BONDS AND CRIME

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

• Does it apply to you?

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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)

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PROGRAM GOAL

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

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PURPOSE

• Assign responsibility
• Establish each employees accountability
• Reduce the States exposure and losses and
  safeguard assets
  
• Maintain public confidence
• Protect assets from theft and robbery

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HOW IS PREMIUM DETERMINED?

• Agencys exposure to risk
• Frequency and severity of claims
• Implementation of a Bonds/Crime Program

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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

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BONDS/CRIME COVERAGE (cont.)

• Postal Bond mandatory with no deductible
• Notary Bond mandatory, as required by revised
  statute, with 1,000 deductible

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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

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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.

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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

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COMPONENTS OF PROGRAM

• Agency Policy and Procedures
• Each agency is responsible for developing and
  implementing a written program

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COMPONENTS OF PROGRAM (cont.)

• Agency Policy Procedures Must
• Designate responsible employees
• Provide Training for responsible employees
• Provide for regular program audits
• Delineate investigation procedures

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COMPONENTS OF PROGRAM (cont.)

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

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RESPONSIBILITIES

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

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RESPONSIBILITIES (cont.)

• Department and Agency Heads
• implementation of program
• reviewing the program regularly
• reviewing audit/CR findings and implementing the
  recommendations

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RESPONSIBILITIES (cont.)

• Supervisors
• ensuring employees are trained
• ensuring safeguards are followed
• reviewing the program for protection of the
  States assets and property from losses

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RESPONSIBILITIES (cont.)

• Employees
• following the fiscal control program
• reporting discrepancies or problems to their
  supervisors

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INTERNAL CONTROL PROCEDURES

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

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INTERNAL CONTROL PROCEDURES (cont.)

• Reasonable assurance
• Attitude
• Competent personnel
• Documentation including recording transactions
• Internal control objectives

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INTERNAL CONTROL PROCEDURES (cont.)

• Obligations and costs comply with applicable
  state law
  
• - State contracts
• - Bid process

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INTERNAL CONTROL PROCEDURES (cont.)

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

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INTERNAL CONTROL PROCEDURES (cont.)

• Procedures for
• locking and unlocking of buildings
• security systems
• procedures used throughout the day
• computer security

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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

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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.

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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

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INTERNAL CONTROL PROCEDURES (cont.)

• Revenues and expenditures are recorded and
  accounted for.

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INTERNAL CONTROL PROCEDURES (cont.)

• Separation of duties
• Supervision
• Access to resources
• Address audit findings

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