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RATWIK ROSZAK MRLDNEY Mr. Neal Beets September 20,2004 Page 3 of 5 By resolution, the Roseville City Council has adopted a General Purchasing Policy, Policy No. 04-009, which is enclosed. This policy sets the standards for claims that do not need Council approval before payment. It also establishes the procedures for payingthese claims. Under the policy, claims that do not need Council approval before payment are essentially budgetedpurchases less than $5,000. The procedure is that purchases under $2,000 require department head approval and purchases$2,000-$5,000 require a departmenthead, or designee, and the Finance Directorto sign a purchase order. While not entirelyclear, it appears that the Finance Director is the administrative official to whom the Council has delegated authorityto pay these claims. The policy sets up internal administrative controls in that the purchases must first be initiated or approved by a Department Head. An additional control is that the City Council is provided a list of the payments made under this delegation for its review. This is done at the regular Council meetings after whichthe payments were made. The City has an annual audited financial statement prepared by an independentcertified public accountant. The City's auditor has not expressed a concern with the delegation of the Council's authority or the way in which the delegationhas been exercised. In short, the requirements of subdivision8, in our judgment, have been maet by the City's purchasingprocedures. As discussed above, Minnesota Statute section 4 Z�_�� 1 and City ordinance make the City Managerthe chief purchasing agent for the City for purchases up to $5,000. All claims resulting from this statutory authorityneed the Council approval that is required under section 412.241. Under section 412.241, Council approval is not requiredto pay claims under $5,000 because there has been a delegation of authority to pay these claims. Read together, the City's Purchasing Policy, and the designation of the City Manager as the chief purchasing agent up to $5,000, support the canclusionthat the Council has given the City Administrative staff the authority to directly make and pay for purchases less than $5,000, subj ect to Council oversight as discussed herein. In summary, given the City's purchasingpolicy and State law, as discussedabove, we believe that the City complies with the terms of Minnesota Statute section 412.24 L The City Council has delegated its authority to pay claims under $5,000; there are procedures by which purchases under $5,000 must be made; the City has intemal controls to ensure proper disbursement of funds; there is frequent review of these payments by the Council; and, the City's procedures withstand the scrutiny of an outside independent auditor. Minnesota �fatu�e��X Section 412.741 is entitled "Disbursementof Funds." It requires that every resolution and motion approving a disbursement of funds and every order for the disbursementspecify