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BONDS, CRIME and PROPERTY
FARA on the behalf of the Office of Risk Management
Revised 06/2011
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 with $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
• FARA - 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 ORM audit/CR findings and implementing the recommendations
RESPONSIBILITIES (cont.)
• Supervisors
– ensuring employees are trained and training is documented
– 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
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