015and reconcile the bank balance to the SeniorCenter Income Statement book balance.

AUDIT RESULTS

The activity per the bank statements for theperiod did not agree to the Senior Centersactivity as reported on their Income Statement(book activity). A deposit of $60.30 from6/25/2015 was noted on the bank statement butnone of the Senior Centers reports reflectedthis deposit amount.

The Senior Center Income Statement, whichdetailed receipts and disbursements for each

month and calculated the book balance forcash, could not be relied upon for book activity.

The transaction (check) register was notproperly maintained by Senior Center staff.

The Senior Center staff did not perform bankreconciliations.

Report issued

August 4, 2015

Auditor:

Kathleen Kuzma, MBA,CPA, CGMA

AgingOld York Road Sr. Center


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25

Human ResourcesPayroll Analysis

Report issued

October 2, 2015

Auditor:

Stephanie Rath-Tickle,MLIS

This agreed upon procedure was performed toensure that the County payroll was accuratelycalculated and properly disbursed for the periodOctober 1, 2013 to May 31, 2015.

The agreed upon procedures were as follows:

Investigate payments to identical directdeposit accounts for unrelated employees.

Ensure longevity is paid out per policy or perprovision of collective bargaining agreementguidelines and that longevity is paid to

eligible active employees only. Ensure that salary increases do not exceed

approved percentages and that pay scalesentered into the IFAS system match payscales as approved by County Council.Determine whether out-of-class pay wasproperly authorized and ensure that noemployee has been receiving out-of-classpayment for more than 6 months.

Ensure that unusual or inappropriate paycodes are not used to conceal improperpayments and that FLSA exempt employees

do not receive overtime payments.

AUDIT RESULTS

All duplicate direct deposits were explained.

We identified three instances in whichemployees did not receive the longevitypayment to which they were entitled.

No salary increases exceeded approvedpercentages and pay scales in IFAS agreed

with pay scales as approved by Council.

Two employees have been receiving out-of-class pay for more than 6 months.

Unusual pay codes were not used to concealimproper payments.

FLSA exempt employees did not receiveovertime pay.


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26

Internal Controls - CashAfter Hours Bail

Report issued

October 29, 2015

Auditor:

Paul Albert, CIA

The purpose of this agreed upon procedure was toevaluate the Countys cash collection process forafter hours bail.




AUDIT RESULTS:

Segregation of duties with regard to cashcollection work assignments in the Jail and theCriminal Division provides for adequate controlin all areas.

Bail collected in the Jail is placed in a tamper-proof sealed bag, kept in a safe overnight andthen taken to the Criminal Division the nextbusiness day. There it is counted, entered intoCPCMS and then deposited into their Bail bankaccount. The cash/check mix of the deposit willbe reviewed when the Criminal Division AgencyFund is audited later this year.


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27

When Northampton County established its 911system three municipalities in the County (City ofBethlehem, Borough of North Catasauqua, andBorough of Walnutport) already had 911 servicesand opted not to utilize the Northampton County911 system. Since 911 costs in excess of userfees are paid from the County's general revenues,reduced millage rates were assigned to thesemunicipalities to adjust for 911 costs consideredfunded by their property tax revenues.

An agreed-upon-procedures engagement isscheduled annually to:

Review and verify all calculations (based onestimates) which resulted in millagereductions for affected municipalities.

Using actual expenses, determine thevariance between these expenses and theestimates used to calculate the millagereduction.

The scope of the engagement was the 2014 realestate tax year reimbursement.

AUDIT RESULTS:

We traced all data used in the calculations tosupporting documentation and reviewed theconceptual basis for using certain data in thecomputation of the millage reduction. We alsorecalculated all computations. We found theestimated millage reduction to be reasonableand all calculations accurate.

The calculated total due to taxpayers based onactual 2014 expenses was $8,546. The lowermillage rate reduced taxes by $122,438resulting in a reduction to taxpayers that was$113,892 more than actual expenses. The2015 difference will be recaptured in the 2016millage reduction based on actual expenses.

