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CITY OF GEM LAKE, MINNESOTA <br />SCHEDULE OF FINDINGS AND RESPONSES (CONTINUED) <br />YEAR ENDED DECEMBER 31, 2016 <br />MATERIAL WEAKNESS (CONTINUED) <br />2016-002: No Utility Billing Reconciliation Performed. <br />Condition.: As the City transitions more responsibility to others, it was noted a formal reconciliation of <br />utility billings. and :collections are not being performed to account for total billings and receipts into the <br />City's general ledger system. <br />Criteria: Management is responsible for having adequate. controls and processes in place to ensure all <br />activity that is 'not created and/or generated by the general ,ledger system is sufficiently reconciled to <br />subsidiary systems. These could be accomplished: through periodic review of billing registers, receipts, <br />and system activity. This process should also include a reconciliation process in which all ofhe activity <br />in the subsidiary system is entered into the general. ledger and key account balances and totals. are <br />traced to the supporting reports/schedules of the subsidiary system. <br />Effect: The City may find unexplained variances. in utility revenue and receivables. <br />Cause: The City is working through.. identifying and establishing controls and processes as some duties <br />are separated out. among different. individuals. <br />Recommendation: We recommend City management establish a process to reconcile the utility <br />system to the general ledger at least quarterly to coincide with the utility billing process which occurs on <br />a quarterly basis. <br />Management Response: <br />Management is exploring ways to .provide a. reconciliation between systems. <br />(37). <br />