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<br />May 15,2006 <br /> <br />2 <br /> <br />, <br /> <br />Mr. McDonald said that local governments are required by state statute to have an audit <br />completed on a yearly basis, Also, the City's bonding rating can be affected by an audit. It is <br />also good 10 have an outside source review your processes and procedures for handling financial <br />transactions, <br /> <br />. <br /> <br />Mayor Aplikowski said that the separation of duties is very important in an organization like <br />Arden Hills, <br /> <br />Councilmember Larson asked about the increased number of journal entries at the end of this <br />past year. <br /> <br />Chief Financial Officer Murtuza Siddiqui stated that the majority of the entries are standard year <br />end cntries, A few adjustments were made in relation to the reclassification of the of the object <br />codes. <br /> <br />Councilmembcr Larson recommended that the City Council adopt a policy that ensures that the <br />City has a reserve of 40% of its general fund balance on a yearly basis, The City could designate <br />any reserves to the PIR fund, <br /> <br />Chicf Financial Officcr Siddiqui noted that the City should consider developing a fund balance <br />policy coveling all of the City funds. <br /> <br />Mr. Steve McDonald completed an overview of the City's differenl fund balances for the City <br />Council. <br /> <br />. <br /> <br />Members of the City Council agreed to have the financial audit report placed on the consent <br />agenda at a future City Council meeting, <br /> <br />Account Code Restructure <br />Chief Financial Officer Murtuza Siddiqui reported that the City's current financial syslem has <br />been in place for over ten years. The current system consists of five major fund categOl~es and <br />multiple dep:utments. Within each department there are numerous categories and object codes. <br />A majority of these codes were created for specific purposes to track the expenses of a particular <br />vendor or object code, <br /> <br />Due to the City's recent fraud case, Chief Financial Officer Siddiqui recommended to lhe City <br />Council that the City explore the possibility of reducing the number of account codes for the <br />City. This may help the City in identifying potential fraud in the future and also assist in the <br />management ofreviewing monthly reports, <br /> <br />City Administrator Wolfe said that the City of Arden Hills current budget code system is very <br />cumbersome, It is difficult for staff members to track their expenditures using this system. It is <br />a critical part of a department heads job to track expenditures. Tbe transition to the proposed <br />changes in the City's accounting system may be a challenge at first, but it should be worth it in . <br />the end. <br />