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Audit Report

Henderson Constable’s Office


Revenue and Expenditures Audit
October 2018

Angela M. Darragh, CPA, CISA, CFE


Audit Director

Audit Committee:
Commissioner Steve Sisolak
Commissioner Chris Giunchigliani
Commissioner James B. Gibson
Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

TABLE OF CONTENTS

REPORT DETAILS ....................................................................................................................................... - 2 -


BACKGROUND ....................................................................................................................................... - 2 -
OBJECTIVES, SCOPE, AND METHODOLOGY .......................................................................................... - 3 -
CONCLUSION......................................................................................................................................... - 5 -

FINDINGS, RECOMMENDATIONS, AND RESPONSES ................................................................................. - 6 -


FINDING 1 – MIXING OF PERSONAL AND BUSINESS FUNDS IN BANK ACCOUNT (HIGH) ..................... - 6 -
FINDING 2 - AMOUNTS REQUESTED IN VENDOR CLAIM VOUCHERS NOT SUPPORTED BY PAYMENTS
(HIGH).................................................................................................................................................... - 8 -
FINDING 3 – CONSTABLE PAYMENTS TO COUNTY EMPLOYEES (HIGH) ............................................. - 10 -
FINDING 4 – PROCEEDS FROM SALES OF COUNTY OWNED VEHICLES NOT REMITTED TO COUNTY (HIGH)
............................................................................................................................................................ - 11 -
FINDING 5 – IMPROVEMENTS TO INTERNAL CONTROLS ARE NEEDED (MEDIUM) ............................ - 12 -
FINDING 6 – SYSTEM ERROR IN GARNISHMENT PAYMENT COMMISSION CALCULATION NEEDS TO BE
RE-EXAMINED (LOW) .......................................................................................................................... - 13 -
FINDING 7 – LATE REPORT FILING AND MISSING DEPUTY APPOINTMENTS (LOW) ........................... - 14 -

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

REPORT DETAILS
BACKGROUND
The Henderson Township Constable’s Office was established in 1944. Henderson Township is one of
eleven townships in Clark County, with a population of approximately 295,450, as of July 1, 2016,
according to the State of Nevada Administrative Office of the Courts.

Nevada constables are law enforcement officers. They are responsible for serving civil action
summonses, attachments against property, civil subpoenas, demand letters, posting notices, and
enforcing wage and bank garnishments, evictions, civil bench warrants and property seizures.
Constables are empowered with the authority of a peace officer by Nevada Revised Statutes (NRS)
Chapter 258. Constables are entitled to charge fees for their services and a percentage of collections for
executions or writs as allowed under NRS 258.125. Fees range from $2 to $26.

Constables are elected officials that serve a four year term, until their successors are elected and
qualified. Constables also take an oath prescribed by law and execute a bond to the State of Nevada.
NRS 258.040 provides that the Board of County Commissioners establish the compensation of the Clark
County Constables.

NRS 258.060 allows constables to appoint deputies who are authorized to perform services for the
Constable. In larger townships, such as Henderson, deputies are required to be peace officers. All
appointments of deputies are done in writing and filed, along with an oath of office, with the Clark
County Recorder. Constables are responsible for the compensation of their deputies.

In October 2014, the Board of County Commissioners approved the establishment of an enterprise fund
to account for the activities of the Henderson Township Constable’s Office. Prior to this resolution, the
Henderson Township Constable’s Office was treated like an outlying township constable’s office,
wherein the Constable was paid a minor stipend, and then kept the collected fees. Those fees were
used to pay the constable and deputies.

The enterprise fund became effective in January 2015. After this date, all proceeds from the office are
deposited into a bank account held by the Clark County Treasurer. All expenses are then paid from this
account through the County.

As of July 2018, the Henderson Constable’s Office consisted of the Constable, four deputies, a deputy
director, and four office support positions, two of which were vacant. The Henderson Constable and
office support staff are County employees and are paid from the enterprise fund. The current salary for
the Henderson Constable is $103,456.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

The Henderson Constable’s deputies are not Clark County employees. The deputies are employed by
the Henderson Constable. The Henderson Constable requests funds to pay the deputies through a
vendor claim voucher that is sent to the County. Once approved, payment for the vendor claim voucher
is made electronically to the Henderson Constable’s bank account, so that he can use the money to pay
his deputies.

In accordance with the enterprise fund resolution, the Henderson Township Constable’s Office collected
enough in revenue to support the costs of the office. Exhibit 1 shows a summary of departmental
revenue and expenses.

