DC Courts:

Improvements Needed in Accounting for Escrow and Other Funds

AIMD/OGC-00-6: Published: Oct 29, 1999. Publicly Released: Oct 29, 1999.

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Pursuant to a congressional request, GAO reviewed the District of Columbia (DC) Courts' management of its escrow and other bank accounts, focusing on whether DC Courts: (1) properly reconciled its bank accounts; (2) had adequate controls over fines and fees collected; and (3) had authority to retain amounts deposited into the Crime Victims Fund account.

GAO noted that: (1) DC Courts did not properly account for the funds in half of its 18 bank accounts during fiscal year (FY) 1998, as evidenced by its problems in determining its cash balances and reconciling its accounting records to supporting documentation; (2) although DC Courts improved its reconciliation procedures during FY 1999 and was able to reconcile fiscal year-end balances for 15 accounts, it continued to have difficulty in properly accounting for the funds in 3 of its accounts--Child Support, Civil Escrow, and Juror Fees; (3) as a result, DC Courts did not have assurance that funds collected in the Child Support account were properly accounted for and appropriately disbursed, that all payments for Juror Fees were properly reimbursed with appropriated funds, and that funds held in the Civil Escrow account for payment of claims and settlements were appropriately safeguarded; (4) in addition, DC Courts did not have adequate controls and procedures in place during FY 1998 to ensure that fines and fees collected were accurately recorded; (5) for example, fines and fees collected were recorded on two different systems without procedures to ensure that both sets of records were in agreement; (6) in addition, accounting and auditing functions were not properly segregated within DC Courts' Financial Operations Division; (7) this situation increased the risk of errors occurring and not being detected and corrected; (8) although DC Courts was authorized to deposit fines, fees, and penalties specified in District law into the Crime Victims Fund to provide financial assistance to crime victims, in fiscal years 1998 and 1999 DC Courts also deposited other fines, fees, and penalties into the Fund that should have been deposited into the U.S. Treasury; (9) according to DC Courts' records as of June 30, 1999, the amounts retained in the Crime Victims Fund account without the requisite authority totalled over $11 million; and (10) however, as of October 15, 1999, Congress was considering legislation that, if enacted, would address this problem.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DC Courts Internal Auditor stated that the Civil Escrow and Jury Fee accounts are now properly reconciled. On August 2, 2001, DC Courts Chief, Accounting and Finance Branch, stated that the Child Support account was now properly reconciled. He stated that the Courts had taken numerous steps to get the child support account to reconcile. For example, they had revamped their internal control procedures over the issuing of checks, hired a full time specialist to do child support bank reconciliations and gotten their bank to enforce the 60 day time limit on child support checks. All of the Courts reconciliations were reviewed by its external auditor as part of FY 2000 financial audit and no material findings were found.

    Recommendation: To improve DC Courts' accounting for and controls over funds it maintains in accounts, the Joint Committee on Judicial Administration should direct the Fiscal Officer to adhere to existing procedures that require that every account be reconciled to the bank statement and supporting detail or subledgers each month. These reconciliations should be completed promptly, such as within 30 days of the receipt of the bank statement. In regard to the Child Support account, DC Courts should review all collections and disbursements and perform a manual reconciliation each month, until the automated reconciliation function of the new child support system can be used.

    Agency Affected: District of Columbia: Joint Committee on Judicial Administration

  2. Status: Closed - Implemented

    Comments: DC Courts Internal Auditor stated that the Civil Escrow and Jury Fee accounts are now properly reconciled.

    Recommendation: To improve DC Courts' accounting for and controls over funds it maintains in accounts, the Joint Committee on Judicial Administration should direct the Fiscal Officer to request reimbursement of all unreimbursed Juror Fee payments. Once all amounts are reimbursed, DC Courts should immediately transfer to the Civil Escrow account all amounts that were temporarily borrowed and terminate the overdraft protection relationship between the Civil Escrow and Juror Fees accounts.

    Agency Affected: District of Columbia: Joint Committee on Judicial Administration

  3. Status: Closed - Implemented

    Comments: DC Courts Internal Auditor stated that the Civil Escrow and Jury Fee accounts are now properly reconciled.

    Recommendation: To improve DC Courts' accounting for and controls over funds it maintains in accounts, the Joint Committee on Judicial Administration should direct the Fiscal Officer to determine the appropriate level to reestablish the Juror Fees account as an imprest fund and the appropriate time intervals to request reimbursement of Juror Fee payments to replenish the fund. The established fund level combined with the reimbursement interval should ensure that there are sufficient funds for the Juror Fees account to operate independently.

    Agency Affected: District of Columbia: Joint Committee on Judicial Administration

  4. Status: Closed - Implemented

    Comments: DC Courts Internal Auditor stated that the Civil Escrow and Jury Fee accounts are now properly reconciled.

    Recommendation: To improve DC Courts' accounting for and controls over funds it maintains in accounts, the Joint Committee on Judicial Administration should direct the Fiscal Officer to transfer all bank reconciliation responsibilities and related accounting functions from the Internal Audit Branch to other branches within the Financial Operations Division in order to appropriately segregate duties.

    Agency Affected: District of Columbia: Joint Committee on Judicial Administration

 

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