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4. Insurance <br />We noticed that all insurance costs were charged to the General Fund. A <br />portion of this cost should be allocated to the Water and Sewer Fund. <br />Insurance and any other overhead costs should be considered when expenses <br />are to be shared with other governmental entities. <br />S. Investing <br />Since the city now has a passbook savings account we suggest that its <br />use be maximized for investing short -term excess cash to maintain the <br />checking account balance at a minimum. The City should consider using a <br />passbook savings account at a savings and loan association because their <br />interest rates may produce a higher yield. <br />6. Cash Disbursements <br />From.the auditor's point of view, a good system of internal control over <br />cash disbursements includes a requirement that all of the following be <br />initialed on each invoice presented for payment: <br />A. indication that the goods or services have been received or <br />performed <br />B. indication that the mathematical accuracy of the invoice has been <br />tested <br />C. indication that the document is approved for payment <br />D. Other- account to be charged, date paid and check number <br />When each invoice has been paid, good internal control requires that each <br />document: <br />A. be attached to a duplicate copy of the check used in paying the <br />amount owed <br />B. be properly canceled to prevent its possible reuse or potential <br />double payment. <br />All of the above could be accomplished by the use of a rubber stamp pro- <br />viding the appropriate indicated spaces for initials of personnel per- <br />forming the functions. <br />7. Bookkeeping System <br />At our suggestion the clerk- treasurer, after receiving approval from the <br />council, eliminated a number of funds by closing them into the General <br />Fund. These funds were unnecessary and their closing should result in a <br />reduction of accounting and auditing costs. <br />As a result of closing these funds it was necessary to completely reorganize I <br />the accounting structure of the General and other City funds. We have <br />assisted and advised the clerk - treasurer in revising the chart of accounts , <br />and have assisted in making necessary changes in other accounting records. <br />The City has been recording its activities under the new method since <br />January 1, 1977. <br />1 <br />