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<br />. <br /> <br />. <br /> <br />. <br /> <br />~ <br />~HILLS <br /> <br />MEMORANDUM <br /> <br />DATE: <br /> <br />May 10, 2006 <br /> <br />AGENDA ITEM: 2.A2 <br /> <br />TO: Honorable Mayor and City Council <br /> <br />FROM: <br /> <br />Murtuza Siddiqui, ChicfFinancial Officer/Treasurer .....\.1 <br /> <br />SUBJECT: Restructuring Account Codes <br /> <br />BACKGROUND: <br />The City of Arden Hill's financial system has currently been in place for over a decade. The <br />current system consists of five major fund categories and multiple departments within these <br />funds. Within each department there are categories and within each of these categories are <br />numerous object codes, amounting to approximately 250 object codes. <br /> <br />A majority ofthese object codes were created for specific purposes, for example, to track the <br />expenses of a particular vendor or expense item. As a result, hundreds of object codes were <br />created because each objcct code was very specific to a particular expense. <br /> <br />DISCUSSION: <br />The existing number of object codes was created to track and report particular expenses. <br />However, there are other possible ways to track thesc items without creating an object code <br />whenever needed. The City's financial system allows for tracking by a specific vendor or by <br />object code. Another way to track the expenses of a particular item would be to look up the <br />original invoice. <br /> <br />In addition to downsizing the number of object codes, staff is proposing to add major expense <br />categories within each department (Exhibit A). The proposal is have ten major expense <br />categories, as compared to the existing five categories (two out of five are not used very <br />frequently). Creating additional categories will allow for tracking and reporting to be easier. For <br />example, reporting can be done at a category level, making it easier to analyze at a glance. <br /> <br />Currently, it is difficult to analyze reports for tracking and reporting purposes due to the number <br />of object codes. Analyzing large amounts of object codes at any particular time makes it difficult <br />to spot irregularities in a certain object code. Particularly with what has occurred, having account <br />codes for every expense item makes it very difficult to detect fraud, as expenses can be coded to <br />numerous object codes, thus making it difficult to identify irregularities with ease, particularly <br />