Departmental Revenues and Expenditures Exhibit 1


Henderson Constable's Office
Fiscal Year 2016, 2017 and 2018

Revenues 2018 2017 2016


Constable Fees $1,179,748.69 $1,210,199.38 $982,468.27
Other 4,228.39 5,254.26 34,891.25
Total Revenues $1,183,977.08 $1,215,453.64 $1,017,359.52

Expenditures
Other Professional Services $523,855.88 $511,925.41 $433,857.86
Permanent Salaries 227,685.60 206,336.74 125,089.28
Other 391,724.79 277,904.50 74,631.05
Total Expenditures $1,143,266.27 $996,166.65 $633,578.19
Difference $40,710.81 $219,286.99 $383,781.33
Source: Clark County Accounting System

The current Henderson Constable chose not to seek re-election. His term expires January 1, 2019, or
when the newly elected Constable is qualified.

OBJECTIVES, SCOPE, AND METHODOLOGY


The objective of this audit was to determine whether revenue and expenditure transactions are timely,
properly accounted, properly recorded and supported in accordance with governing laws and
regulation. Our objective was also to determine whether adequate controls are in place to safeguard
assets. This audit was performed at the request of Clark County Management.

In order to achieve our objectives, we performed the following procedures:

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

 Used professional judgment to select a sample of 15 deposits to determine whether receipted


funds are properly recorded, completely accounted for and deposited in a timely manner to the
appropriate bank account.
 Statistically selected a sample of 72 payments to determine whether fees charged by the Office
are consistent with the fees allowed by NRS. Further, we tested garnishment order payments to
determine that receipted funds were disbursed to the correct party, and service commission
was correctly calculated.
 Reviewed 17 months of bank records on hand for the account used by the Henderson Constable
to hold funds remitted by the County; this corresponded to a review of 758 transactions to
determine whether deposits and withdrawals from the account were reasonable and
corresponding to the operations of the Office. Also, whether tax withholdings and contributions
were remitted in a timely manner to the Internal Revenue Service.
 Reviewed all the voucher reimbursement requests submitted by the Henderson Constable
corresponding to the 17 months of bank records on hand. We reviewed vouchers to determine
whether they were appropriate, supported and county remitted funds were subsequently
disbursed, in their entirety, to the appropriate parties.
 Used professional judgment to select a sample of two months of client billings to determine
whether billing statements are accurate and account receivables activity is being reasonably
monitored and resolved.
 Used professional judgment to select a sample of 25 reversed payment transactions to
determine appropriateness, accuracy and reasonableness.
 Obtained independent documentation to determine whether the Henderson Constable and
appointed deputies are in compliance with Nevada Revised Statutes related to peace officer
certification, oaths of offices, bonds, written appointments and quarterly financial statement
fillings.
 Used professional judgment to select a sample of two quarterly financial statement filings to
review for accuracy.

Our review included an assessment of internal controls in the audited areas. Any significant findings
related to internal control are included in the detailed results. Our procedures considered the period of
January 1, 2015, to March 8, 2018. The last day of fieldwork was August 1, 2018.

Our audit was limited due to unavailability of certain records, such as full, un-redacted bank statements
and support for vendor claim vouchers and deputy payments. We cannot fully assess accuracy of the
vendor claim vouchers submitted by the Constable due to that limitation. Our audit findings reflect the
findings as we were able to determine them with the documentation we had available to us.

While some samples selected were not statistically relevant, we believe they are sufficient to provide
findings for the population as a whole.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

Except for the limitation discussed above, we conducted this performance audit in accordance with
generally accepted government auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.

CONCLUSION
The Henderson Constable did not provide support for $85,921.29 in business expenses claimed on
vendor claim vouchers submitted to the County. Further, he received and deposited checks totaling
$4,465 for the sale of County property. These funds were deposited into an account used for personal
and business purposes. We also found the following issues related to the operation of the office:

 County staff that also received payments from the Constable directly.
 Internal controls that could be improved, including a late filing of the quarterly revenue report.
 Some business processes that need reinforcement and monitoring.
 Non-compliance with statutory requirements.

Each finding includes a ranking of risk based on the risk assessment that takes into consideration the
circumstances of the current condition including compensating controls and the potential impact on
reputation and customer confidence, safety and health, finances, productivity, and the possibility of
fines or legal penalties.

Auditee responses were not audited and the auditor expresses no opinion on those responses.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDINGS, RECOMMENDATIONS, AND RESPONSES


FINDING 1 – MIXING OF PERSONAL AND BUSINESS FUNDS IN BANK ACCOUNT (HIGH)
The Constable receives reimbursement for payroll expenses after submitting a vendor claim voucher to
the County. The funds received from this process are deposited by the Constable in a Henderson
Constable owned and titled account. While this should be used as a pass through, with funds deposited
and then withdrawn for payment to deputies, we found the Constable mixed personal funds with
business funds in this account.

