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Report on Internal Control over Financial Reporting <br />and on Compliance and other batters <br />Page 3 <br />Criteria: Generally, a system of internal control contemplates separation of duties such that <br />no individual has responsibility to execute a transaction, have physical access to the related <br />assets, and have responsibility or authority to record the transaction. <br />Condition: Utility bills are produced, payments are collected, and receipts are posted to the <br />utility system by a single employee. There is no documented approval process for <br />adjustments to the utility billing system and exception reports are not being created and <br />reviewed for errors within the system. Additionally, disbursements are entered into the <br />accounting system, checks are written, and checks are mailed by a single employee. <br />Cause: The condition is due to the limited number of staff and is common to cities of this <br />size. <br />Effect: The lack of ideal segregation of duties subjects the City to a higher risk that errors or <br />fraud could occur and not be detected in a timely manner. <br />Management ,Response: The City does their best to try and rotate or fill in for the different <br />areas. The City is taking steps to ensure that all adjustments that are made for utility billing <br />are approved and reviewed for accuracy by the Public works Director. The City will also <br />review exception reports throughout the year for any potential errors, corrections or <br />adjustments. <br />W <br />