How to use these questions: Try to answer each question in your own words, then select it to reveal the answer and check your understanding. Select the question again to hide the answer.
1. It is OK to create a procedures manual that never refers to the judicial standing orders. (True or False)
False.
2. A procedures manual should include a description of how payments should be collected, processed, deposited, or remitted. (True or False)
True.
3. A procedures manual is an essential part of a sound internal control system. (True or False)
True.
4. A good procedures manual guides employees in performing their jobs correctly and helps train new employees. (True or False)
True.
5. In addition to personnel within the municipal court, what other city offices should be consulted to help ensure financial management procedures are sound and practical?
The treasurer’s office, the accounting department, and the internal auditor’s office.
6. How often should a procedures manual be reviewed and updated?
At least annually.
7. A sound system of internal control can mitigate errors and misuse of funds. (True or False)
True.
8. Good internal control systems simplify the work of auditors. (True or False)
True.
9. There is an increased need for awareness and understanding of internal controls at all levels of government. (True or False)
True.
10. An internal control system only needs three of the four basic principles to be considered a strong internal control system. (True or False)
False.
11. An appropriate division of duties is a basic principle of internal control. (True or False)
True.
12. Fraud is more difficult if the same person collects cash, prepares the bank deposit, or records the receipts in the general ledger. (True or False)
False (it is easier).
13. Staff positions do not require specialized training in court processes. (True or False)
False.
14. Personnel should understand how their duties fit in with the duties of others in the municipal court and with duties of other offices in the city. (True or False)
True.
15. Procedures should be broad and general so the reader will not get bogged down in detail. (True or False)
False.
16. If personnel clearly understand what is expected of them and how they are supposed to do their job, they will more likely do a better, more accurate job. (True or False)
True.
17. Even if a municipal court’s performance is being checked by the city’s internal audit department, the court should still check its own performance. (True or False)
True.
18. In addition to actual monetary losses that can result from poor internal controls, perhaps the biggest loss is:
The decline in the public’s perception of and confidence in government.
19. As a general rule, the cost of internal control should not exceed the
Expected benefit.
20. In addition to safeguarding assets, an internal control system should
Protect those people who do their job and do it right.
21. The three basic functions that should, if at all possible, be performed by three different people in a municipal court are:
Authorization (approval) of transactions; recording of transactions; and custody of assets (cash and other property).
22. Three other means that take on added importance in helping assure reliable internal control when a strict separation of duties cannot be maintained due to a limited staff size are
Rotation of duties among personnel; more strict supervision; special double-checking of work; enforced vacations; additional training to improve quality of work; and more frequent internal audits.
23. The most important thing to remember about an appropriate division of duties is
That no person should handle a transaction from beginning to end.
24. Two examples of items that should be prenumbered and controlled are
Receipts and checks.
25. In a municipal court, three of the tasks that sound procedures should provide for include
Use and control of prenumbered forms/documents; cross-referencing of documents; periodic reconciliation of subsidiary records to control totals; proper authorization of transactions; effective, timely reporting of transactions; safeguarding of assets; appropriate flow of documents; reasonable amount of checking the work of others; and bonding of all employees with access to cash and other valuables.
26. At a minimum, how frequently should a municipal court assess the adequacy of its internal controls?
Annually.
27. State law requires municipal courts to maintain a bank account. (True or False)
False.
28. The fewer the number of bank accounts a city has, the easier it is to keep up with and reconcile them. (True or False)
True.
29. Fewer bank accounts for a city can result in lower bank service charges and higher interest rates. (True or False)
True.
30. If a municipal court can operate effectively without a bank account, it should consider doing so. (True or False)
True.
31. State court costs and fees must be kept in a separate bank account pending transfer to the State. (True or False)
False.
32. It is best for checks to have an expiration date printed on them. (True or False)
True.
33. If a municipal court maintains a bank account, it should be because
It will somehow enhance overall city operations (e.g., better safeguarding of money or more efficient handling of court operations).
34. If an account is maintained, the court should make sure that the person signing the checks is
Not also someone who has recordkeeping or custodial functions.
35. A small municipal court staff is an argument against the court having a bank account because
It makes it even more difficult to appropriately divide duties.
36. Petty cash consists of
A sum of money set aside for making small cash purchases on a contingency basis.
37. A change fund is used for
The purpose of making change for customers.
38. There should be a separate change fund for
Each individual receiving money and issuing receipts.
