Laserfiche WebLink
Honorable Mayor and <br />Members of the City Council <br />City of Gem Lake <br />Limited Segregation of Duties <br />Condition:. true. to the -.small size of the City`s staff, there is by definition a lack of segregation *of the <br />accounting functions that is necessary to ensure atlequate internal accounting control. While we realize <br />.this scenario is cpmmon *for small .entiiies,. we are required to report this issue 'and to advise that a <br />concentration :of duties *and responsibilities in a limited number of individuals is not desirable from an <br />internal control perspecbVe. <br />Criteria: Generally, -a system .of internal control contemplates separation of duties such that no <br />individual has. responsibility to execute a transaction, have physical access to the related assets, .and <br />have responsibility or-authotity to record the transaction. <br />Effect: The City is unable. to maintain, segregation of incompatible duties. <br />Cause: The. condition -is due to .a limited number of personnel involved. in receipt and disbursement <br />processes. <br />Recommendation: Controls should be reviewed periodically and consideration given to improving the <br />segregation of duties. In making this review; it is important. to consider the benefit derived as. weighed <br />against the cost of -the improvements, <br />i Disbursements Supporting Documentation <br />Condition: A sample of 25 general disbursement -transactions are. tested as part. of -the audit. Tile City <br />did not retain supporting documentation -for 3 of these transactions: The absence of a complete Control <br />procedure or process in this area is considered a material weakness because the potential exists that a <br />material. misstatement of.the financial statements could occur and not be prevented or detected by the <br />j Cliy's internal control processes. <br /># Criteria: The Eity should hove: controls in place to ansure supporting documentation is retained for all <br />cash disbursements. <br />Effect: No effect on the -financial statements. <br />Cause: The City has rtof established'corittois to*Ansure that all records are properly retained. <br />Recommendation: We recommend the City review. their procedures for processing disbursements <br />t and develop a filing system to retain all suppottr-ig documentation. <br />Compliance and Other Matters <br />As. part of obtaining reasonable assurance about whether the City's financial statements are free -of <br />Material misstatement, we performed tests- of its coinlpliant;e with. certain provisions :-of laws, <br />regulations, ;contracts, and grant agreements, noncompliance, with which 'could have a direct and <br />material. effect on the determination of financial statement amounts. HoWever; providing an opinion on <br />compliance with those provisions Was not an objective of our aUdit:and, accordingly, we. -do -not express <br />such an opinig(n: The i'esulfs of .our -tests disclosed no instances of noncompliance or other matters that <br />are required*to be -reported under-:G.overnment Auditing Standards. <br />This report is intended solely for: the information and. use of the City Council, management, the Office <br />of the State Auditor, -and* state and federal awarding. agencies and is not intended tc -be *aryd should not <br />be used. by anyone other than these. specified parties: <br />Minneapolis, Minnesota <br />August 2.9, 2008. <br />L� <br />LarsonAllen LLP <br />(34) <br />