2009 Audit Management Letter - Laserfiche WebLink

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City of Centerville May 19, 2010 Page 5 2009-3 Mileage Reimbursement Allowance Condition: During our audit we noted that the City paid an automobile allowance to an employee, and also reimbursed the same employee for actual mileage incurred while performing work for the City. Criteria :Minnesota statute 471.665, subd. 3, requires that if the City establishes an automobile allowance for any officer or employee, the allowance be in lieu of all other mileage reimbursement to that officer or employee. Cause :The City wanted to ensure the employee was reimbursed for automobile expenses. Effect :The City is not in compliance with Minnesota statute. Recommendation :We recommend the City review the statute and not pay any mileage reimbursement to any employee or officer for whom they have established an automobile allowance for. Management Response :Management was unaware of the prohibition.In this specific case, two employees were hired by the City to provide inspection on city street projects. The City did not have vehicles for use of the employees on the job site. The normal procedure where employees use there own vehicles for city business, is to provide mileage at the Federal rate for distance traveled on city business. In this case, management determined that the normal mileage reimbursement formula did not adequately consider wear and tear on the employee’s vehicle. The employee would drive relatively few miles, but in areas where streets were torn up and under construction. So an additional stipend of $25 per week was paid in an attempt to recognize the special conditions.The practice has been stopped. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free of material misstatement, we performed tests of compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However providing an opinion on compliance with those provisions was not an objective of our audit. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City’s compliance with those requirements. We noted oneinstance of noncompliance with Minnesota statutes –see above finding 2009-3. Summary of Prior Year Findings 2008-1: Segregation of Duties over Utility Billing and Investment Transaction Cycles Condition: During our audit, we reviewed internal control procedures over major transaction cycles and found the City to have limited segregation of duties in the utility billing and investment transaction cycles. Criteria: There are four general categoriesof duties: authorization, custody, record keeping, and reconciliation. In an ideal system, different employees perform each of these four major functions. In other words, no one person has control of two or more of these responsibilities. Current Year Status: See above finding 2009-1.The City has implemented procedures to remove the investment cycle comment but the utility comment remains unchanged.