We requested all statements for the holding account from January 2015 to March 2018 from the
Henderson Constable. However, he did not provide them to us. We were able to obtain 17
nonconsecutive months of redacted bank statements from the Clark County Public Information Office.
While several months were missing from these records, we were able to analyze many of the
expenditures from the account. During this time period, a total of 541 debit (purchases and/or
withdrawals) transactions took place. Due to redactions, we could only review 318 (or 58.78%) of these
debit transactions.

During the audit period, we found 49 personal deposits, totaling $32,498.67 and $689,086.55 in
automatic deposits from the County for the reimbursement of payroll expenses and other business
expenses submitted through a vendor claim voucher. Exhibit 2 summarizes the source of funds in the
holding account.

Holding Account Deposits Exhibit 2


$32,498.67, 5%

$689,086.65 , 95%

Non-County Deposits County Deposits

Source: Review of holding account bank statements.

We also identified several purchases and payments that appeared personal in nature. These included
the following:

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

 36 checks totaling $49,133 written to the Henderson Constable;


 9 cash withdrawals totaling $1,493 with fees;
 43 purchases totaling $1,978 for food and beverage;
 3 airfare purchases totaling $635;
 16 purchases originating outside of Nevada totaling $2,489;
 21 purchases totaling $1,317 in Northern Nevada; and
 $8,977 spent on miscellaneous purchases such as payments to/for political action groups, public
relations firms, charitable donations, entertainment, insurance, automotive repair, gas station
convenience store purchases, and the Department of Motor Vehicles.

Each of these types of expenses has a different requirement by the County when related to County
operations. For example, food and beverage purchases are restricted and require the prior approval
and authorization of the Clark County Manager or his/her designee. Travel purchases must be approved
and expended in accordance with Clark County Fiscal Directive Number 3, and minor cash purchases
require the establishment of a petty cash fund or imprest account in accordance with NRS 354.609.

By combining business and personal funds in one account, the Henderson Constable could bypass
internal controls over purchasing. Further, it can be difficult to manage the cash in one account. For
example, potentially due to personal or non-reimbursed expenses paid out of this account, employee
tax and withholding amounts were not regularly paid to the Internal Revenue Service.

RECOMMENDATION
1. Immediately discontinue the practice of mixing personal and business funds in a single bank
account.
2. Review Clark County Fiscal Directives related to purchasing, refreshments & meals, invoices and
payment requests.
3. Make a determination on the business need for a petty cash fund.
4. Work with Clark County Finance to request approval for business expenditures when necessary.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDING 2 - AMOUNTS REQUESTED IN VENDOR CLAIM VOUCHERS NOT SUPPORTED


BY PAYMENTS (HIGH)
The Henderson Constable submits a vendor claim voucher to request reimbursement from the County
every two weeks to pay for deputy constable salaries, mileage reimbursement (for miles driven in the
course of constable work), bookkeeping expenses and employer tax contributions. During our testing of
vendor claim vouchers, we found the Henderson Constable requested $85,921.29 more for business
expenses than he paid.

Following is a chart showing the amount requested by vendor claim voucher each month and the
amount paid for expenses. We were unable to obtain statements for the missing months in our audit
period.

Comparison of Amounts Requested For Business Exhibit 3


Expenses and Actual Costs Incurred

Total Requested
on Vendor Claim Total Actual Business
Month & Year Vouchers ⁽¹⁾ Expenses ⁽²⁾ Difference
December 2017 $41,400.44 $30,738.25 -$10,662.19
June 2017 ⁽³⁾ 22,915.42 23,818.51 903.09
May 2017 60,789.94 29,737.12 -31,052.82
April 2017 46,788.21 41,440.23 -5,347.98
February 2017 42,829.76 38,653.44 -4,176.32
December 2016 42,762.82 43,942.02 1,179.20
November 2016 35,263.83 33,136.67 -2,127.16
October 2016 ⁽⁴⁾ 20,925.58 21,078.59 153.01
September 2016 30,897.64 21,465.59 -9,432.05
August 2016 46,378.47 47,916.18 1,537.71
July 2016 36,191.89 30,108.52 -6,083.37
June 2016 36,431.68 45,149.17 8,717.49
May 2016 51,068.35 31,038.24 -20,030.11
April 2016 34,827.10 36,533.34 1,706.24
March 2016 38,060.65 30,062.82 -7,997.83
February 2016 41,639.10 49,718.14 8,079.04
January 2016 33,213.35 21,926.11 -11,287.24
Total $662,384.23 $576,462.94 -$85,921.29
Source: Audit results from voucher and bank review.
⁽¹⁾ Includes requests for deputy constable payroll, employer tax contributions, mileage reimbursement, bookkeeping services,
and other.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

