WS 05-26-2009 - Laserfiche WebLink

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1. Lack of Segregation of Accounting Duties Auditors' Comment: During the year ended December 31, 2008, the City had a lack of segregation of accounting duties due to a limited number of office employees. Management and the City Council are aware of this condition and have taken certain steps to compensate for the lack of segregation. However, due to the small, limited staff needed to handle all of the accounting duties, the costs of obtaining desirable segregation of accounting duties can often exceed benefits which could be derived. However, management, along with the City Council must remain aware of this situation and should continually monitor the accounting system, including changes that may occur. Response: This is a common condition for city finance departments, especially those of our size (7 employees). We have received this comment in the past since it is and remains a significant deficiency as defined by the American Institute of Certified Public Accountants. We are very aware of this issue and take reasonable precautions while developing, reviewing and implementing our practices and procedures. The Finance Department reviews and makes changes and recommendations as necessary and appropriate relating to internal controls on a regular basis. For this year as well as future years, our annual work plan includes reviewing internal controls. The Finance Department staff is encouraged to bring suggestions regarding internal controls to the attention of their supervisor. The lack of segregation of accounting duties at the Family Service Center and Golf Course have been briefly discussed with appropriate Park & Recreation personnel. A meeting to more fully discuss the system of internal controls has been scheduled. In March 2006, the Auditing Standards Board issued Statements of Auditing Standards numbers 104 through 111. These new standards provided guidance concerning the auditor's assessment of risks of material misstatement in a financial statement. The auditors are now required to evaluate the design of internal controls and determine if those controls are being implemented. Anticipating this new requirement, the Finance Department prepared flowcharts of our procedures and their internal controls. Various procedures and internal controls were discussed with appropriate personnel of operating departments and divisions. As a result, a number of improvements to our internal controls have been implemented during the past year. Comments from our auditors are thoroughly discussed with their merits evaluated. With a staff of only seven in the department, segregation of duties is limited. I do not believe (nor do the auditors) that the cost/benefit analysis justifies adding staff to address this issue. 0