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CITY OF GEM LAKE, MINNESOTA <br />SCHEDULE OF FINDINGS AND RESPONSES (CONTINUED) <br />YEAR ENDED DECEMBER 31, 2019 <br /> <br /> <br /> <br />(35) <br /> <br />MATERIAL WEAKNESS (CONTINUED) <br /> <br />2019-002: 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. It was also noted that because of this, the 4th Quarter Utility billing was <br />not booked in the current year activity. <br /> <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 of the 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 /> <br />Effect: The City may find unexplained variances in utility revenue and receivables. <br /> <br />Cause: The City is working through identifying and establishing controls and processes as some duties <br />are separated out among different individuals. <br /> <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 /> <br />Management Response: <br />Management is exploring ways to provide a reconciliation between systems. <br />