⁽²⁾ Includes payments to deputy constables, IRS, bookkeeper, insurance providers and other possible business expenses based
on transaction review.
⁽³⁾ Second pay period reimbursement request and expenses not included in analysis due to missing subsequent month check
images.
⁽⁴⁾ First pay period reimbursement request and expenses not included in analysis due to missing bank statement information.

The Henderson Constable is allowed to appoint deputies under NRS 258.060. We found the Henderson
Constable’s Office did not have written compensation agreements in place for deputies. Without a
written compensation schedule, we were unable to determine whether deputies were paid correctly.
We requested deputy 1099 or W-2 forms as proof of reporting to the Internal Revenue Service, but the
Constable did not provide us with those documents.

The Henderson Constable signs an attestation on submitted vendor claim vouchers that reads “I certify
that the foregoing claim is correct and just; that the articles specified have been received by the proper
officials of the County, or the services staled have been performed; that they were necessary for and
have been or will be applied to county purposes, and that to the best of my knowledge and belief the
prices charged are reasonable and just.” Based on our analysis, the vendor claim vouchers were not
correct, and included charges not supported by payments for county purposes.

RECOMMENDATION
1. Provide the Clark County Chief Financial Officer with a full reconciliation, to include detailed
evidence, of amounts requested for deputy constable compensation, and related expenses, to
actual expenditures for the period of January 2015 to present.
2. Reimburse the County for any amounts above actual expenditures.
3. Implement a written compensation agreement for deputies that details compensation and work
to be performed.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDING 3 – CONSTABLE PAYMENTS TO COUNTY EMPLOYEES (HIGH)


We identified five County employees that received checks from the Henderson Constable’s bank
account. Four of the five were employees at the Henderson Constable’s Office, and the fifth was an
employee of the Department of Family Services who subsequently transferred to the Henderson
Constable’s Office.

We identified a total of 39 checks totaling $12,742.93 and averaging $327 paid to County employees.
Clark County Merit Personnel Policies manual – Section XII – Subsection V states that “to ensure no
conflict of interest exists, no employee may….Hold two County positions of any type simultaneously; or
hold a County position and contract employment with the County simultaneously.” While in this case,
the employees were paid by the Constable and the County, we believe this is the type of situation could
cause a conflict.

RECOMMENDATION
1. Submit all future Clark County employee related expense requests to Clark County Finance for
approval and payment.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDING 4 – PROCEEDS FROM SALES OF COUNTY OWNED VEHICLES NOT REMITTED


TO COUNTY (HIGH)
We identified three instances where proceeds from the sale of departmental vehicles were not remitted
to Clark County for deposit into the enterprise fund. In two of the instances, the Henderson Constable
previously sold the vehicles to the County and received payment for their sale. He then received the
proceeds from their subsequent sale at auction.

When the Henderson Constable’s Office enterprise fund was established in January 2015, they had
ownership of two vehicles used by the Office. These vehicles were the personal property of the
Henderson Constable. When the Office became an enterprise department of the County, the County
purchased the vehicles from the Henderson Constable. The Henderson Constable was personally paid
the wholesale market value of $3,000 for two vehicles that were in service at the time. After that
transaction, the vehicles became the property of the County. Subsequently, the vehicles were taken out
of commission due to age and sold at auction. One vehicle sold at a County surplus auction on
November 2016 for $1,235. The other vehicle sold at a County surplus auction, for $2,185 on November
2015. In both instances, the proceeds from the sale, paid via a check from the auction, were deposited
in to the Henderson Constable’s holding account. Funds should have been remitted to Clark County
Finance for proper recording and credit to the enterprise fund.

Another department vehicle was acquired from the County’s pre-owned vehicle surplus inventory on
September 2015 for the use of the Henderson Constable’s Office. This vehicle was purchased with
money from the County’s enterprise fund. This vehicle was subsequently taken out of commission and
sold at a County surplus auction on November 2017 for $1,045. The proceeds from the sale, paid via a
check from the auction, were also deposited in the Henderson Constable’s holding account. Funds
should have been remitted to Clark County Finance for proper recording and credit to the enterprise
fund.

