Federal Financial Assistance 12/31/1991

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w WIN tamo Immo City of Lino Lakes, Minnesota Legal Compliance Report FINDING: CONDITION: CRITERIA: Lack of Endorsement on Claims The City does not employ a claim system. This is not uncommon for Minnesota cities. There is a statutory requirement which outlines the disbursing process and refers to approvals based on a claim system. The City does not have alternate approval mechanisms which provide reasonable assurances that authorized amounts are disbursed. The lack of claim procedures as referred to in Minnesota statutes may be considered noncompliance with statutes. Minnesota Statute 412.271 reads in part as follows: 412.271 DISBURSEMENTS. Subd. 3. Endorsement on claims. The clerk shall endorse on each claim required to be audited by the council the word "disallowed" if such be the fact, or, "allowed in the sum of $ ," if approved in whole or in part, specifying in the latter case the items rejected. Each order shall be so drawn that when signed by the treasurer in an appropriate space, it becomes a check on the city depository. Such order -check may have printed on its reverse side, above the space for endorsement thereof by the payee, the following statement: "The undersigned payee, in endorsing this order - check, declares that the same is received in payment of a just and correct claim against the city of , and that no part of such claim has heretofore been paid." When endorsed by the payee named in the order - check, such statement shall operate and shall be deemed sufficient as the required declaration of the claim. Any order presented to the treasurer and not paid for want of funds shall be so marked and paid in the order of its presentation with interest from the date of presentation at the rate of five percent or such lower rate as is fixed by the council prior to its issuance. RECOMMENDATION: Our office has requested clarification of this issue from the Office of the State Auditor regarding the applicability of the MS 412.271. Pending the result of this request, we will advise the City of required corrective actions (if any). The 1988 Minnesota State legislative session had proposed legislation (as an add on provision) to amend the preceding statute. The add on provision, however, was eliminated and may be considered in future sessions.