Included in this assignment on Canvas is a news article that appeared in THE STAR- LEDGER that reported problems in internal control over the handling of guest fees at the Hillside municipal swimming pool. THE STAR-LEDGER Hillside pool robbed of thousands in fees BY ERIN EILEEN O'NEILL Instructions: (a) Indicate the weaknesses in internal control over the handling of guest fees. For each weakness cited, indicate which Principle of Internal Control was violated. (b) List the policies or procedures that you would implement to correct the corresponding deficiency in internal control cited in part (a). Solution: Principle of Internal Control Violated a Weakness in Internal Control 1. 2. 3. 4. 5. 6. 7. 8. (b) Procedure to correct internal control deficiency described in part (a) 1. 2. 3. 4. 5. 6. 7. 8. WEDNESDAY, NOVEMBER 11, 2009 POOL CONTINUED FROM PAGE 17 THE STAR-LEDGER LOCAL NEWS Hillside pool robbed of thousands in fees Investigators saw as many as five people handle the cash wrapped in the ledgers. During the day, money was stored in a se- cured locker. However, the report said the key to the secured locker was located in an adjoining locker that was not secured. The report further stated that it is possible that employees may be responsible for the alleged theft, but said it is just as likely that people not employed at the pool could be the culprits, as they could gain access to the lockers. "Measures do need to be changed, and hopefully they are changed by the summertime," said Michael Pielech, the pool manager Kobitz said several changes are under way at the more than 45- year old pool. "There will be a drop box," said Kobitz, who noted that once a certain amount of inoney is col- lected it will be deposited into that locked container. Only the police will have access to the key to the lock box, and at the end of the day, township officers will col- lect the pool revenue and bring it to the municipal building, ac- cording to Kobitz. Those, as well as several other recommenda- tions, were outlined in the police report. Hillside Mayor Joseph Menza said those are steps in the right direction, but contends the pool management structure needs a major overhaul. He said he would like to see the pool commission disbanded and the recreation director - a paid, BY ERIN EILEEN O'NEILL the result of a series of thefts of FOR THE STAR-LEDGER several hundred dollars. As much as $5,000 in daily fees "Unfortunately, we put too collected at the Hillside munici- much trust into some of our em pal pool this summer never made ployees and there was too many it from the Central Avenue swim- people handling the money," said ming complex to the bank. Dennis Kobitz, chairman of the Nobody was caught in the al- municipal pool commission - a leged theft, which a Hillside police volunteer body appointed by the investigation blames on poor cash township council. management and lack of account- The pool usually opens at the ability at the municipal pool. end of the school year and re- "This is the result of poor finan- mains open through Labor Day. cial record-keeping and an ab- Pool guests pay $10 for admission sence of management control at and their names are kept on a led- the facility," wrote Hillside Police ger at the entrance. With 30 slots Chief Robert Quinlan in a report per ledger, the sheet should rep. released last month that detailed resent $300 in revenue. However, the investigation. Quinlan would through subpoenas of the pool's not comment on the matter when financial records, investigators reached by phone yesterday. found that several times deposits The investigation, which began did not match the amount of rev- last July and included surveillance enue investigators estimated dur- over several weekends, concluded ing their surveillance, according that between $4,000 and $5,000 in to the report. LOUTE that between $4,000 di po, guest fees were not deposited into Investigators found that the led- the pool's bank accounts dur- gers of guest names, which were ing the 2009 season, according to not numbered, were also routinely the report. The report also stated destroyed, the report said. that the missing money is likely [See POOL, Page 23] municipal employee - placed in charge. The pool should be a self-sus- taining utility, but has operated at a financial loss for several years. Menza said that leaves township taxpayers to pay the difference. Erin Eileen O'Neill is a reporter with the New Jersey Local News Service. She may be reached at (908) 243-6217 or eoneill@njlns. com. Included in this assignment on Canvas is a news article that appeared in THE STAR- LEDGER that reported problems in internal control over the handling of guest fees at the Hillside municipal swimming pool. THE STAR-LEDGER Hillside pool robbed of thousands in fees BY ERIN EILEEN O'NEILL Instructions: (a) Indicate the weaknesses in internal control over the handling of guest fees. For each weakness cited, indicate which Principle of Internal Control was violated. (b) List the policies or procedures that you would implement to correct the corresponding deficiency in internal control cited in part (a). Solution: Principle of Internal Control Violated a Weakness in Internal Control 1. 2. 3. 4. 5. 6. 7. 8. (b) Procedure to correct internal control deficiency described in part (a) 1. 2. 3. 4. 5. 6. 7. 8. WEDNESDAY, NOVEMBER 11, 2009 POOL CONTINUED FROM PAGE 17 THE STAR-LEDGER LOCAL NEWS Hillside pool robbed of thousands in fees Investigators saw as many as five people handle the cash wrapped in the ledgers. During the day, money was stored in a se- cured locker. However, the report said the key to the secured locker was located in an adjoining locker that was not secured. The report further stated that it is possible that employees may be responsible for the alleged theft, but said it is just as likely that people not employed at the pool could be the culprits, as they could gain access to the lockers. "Measures do need to be changed, and hopefully they are changed by the summertime," said Michael Pielech, the pool manager Kobitz said several changes are under way at the more than 45- year old pool. "There will be a drop box," said Kobitz, who noted that once a certain amount of inoney is col- lected it will be deposited into that locked container. Only the police will have access to the key to the lock box, and at the end of the day, township officers will col- lect the pool revenue and bring it to the municipal building, ac- cording to Kobitz. Those, as well as several other recommenda- tions, were outlined in the police report. Hillside Mayor Joseph Menza said those are steps in the right direction, but contends the pool management structure needs a major overhaul. He said he would like to see the pool commission disbanded and the recreation director - a paid, BY ERIN EILEEN O'NEILL the result of a series of thefts of FOR THE STAR-LEDGER several hundred dollars. As much as $5,000 in daily fees "Unfortunately, we put too collected at the Hillside munici- much trust into some of our em pal pool this summer never made ployees and there was too many it from the Central Avenue swim- people handling the money," said ming complex to the bank. Dennis Kobitz, chairman of the Nobody was caught in the al- municipal pool commission - a leged theft, which a Hillside police volunteer body appointed by the investigation blames on poor cash township council. management and lack of account- The pool usually opens at the ability at the municipal pool. end of the school year and re- "This is the result of poor finan- mains open through Labor Day. cial record-keeping and an ab- Pool guests pay $10 for admission sence of management control at and their names are kept on a led- the facility," wrote Hillside Police ger at the entrance. With 30 slots Chief Robert Quinlan in a report per ledger, the sheet should rep. released last month that detailed resent $300 in revenue. However, the investigation. Quinlan would through subpoenas of the pool's not comment on the matter when financial records, investigators reached by phone yesterday. found that several times deposits The investigation, which began did not match the amount of rev- last July and included surveillance enue investigators estimated dur- over several weekends, concluded ing their surveillance, according that between $4,000 and $5,000 in to the report. LOUTE that between $4,000 di po, guest fees were not deposited into Investigators found that the led- the pool's bank accounts dur- gers of guest names, which were ing the 2009 season, according to not numbered, were also routinely the report. The report also stated destroyed, the report said. that the missing money is likely [See POOL, Page 23] municipal employee - placed in charge. The pool should be a self-sus- taining utility, but has operated at a financial loss for several years. Menza said that leaves township taxpayers to pay the difference. Erin Eileen O'Neill is a reporter with the New Jersey Local News Service. She may be reached at (908) 243-6217 or eoneill@njlns. com