While there is a possibility the funds may have been used for business expenditures, as they were
deposited in the holding account, the funds should have been remitted to Clark County for appropriate
recording and accounting in the enterprise fund.

RECOMMENDATION
1. Reimburse $4,465 to the enterprise fund or provide the Chief Financial Officer with a detailed
accounting of how the funds were used.
2. In the future, forward all proceeds from the disposition of departmental vehicles to Clark County
Finance for credit into the enterprise fund.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDING 5 – IMPROVEMENTS TO INTERNAL CONTROLS ARE NEEDED (MEDIUM)


The Henderson Constable’s Office needs to improve internal controls over cash and segregation of
duties. Each weakness we identified is discussed in detail below.

Change Banks Need to Be Periodically Reconciled


The Henderson Constable’s Office has a $400 change fund that was approved by the Board of County
Commissioners. During our testing we found that employees are provided with a $100 cash bank for
change when accepting cash payments. Throughout the day, cash receipts are kept in the locked
drawer, along with the change bank. At the end of the day, daily cash receipts are turned in to the lead
clerk who prepares the deposit. The change bank remains in the locked drawer. There is no
reconciliation of the change bank.

The resolution that established the change banks requires that the funds be reconciled no less than once
per day to prevent undetected misappropriation of funds.

Daily Deposits Need to Be Reviewed


The daily deposit is prepared by a single staff member. This staff member may also accept cash
payments if necessary and reviews daily reversals. No verification of the total deposit is performed. A
small office staff makes deposit preparation and verification by two staff members difficult. However,
by not having an additional person involved in the deposit preparation and/or verification, errors or
intentional misappropriations may go undetected.

RECOMMENDATION
1. Keep the teller change banks in a secured location overnight. At the beginning of the shift,
perform a verification of the change bank amount and attest in writing.
2. Periodically, perform an independent verification and reconciliation of the change bank fund
agreeing to the resolution approved amount.
3. Implement a procedure where the Constable reviews reversals and the reconciliation between
SAP, Courtview, and the bank deposit and notes his review on the records.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDING 6 – SYSTEM ERROR IN GARNISHMENT PAYMENT COMMISSION


CALCULATION NEEDS TO BE RE-EXAMINED (LOW)
The case management system used by the Henderson Constable’s Office automatically calculates
statutory commission earned by the office when a garnishment order payment is received. However,
we found a system error in the calculation of payment commissions. This error is known by the office,
and can be corrected on each garnishment payment transaction. The solution requires the user to
create an entry to repopulate the correct commission amount. This error has existed since
approximately 2012.

During our testing, we found the garnishment commissions are not consistently being corrected. During
our testing of garnishment cases, 25 of the 49 cases had incorrect payment commission calculations.
The average overage, in comparison to what should have been collected, was approximately $1.06 or a
34.39% discrepancy of the correct amount.

We rated this finding as low, because the system error does not change the total garnishment
commission, which is correct. This error only applies to individual payments. The system keeps a record
of outstanding commission, creating a point of reference for staff.

On any given day, the Henderson Constable’s Office processes a large volume of garnishment order
payment checks. In calendar year 2017, the Henderson Constable’s Office reported $9,807,106.49 in
garnishment payments received.

We believe a solution that does not require additional user steps needs to be developed and
implemented to ensure compliance with NRS.

RECOMMENDATION
1. Work with the case management application vendor to fix the commission calculation without
the need for additional user input.
2. In the interim, place a reminder on each workstation with the keyboard shortcuts to fix the
commission calculation error.

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Henderson Constable’s Office - Revenue and Expenditures Audit October 2018

FINDING 7 – LATE REPORT FILING AND MISSING DEPUTY APPOINTMENTS (LOW)


During our audit we noted two items that were not in conformance with requirements set forth in NRS
258.

Missing Deputy Appointment Oath Needs to Be Filed


NRS 258.060 requires that all deputy appointments be in writing and must, together with the oath of
office of the deputies, be filed and recorded within 30 days after the appointment. When reviewing
oaths of offices, we noted that all but one deputy filed their oath with the Recorder’s Office.

Late Financial Report Noted


NRS 258.190 requires constables to file quarterly financial reports detailing all fees or compensation
received in their official capacities for the preceding three months. During our testing, we reviewed the
timeliness of 8 quarterly filings. We found 1 filing (for the third quarter of 2017) that was late by 3
months.

RECOMMENDATION
1. File the missing Oath of Office for the newly hired deputy constable.
2. Implement a checklist to ensure future filings of both new and revoked deputy oaths are
recorded timely.
3. Implement a quarterly calendar reminder so that future financial statements are filed on time.

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