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Report on Internal Control Over Financial Reporting <br />and on Compliance and Other Matters <br />Page 6 <br />Criteria: Grant activity requires compliance with various grant agreement provisions. <br />Additionally, revenue for expenditure driven grants should be recognized in the same fiscal <br />period as the expenditures. <br />Condition: Some of the City's grants are monitored and reported by staff outside of the <br />finance department. This decentralized system does not allow for oversight by the finance <br />department which would facilitate proper revenue recognition, appropriate monitoring of <br />grant compliance provisions, and accurate preparation of grant financing reporting forms. <br />Cause: The City has a decentralized system of grant monitoring. <br />Effect: Grant revenues were not being recognized or accrued properly throughout the year. <br />Management Response: The City is implementing procedures to centralize the grant <br />paperwork. Copies of all grants will be forwarded and kept in the finance department. The <br />finance director will monitor all grant provisions, and ensure that accurate preparation of <br />grant financing reporting forms are done in a timely fashion. <br />