Fiscal Affairs

911 Tax Reimbursement

Report issued

December 23, 2015

Auditor:

Paul Albert, CIA


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28

Community andEconomic Development

Hotel Tax

Reports issued

Thr oughout, 2015

Auditors:

Stacy Duke

Stephanie Rath-Tickle, MLIS

Brandon Dunstane

Gary Krall, CMA

During 2015 the Controllers Office issued reportsfor the hotels listed below which are located inNorthampton County. The purpose of theengagements was to ensure the accuracy andtimeliness of the taxes remitted to the County.

Reports issued for the years ended December 31,2012 and December 31, 2013:

#102 Comfort Suites University Bethlehem#133 Courtyard Marriott#138 TownePlace Suites Bethlehem Easton#142 Value Place#145 Riverton Hotel#151 Hanover Eatery

Reports issued for the years ended December 31,2013 and December 31, 2014:

#101 Hotel Bethlehem#104 Best Western#105 Hampton Inn Bethlehem#121 Hampton Inn Easton#141 Tuscarora Inn

AUDIT RESULTS

Hotel tax and interest due from these hotels wascalculated to be $6,472.

Some hotels were not using the most currentremittance form and/or completing the formcorrectly.

In some instances, remittance was made afterthe due date.

In many instances the taxable revenueaccording to the operators records did notequal the taxable revenue reported to thecounty.

Some hotels claimed invalid exemptions.


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Summary of Follow-Up Reports

29

Civil/SheriffAgency Fund

Report issued

May 10, 2013

Follow-Up Report

Apr il 15, 2015

Corrective action was taken for four ofthe six audit concerns.

No additional follow-up will be performed.

Assessment Division

Report issued

May 22, 2013

Follow-Up Report

January 26, 2015

Corrective action was taken for five ofthe six audit concerns.

No further follow-up is planned.

Wills / Orphans

Agency Fund

Report issued

June 18, 2014

Follow-Up Report

June 19, 2015

Corrective action was taken for five of

the six audit concerns.

Additional follow-up will be performed inJanuary 2016.


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Lump Sum Payouts

Report issued

June 25, 2014

Foll ow-Up Reports

February 6, 2015

August 17, 2015

Corrective action was taken for two ofthe four audit concerns.

Additional follow-up will be performed inFebruary 2016.

National Vision

Administrators

Report issued

July 17, 2014

Foll ow-Up Reports

June 2, 2015

December 21, 2015

Corrective action has been taken for twoof the four audit concerns.

Additional follow-up will be conducted inJune 2016.

Community

Corrections

Report issued

November 12, 2014

Foll ow-Up Report

May 20, 2015

Corrective action has been taken for all

three audit concerns.

No additional follow-up will be conducted.


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Article XIII

Report issued

February 9, 2015

Follow-Up Report

October 19, 2015

Public Works

Timekeeping

Report issued

March 6, 2015

Follow-Up Report

October 8, 2015

Corrective action has not been taken forany of the four audit concerns.

Additional follow-up will be performed inApril 2016.

Admin. Services

Postage Account

Report i ssuedMarch 18, 2015

Follow-Up Report

September 30, 2015

Corrective action has been taken for oneof the two outstanding audit concerns.

Additional follow-up will be performed inApril 2016.

Corrective action was taken for one of thethree audit concerns.

Additional follow-up is planned for March2016.


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Tax ClaimAgency Fund

Report issued

May 27, 2015

Foll ow-Up Report

December 23, 2015

Corrective action was taken for the loneaudit concern.

No additional follow-up will be conducted.


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The following graphs illustrate how audit follow-up encourages the implementation of

corrective action.

49

5 5

21

5

21

11

0

10

20

30

40

50

Total 2013 2014 2015

2013 Audit Recommendations

2013 Recommendations# Implemented in 2015# Implemented in 2014# Implemented in 2013

35

7 7

14

0

10

20

30

40

Total 2014 2015

2014 Audit Recommendations

2014 Recommendations# Implemented in 2015# Implemented in 2014


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Summary of Nonaudit Services

34

The Controller's Office provided nonaudit services to County employees and departments

in 2015. Some of these services are listed below.

Committees

Auditor:

Fr ank Kedl, CIA

Staff members performed reviews of selectedaudits to ensure compliance with internalpolicies and Government Auditing Standards.

The ALGA peer review guide was used todocument the review.