39. It is helpful to have signs posted in a municipal court stating
Checks and money orders will be accepted for amount of payment only; checks will not be cashed; when paying in cash, please have as close to the exact amount as possible.
40. It is preferable for municipal courts to have petty cash funds and make their own small purchases. (True or False)
False.
41. Petty cash funds and change funds should be commingled. (True or False)
False.
42. A change fund should be maintained at a very high a dollar value to cover all possibilities. (True or False)
False.
43. An individual receiving a change fund amount should sign a receipt for the amount received. (True or False)
True.
44. Change fund amounts should be verified at the beginning and end of each work day. (True or False)
True.
45. For reasons of convenience, change funds should be used to cash personal checks. (True or False)
False.
46. Change funds should not be used to make advances to officials or employees. (True or False)
True.
47. Prenumbered receipts are not necessary as long as the court is audited frequently. (True or False)
False.
48. Receipts should not be prepared for mailed payments unless a self-addressed stamped envelope is included with the payment. (True or False)
False.
49. The municipal court should periodically account for all receipts, both issued and unissued. (True or False)
True.
50. If computer-generated receipts are the norm, what should be available if there are computer problems?
Regular prenumbered, hardcopy receipts.
51. Regular hardcopy receipts should be ordered by
Centrally by the city and distributed to the municipal court as needed.
52. When should a receipt be prepared?
Each time a payment is received.
53. Eight things a receipt form should provide adequate space for include:
Date issued; docket number; amount received; who the money is being received from; what the money is being received for; method of payment (i.e., cash, check, money order, credit card) and check or money order number when applicable; signature, electronic signature or initials of individual preparing the receipt; and any other information relevant in the circumstances.
54. Why is proper management of mailed payments particularly important?
Because the payee is not present and no receipt is issued at the time of payment.
55. If the person opening the mail also has responsibilities for other monies, when and where should mail be opened?
Mail should be opened at a time of the day and in a location where other monies are not being handled.
56. Name two possible benefits to accepting credit card payments.
Decreasing outstanding amounts owed; reducing the number of defendants on installment agreements; increasing taxpayer service by providing a convenient way to make payment; and reducing administrative costs of the municipal court.
57. The goals concerning installment payments include
Ensuring that payments are made timely and that missed payments are promptly followed up on.
58. A written installment agreement should clearly explain what?
The terms of the agreement, including payment amounts and dates.
59. Employees with access to cash should be adequately bonded. (True or False)
True.
60. Each person receiving payments should have a separate cash box or drawer. (True or False)
True.
61. It is best to have the change fund amount vary each day to keep everyone on their toes. (True or False)
False.
62. An individual receiving payments should allow trustworthy co-workers access to their cash box or drawer in their absence. (True or False)
False.
63. It is best to handle as many transactions at a time as possible. (True or False)
False.
64. It is best to always arrange currency, coins, and checks in a box or drawer in a consistent manner. (True or False)
True.
65. Each individual receiving payments should balance out his or her cash box or drawer each day. (True or False)
True.
66. Bank deposits or remittances to the city treasurer should be made daily. (True or False)
True.
67. If possible, a city should avoid having the police department accept municipal court payments and issue receipts. (True or False)
True.
68. When the police department does receive municipal court payments, it should not issue receipts, since that should be done by the municipal court. (True or False)
False.
69. A separate listing should be made of each day’s receipts and it should be forwarded to the city auditor or to the city treasurer if there is no auditor. (True or False)
True.
70. The daily drop/lock box collections report should be signed or initialed and dated by the person preparing it. (True or False)
True.
71. All mail should be opened daily, with the exception of weekends or holidays. (True or False)
True.
72. Mail should be opened by someone while he or she is receiving payments and issuing receipts. (True or False)
False.
73. Mail should be opened out in the open, not in an enclosed office. (True or False)
True.
74. The law provides that a city council may authorize a city official to collect payment for court costs, fees, and fines by credit card. (True or False)
True.
75. In deciding whether or not to accept credit card payments, the city should compare the cost of processing fees with the expected benefits. (True or False)
True.
76. Since the decision rests with the judge in each case, it is best not to have a written description of when installment payments are generally utilized. (True or False)
False.
77. There should be a written installment agreement any time a payment plan is granted. (True or False)
True.
78. There should be an efficient way to keep up with payments and indicate past due amounts. (True or False)
True.
