BONDS AND CRIME

Office of Risk ManagementLoss Prevention Unit

08/16/06

BONDS AND CRIME

• Does it apply to you?

WHO DOES THE PROGRAM APPLY TO?

• Any agency that:owns property;has petty cash;receives funds;pays out funds; orhandles any other type of

negotiables (e.g. bus tokens)

PROGRAM GOAL

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

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

HOW IS PREMIUM DETERMINED?

• Agency’s “exposure” to risk

• Frequency and severity of claims

• Implementation of a Bonds/Crime Program

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

BONDS/CRIME COVERAGE (cont.)

• Postal Bond – mandatory with no deductible

• Notary Bond – mandatory, as required by revised statute, with $1,000 deductible

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

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.

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

COMPONENTS OF PROGRAM

Agency Policy and Procedures

Each agency is responsible for developing and implementing a written program

COMPONENTS OF PROGRAM (cont.)

Agency Policy & Procedures Must:

• Designate “responsible” employees

• Provide Training for “responsible” employees

• Provide for regular program audits

• Delineate investigation procedures

COMPONENTS OF PROGRAM (cont.)

• Policies must address:• Responsibilities and accountability• Communication/organization• Training• Accident Analysis• Loss Prevention Audits/CRs &

Recordkeeping

RESPONSIBILITIES

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

RESPONSIBILITIES (cont.)

• Department and Agency Heads– implementation of program

– reviewing the program regularly

– reviewing audit/CR findings and implementing the recommendations

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

RESPONSIBILITIES (cont.)

• Employees– following the fiscal control program

– reporting discrepancies or problems to their supervisors

INTERNAL CONTROL PROCEDURES

• Each agency should establish a system of internal accounting and administrative controls

INTERNAL CONTROL PROCEDURES (cont.)

• Reasonable assurance

• Attitude

• Competent personnel

• Documentation including recording transactions

• Internal control objectives

INTERNAL CONTROL PROCEDURES (cont.)

• Obligations and costs comply with applicable state law

- State contracts

- Bid process

INTERNAL CONTROL PROCEDURES (cont.)

• Safeguard funds, property, & other assets against waste, loss, unauthorized use or misappropriation

INTERNAL CONTROL PROCEDURES (cont.)

• Procedures for:– locking and unlocking of buildings

– security systems

– procedures used throughout the day

– computer security

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

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.

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

INTERNAL CONTROL PROCEDURES (cont.)

• Revenues and expenditures are recorded and accounted for.

INTERNAL CONTROL PROCEDURES (cont.)

• Separation of duties

• Supervision

• Access to resources

• Address audit findings