Control

Self-Assessment

Auditors:

Stacy Duke

Stephanie Rath-T ickle,

MLIS

Consulting

Auditors:

Paul Albert, CIA

Tony Sabino, CIA

Kathy Kuzma, MBA,

CPA, CGMA

Brandon Dunstane

The Controller's Office provides computerassistance to County employees uponrequest.

Staff assists offices with internal controlquestions and other procedural issues.

Staff provides information to other CountyController Offices as requested.

Member of the Information ServicesAdministration and Administrative ServicesSubcommittee.


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We used ACL to compare the list of activeemployees to the list of employees eligiblefor medical benefits. A report of exceptions

was provided to Human Resources.

We produced ACL reports of potential splitp-card purchases for the staff of theProcurement Office to review.

Post Audit

Support

Auditors:

Tony Sabino, CIA

Stacy Duke

Debt

Statement

Auditor:

Tony Sabino, CIA

In compliance with section 402.3 of theCounty of Northampton Home Rule Charter,we prepared a statement of bondedindebtedness of Northampton County for theperiod ending December 31, 2014 withprojections to December 31, 2015.

DCED Report

Auditor:

Stephanie Rath-Tickle,

MLIS

Prepared the Pennsylvania Department ofCommunity and Economic Developments

Annual Audit and Financial Report.


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We researched and responded to variousletters from grantor agencies relating to theSingle Audit Schedule of Expenditures ofFederal Awards.

Single Audit

Auditor:

Kathy Kuzma, MBA,

CPA, CGMA

We attended proposal openings forprofessional service RFPs as prescribed bythe County Administrative Code.

Procurement

Auditors:

Stacy Duke


Brandon Dunstane

Gary Krall

Training

Auditors:

Fr ank Kedl, CIA

Paul A lbert, CIA

Tony Sabino, CIAKathy Kuzma, MBA, CPA,

CGMA

Stacy Duke


We co-sponsored the 2015 Fall Conference forGovernment Auditors with the Lehigh County

Controllers Office.


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Summary of Other Work

37

In addition to issuing reports and performing nonaudit services, the Controller's Office

committed staff resources to the other assignments summarized below.

Assignment Completion Date

Assisted CliftonLarsonAllen LLP with the 2014 year endfinancial audit.

March 2015

Assisted CliftonLarsonAllen LLP with the 2014 Single Audit. April 2015

Disposed of office files in accordance with the County

Records Manual issued by the Pennsylvania Historical andMuseum Commission. April 2015

Submitted abstracts of audit reports for publication in theLocal Government Auditing Quarterly.

Ongoing

Updated the Controllers Office web page with audit reportsand other pertinent information.

Ongoing

Scanned audit reports and workpapers in PDF format forfile retention.

Ongoing


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Work in Process

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The following audits and agreed upon procedure engagements are in progress at December

31, 2015. These assignments will be included in the 2016 Summary of Reports Issued.

Assignment Projected I ssue Date

Hotel TaxLafayette Inn License #106 January 2016

Hotel TaxRed Carpet Inn License #129 January 2016

Hotel TaxSmall Hotels / No site visit January 2016

Procurement Card 6/30/15 January 2016

Hotel TaxComfort Inn License #108 February 2016

Hotel TaxHoliday Inn Express License #119 February 2016

Internal Controls - Sheriff February 2016

Criminal Agency Fund April 2016

Offender Supervision Fee 6/30/15 May 2016

Open Space Program May 2016

Prison Financial Responsibility Program June 2016


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Office Improvements

The staff of the Controller's Office continually strives to improve themselves and the audit

process. During 2015 we made several improvements to our processes and professional

skills.

Completed 317 hours of continuing professionaleducation to comply with Government AuditingStandards and professional certifications.

Continued to exchange ideas with other localgovernment auditors and the Association of LocalGovernment Auditors (ALGA).

Participated in ACL Audit Software Users Group.

Continued to use the Internet to research audit subjectmatter and evaluate the best practices of other auditdepartments.

Continued to use Sharepoint to post documents, makeoffice announcements and monitor audit projects.

Purchased two new PCs for the office.

Revised the Year End automated trial balance toreduce the amount of data entry required.

Converted to the Countys VOIP phone system inOctober 2015.

NorCo Controller Annual Report 2015

Documents

Transcript of NorCo Controller Annual Report 2015