Laserfiche WebLink
Metadata
Document management portal powered by Laserfiche WebLink 9 © 1998-2015 Laserfiche. All rights reserved.
AGENDA ITEM – 1A <br /> <br />MEMORANDUM <br /> DATE: August 17, 2020 <br />TO: Honorable Mayor and City Councilmembers <br />Dave Perrault, City Administrator <br />FROM: Gayle Bauman, Finance Director <br />SUBJECT: Segregation of Duties Discussion <br />Budgeted Amount: Actual Amount: Funding Source: <br />N/A N/A N/A <br /> <br />Council Should Consider <br />City Council feedback is requested regarding the Segregation of Duties finding the City receives in <br />its audit each year. Discussion <br />Attachment A is a copy of the finding we received in the 2019 audit. This comment is not just <br />looking at possible fraud and intentional acts, but also ensuring proper financial reporting and the <br />prevention of honest errors. Even knowledgeable staff is capable of coding or classifying an entry <br />incorrectly. This is why it is always best multiple individuals are trained in each area so that no <br />one individual can have responsibility to execute a transaction, have physical access to the related <br />assets, and have responsibility or authority to record the transaction. <br /> <br />A deficiency in internal control exists when the design or operation of a control does not allow <br />management or employees, in the normal course of performing their assigned functions, to prevent, <br />or detect and correct, misstatements on a timely basis. <br />A material weakness is a deficiency, or a combination of deficiencies, in internal controls, such <br />that there is a reasonable possibility that a material misstatement of the entity’s financial statements <br />will not be prevented, or detected and corrected, on a timely basis. <br />A significant deficiency is a deficiency, or a combination of deficiencies, in internal controls that <br />is less severe than a material weakness, yet important enough to merit attention by those charged <br />with governance. <br /> <br />The City receives a material weakness finding related to Segregation of Duties in its audit each <br />year. The finding is primarily caused by the limited size of the City’s finance department staff. It <br />is not unusual for a City of our size to receive this finding. <br /> <br />Staff met with Mr. Aaron Nielsen from MMKR to go through the audit areas/transaction classes <br />related to this finding shown in Attachment B. This was a good exercise for both the City and the <br />auditors to work through. It revealed the specific areas where additional checks and balances were <br />needed. Below is the city’s response/remedy in each of the different areas.