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City of Lino Lakes, Minnesota <br />Management Report <br />Capital Project Funds <br />Although the environment poses obstacles to establishing efficient controls, understanding <br />those obstacles improves the likelihood of creating a reliable control environment. Additionally, <br />in many, if not most, circumstances there are built -in mechanisms designed to detect errors or <br />irregularities on a timely basis. Examples of this concept are as follows: <br />Potential Error or Irregularity <br />Systems to Detect <br />Failure to adopt an assessment roll <br />Projected cash position of bonded debt fund would <br />likely reflect a shortage. This would prompt a <br />comparison of the anticipated amounts with actual. <br />Failure to collect a connection charge <br />Permit process requires collection of required, pre- <br />defined fees, prior to issuance of the building permit. <br />Vendor submits invoice twice for <br />payment <br />Department head approval process, accounting system <br />double payment detection procedures and possibly <br />budget variance analysis. <br />Failure to process scheduled bonded <br />debt payment <br />Either a notification from the paying agent or a year <br />end confirmation difference <br />q We recommend that the City of Lino Lakes consider adopting improved contract <br />management controls as follows: <br />✓ Assign a responsible position in each impacted department to monitor compliance with <br />contract provisions. In this case, public works position would be responsible for the <br />engineering aspects of the agreement. A finance department position would be <br />responsible for payments due. <br />✓ Anticipate interdepartmental coordination needed for efficient control procedures. In <br />this circumstance, finance would require notification from public works that <br />connections were forthcoming and that specific dollar amounts would be billed to Lino <br />Lakes from the neighboring City. This coordination may occur throughout the year if <br />connection transactions are occurring or alternatively, would require periodic scheduled <br />coordination efforts, such as at year -end in conjunction with the year -end closing <br />process. <br />Page 43 <br />