Cash handling at the county Mass Transit Agency was so lax, the legislative auditor can’t tell if any money is missing, much less how much.
In a 57-page audit sent Monday to the County Council, Auditor Bonnie Nims said the approximately $1.2 million that flows through the agency annually — most of it in cash — needs to be tracked better to ensure it all reaches county coffers. The audit makes 30 recommendations to tighten controls.
“Cash handling internal controls at Mass Transit are inadequate and ineffective to ensure that revenue is properly controlled and deposits are timely and accurate,” the audit states. “As a result, we are unable to determine if cash receipts were complete.”
The audit says a surprise cash count in January found almost $30,000 in bus fare revenue, some of which was there since July. Money was found in an unlocked safe and on a table in an unlocked break room.
“While money is locked in a safe and a locked closet overnight, both locations are left open and unattended during the day,” the audit said. “We observed cash left unattended on the break room table, the safe door was ajar and both doors to the room unlocked. This break room is accessible to all Mass Transit staff.”
The county immediately reconciled and deposited the money, the audit says.
Auditors tried to compare cash received to the number of passenger trips recorded by the contracted bus drivers by comparing the bags containing trip sheets and the associated cash that are turned in to the agency.
They found, in addition to cash shortages, cash overages, leading to the conclusion that not all passenger trips are recorded. It’s hard to reconcile the accounts, they said, because they don’t know how many trips were made.
Only 8 percent of the bags balanced to the trip sheets, with 29 percent under and 63 percent over.
The largest calculated cash bag overage ($199) was because no trip sheet was included with the cash; the largest shortage ($212) was because no cash was included with the trip sheet. Auditors could not determine what happened to the cash from the bag with the shortage.
“Due to the numerous internal control weaknesses, an ineffective bus cash receipting system, and the inconsistencies found during our count, we could not determine if all the cash paid by the bus riders was included in our count,” the audit states. “We were unable to determine if money had been lost or misappropriated.”
Hilo Councilwoman Sue Lee Loy, who sponsored a resolution last year asking for the audit, said Thursday she was taken aback by the extent of the problem.
“We have known for some time that MTA is in poor shape but not the details,” Lee Loy said. “This audit is another sign of how serious the situation is.”
Lee Loy said the county should consider shutting down all but the most critical routes for a month to give the agency time to get back on track, what she called “hitting the reset button.”
“This temporary shutdown will create an opportunity for the administration to have the buses repaired, allow staff to attend training to implement the recommendations of the audit and the retooling necessary to implement the Mass Transit Master Plan,” Lee Loy said. “We need a system that the community believes in, addresses the community’s needs and trust that their money will not be wasted anymore.”
Best practices in ensuring safeguarding of county assets include physical security, timely deposits and reporting, independent monitoring, segregation of duties and written policies and procedures. The agency failed in the first four and had inadequate compliance with the fifth, the audit said.
Auditors praised the cooperation of Mass Transit Administrator Maria “Sole” Aranguiz, who took over in February. Aranguiz has been “open and receptive” to recommendations, auditors said.
“We are also pleased to report that Mass Transit has taken a proactive role in strengthening certain controls we identified as weaknesses during the course of the audit,” auditors said.
Aranguiz did not return a phone call seeking comment by press time Thursday.
But in a response to the audit, she said the agency is addressing many of the recommendations.
“Although the MTA acknowledges that its internal controls could be improved, it has already begun to revise the procedures followed by its staff,” Aranguiz said. “The MTA will continue to assess its current policies and make the necessary changes.”
Email Nancy Cook Lauer at firstname.lastname@example.org.