79. If the court does not have an automated means of handling and keeping up with installment payments, some sort of manual system should be used. (True or False)
True.
80. The goal in recording both jail time and community service credit should be to properly apply any credit and establish a clear audit trail. (True or False)
True.
81. A copy of a completed form showing when the defendant was placed in jail and released from jail should be forwarded to the municipal court. (True or False)
True.
82. There should be an order signed and dated by the judge authorizing the defendant to participate in community service. (True or False)
True.
83. An entity or organization supervising community service should specifically indicate how many hours the defendant worked. (True or False)
True.
84. The court should rely on the defendant to determine if the defendant has timely completed and documented completion of community service. (True or False)
False.
85. A policy on cash bonds should include guidance that will ensure that the right amount of money gets to the right place in a timely manner. (True or False)
True.
86. A receipt should not be given to a defendant posting a cash bond until the bond is forfeited. (True or False)
False.
87. If all or part of the bond is refunded to the defendant, any interest earned on the bond shall be
Returned to the defendant as well.
88. If the court is using the provisions in Article 45A.256 of the Code of Criminal Procedure, what should be included in any paperwork once the bond is forfeited?
The paperwork should: indicate to the treasurer that the bond amount should now be applied to court costs, fees, and fines and how much to apply to each; and indicate the amount to be refunded to the defendant if the defendant is entitled to jail-time credit.
89. If the court is using the civil bond forfeiture provisions in Chapter 22 of the Code of Criminal Procedure, and the money has been kept in a cash bond account in the court, where should the money be deposited?
As general revenue for the city.
90. The person identifying the money should document in writing what was found, where it was found, how it was found, and then sign and date the documentation. (True or False)
True.
91. If it can be determined to whom the money belongs, the money should be kept in the municipal court until it is claimed by the rightful owner. (True or False)
False.
92. Receipts should be balanced out daily. (True or False)
True.
93. If there are three individuals in the court receiving money and issuing receipts, the one with the most tenure should be responsible for balancing out all three cash boxes or drawers. (True or False)
False (each person should balance their own).
94. Any overages or shortages should be excluded from the reconciliation form unless it is known what the cause was. (True or False)
False.
95. The total amount shown on the receipts issued for the day should equal
The total amount of money in the cash box or drawer less the amount of the change fund.
96. The report should show the beginning balance the court was responsible for at the start of the month. (True or False)
True.
97. The report should be signed and dated by the person preparing it and by the person reviewing and approving it. (True or False)
True.
98. Define auditing.
Examining information and operations for mathematical accuracy, legality, and propriety. It is a process of determining whether all transactions are properly recorded in the accounts and appropriately reflected in statements and reports.
99. List at least three specific objectives of auditing.
Objectives of auditing include assuring that: the court has collected all the money they are supposed to; money collected was properly remitted to the appropriate party; property is properly managed; money and other property is properly accounted for, properly reported, and adequately safeguarded; and operations conform to laws, rules, and prescribed procedures.
100. List at least four examples of the type of audit work that should be done in a municipal court.
Examples of the type of audit work that should be done in a municipal court are: conducting surprise cash counts; reviewing bank reconciliations; accounting for all receipts; auditing receipts for proper amount collected, deposited, or remitted and correct bookkeeping; confirming amounts paid (or the fact that nothing was paid) with defendants; and reviewing reports.
101. List at least five items an auditor may want to examine during the course of an audit.
Items an auditor may want to examine during the course of an audit are: procedures manual, including any internal control procedures used in the court; bookkeeping system, including reports, ledgers, and journals; docket books; monthly bank reconciliations for each bank account, including canceled checks and bank statements for the period covered by the audit; fixed assets assigned to the court; change funds, receipts (issued and unissued), and monies collected; and office files and related correspondence.
102. Auditing can be a means for minimizing and providing for early detection and correction of material mistakes and irregularities. (True or False)
True.
103. An internal audit is an audit done by someone who does not work for the organization being audited. (True or False)
False (that is an external audit).
104. State law requires that cities have annual audits conducted by independent certified public accountants. (True or False)
False (it is recommended it be conducted by an independent person).
105. At least quarterly, some sort of audit work should be done relating to municipal court operations. (True or False)
True.
106. A municipal court will always be notified when an internal audit is going to be conducted. (True or False)
False.
107. Some audit steps are almost always done on a surprise basis (without any notification), such as a cash count. (True or False)
True.