BONDS AND CRIME

1. Office of Risk Management Loss Prevention Unit BONDS AND CRIME 08/16/06

2. BONDS AND CRIME • Does it apply to you?

3. WHO DOES THE PROGRAM APPLY TO? • Any agency that: owns property; has petty cash; receives funds; pays out funds; or handles any other type of negotiables (e.g. bus tokens)

4. PROGRAM GOAL • To provide a comprehensive system of internal fiscal control as well as property control.

5. PURPOSE • Assign responsibility • Establish each employee’s accountability • Reduce the State’s exposure and losses and safeguard assets • Maintain public confidence • Protect assets from theft and robbery

6. HOW IS PREMIUM DETERMINED? • Agency’s “exposure” to risk • Frequency and severity of claims • Implementation of a Bonds/Crime Program

7. BONDS/CRIME COVERAGE • Fidelity Bonds - mandatory, as required by legislative auditor, with $1,000 deductible • Property Manager Bonds - mandatory, as required by statute, with $1,000 deductible

8. BONDS/CRIME COVERAGE (cont.) • Postal Bond – mandatory with no deductible • Notary Bond – mandatory, as required by revised statute, with $1,000 deductible

9. BONDS/CRIME COVERAGE (cont.) • Public Official Bond - mandatory, with $1,000 deductible • Crime Policy-inside/outside premises; money & securities; depositors forgery - mandatory, $1,000 deductible

10. Conditions for Coverage • Money and securities must be kept in a safe when the custodian is not on the premises. • When transporting money and securities over $50,000, an armed escort recommended.

11. Condition for Coverage (cont.) • Armed escorts are recommended as follows: • one armed escort for up to $65,000 • two armed escorts for up to $85,000 • three armed escorts for up to $125,000 • OR contract an armored vehicle service

12. COMPONENTS OF PROGRAM Agency Policy and Procedures Each agency is responsible for developing and implementing a written program

13. COMPONENTS OF PROGRAM (cont.) Agency Policy & Procedures Must: • Designate “responsible” employees • Provide Training for “responsible” employees • Provide for regular program audits • Delineate investigation procedures

14. COMPONENTS OF PROGRAM (cont.) • Policies must address: • Responsibilities and accountability • Communication/organization • Training • Accident Analysis • Loss Prevention Audits/CRs & Recordkeeping

15. RESPONSIBILITIES • ORM - will assist agencies in organizing, directing, implementing and controlling an internal fiscal control program

16. RESPONSIBILITIES (cont.) • Department and Agency Heads • implementation of program • reviewing the program regularly • reviewing audit/CR findings and implementing the recommendations

17. RESPONSIBILITIES (cont.) • Supervisors • ensuring employees are trained • ensuring safeguards are followed • reviewing the program for protection of the State’s assets and property from losses

18. RESPONSIBILITIES (cont.) • Employees • following the fiscal control program • reporting discrepancies or problems to their supervisors

19. INTERNAL CONTROL PROCEDURES • Each agency should establish a system of internal accounting and administrative controls

20. INTERNAL CONTROL PROCEDURES (cont.) • Reasonable assurance • Attitude • Competent personnel • Documentation including recording transactions • Internal control objectives

21. INTERNAL CONTROL PROCEDURES (cont.) • Obligations and costs comply with applicable state law - State contracts - Bid process

22. INTERNAL CONTROL PROCEDURES (cont.) • Safeguard funds, property, & other assets against waste, loss, unauthorized use or misappropriation

23. INTERNAL CONTROL PROCEDURES (cont.) • Procedures for: • locking and unlocking of buildings • security systems • procedures used throughout the day • computer security

24. INTERNAL CONTROL PROCEDURES (cont.) • Procedures to safeguard against damage to property: - employee/student accountability for equipment and property - devices to prevent damage - equipment management programs

25. INTERNAL CONTROL PROCEDURES (cont.) • Procedures to safeguard against losses: - security of cash, checks, stamps - equipment check-in and-out & security - collections from stadiums, dormitories, & other fees etc.

26. INTERNAL CONTROL PROCEDURES (cont.) • Procedures to safeguard against unauthorized use or misappropriations: - computer use agreements - internet use agreements - equipment use agreements (e.g. TV/VCR, camera, vehicle) - funds including petty cash

27. INTERNAL CONTROL PROCEDURES (cont.) • Revenues and expenditures are recorded and accounted for.

28. INTERNAL CONTROL PROCEDURES (cont.) • Separation of duties • Supervision • Access to resources • Address audit findings