HomeMy WebLinkAbout4.2 Auditor's Report 1981-1982 f
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AGENDA 'STATEMENT 3 lO
Meeting Date: November 22 , 1982
SUBJECT City Auditor's Report - Fiscal Year 1981-82
EXHIBITS ATTACHED 1981-82 Financial Statement; Management Letter
RECOMMENDATION 1 ) Receive report from Audit Committee
2) • Authorize Staff to proceed with .the selection of a
part-time bookkeeper
FINANCIAL STATEMENT: Estimated cost of part-time bookkeeper less than $10,000/year;
Amount budgeted $10,000.
DESCRIPTION Bray, Burke, Waterman, Cockrill & Carter, the City's Audit Firm
has completed its review of the City's financial records for fiscal
1981-82. As indicated in the audit firm's financial report (see
attached) , the City's actual reserves as of June 30, 1982 were
$489,309.
Staff has reviewed the recommendations of the Auditor in his management letter and has
discussed them with the Auditor with respect to division of duties. . Staff is in agreement
that greater internal control is needed. At present the City Manager's Secretary is
responsible for the following duties:
1 . Receipting all cash and entering receipts into the cash receipts journal .
2. Preparation of all checks and entering checks into cash disbursements journal .
3. Acts as check custodian.
4. Responsible for petty cash drawer.
All other bookkeeping and financial responsibilities are performed by the City Manager.
The bookkeeping responsibilities alone, including distribution of receipts and disburse-
ments to their appropriate accounts, posting to the General Ledger, bank reconciliation,
and preparation of a monthly financial report presently require approximately 25 hours
per month of the City Manager's time. This time requirement will increase as the number
of transactions increase. Even if the Secretary to the City Manager had the available
time to assume these responsibilities, it would not be proper to delegate them for the
sake of internal control .
It is Staff's recommendation that the City Council authorize Staff to secure the services
of a part-time bookkeeper on a contractual basis to undertake those responsibilities
listed above. This would provide for better internal division of duties and relieve the
City Manager of the bookkeeping work which he is presently performing. The estimated
cost of obtaining these services should be less than the $10,000 budgeted for fiscal year
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COPIES TO:
ITEM NO. "�"
AGENDA STATEMENT: City Auditor's Report - Page 2
1982-83.
With respect to the Auditor's recommendations on an internal control checklist, all
procedures have been implemented. Staff has not prepared any written accounting
procedures to date.
The Audit Committee has met with the Auditor to discuss the audit .report and is prepared
to comment to the City Council .
BRAY,BURKENATERMAN,COCKRILL 6 CARTER -CERTIFIED PUBLIC ACCOUNTANTS -
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CITY OF DUBLIN
FINANCIAL STATEMENTS
FOR THE PERIOD FEBRUARY 1 , 1982
(INCORPORATION)
THROUGH JUNE 30 , 1982
With
Report of Certified Public Accountants
BRAY,BURKEMATERMAN,COCKRILL 8 CARTER -CERTIFIED PUBLIC ACCOUNTANTS
CITY OF DUBLIN
FINANCIAL STATEMENTS
FOR THE PERIOD FEBRUARY 1 , 1982 (INCORPORATION)
THROUGH JUNE 30 , 1982
CONTENTS
Page
Report of Certified Public Accountants I
FINANCIAL SECTION
Combined Statements :
Combined Balance Sheet - All Fund. Types and
Account Groups 2
Combined Statement of Revenues , Expenditures
and Changes in Fund Balances - All Governmental
Fund Types 3
Notes to Financial Statements 4-7
Financial Statements of Individual Funds :
General Fund
Balance Sheet 8
Statement of Revenues , Expenditures and Changes
in Fund Balance 9
Special Revenue Funds
Combining Balance Sheet 10
Combining Statement of Revenues , Expenditures
and Changes in Fund Balances 11
Genera]- Fixed Assets Account Group
Schedule: of General' Fixed. Assets. .by. Sources 12
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BRAY, BURKE, WATERMAN, COCKRILL & CARTER
CERTIFIED PUBLIC ACCOUNTANTS
NORMA J.WATERMAN,CPA CITY CEN"rER BUILDING,SUITE 509
GERALD L.COCKRILL.CPA 22300 FOOTHILL BOULEVARD
PERRY H.CARTER,CPA HAYWARD,CALIFORNIA 94541
OF COUNSEL: (41 5)886-6411&357-3200
CHARLES E.BRAY,CPA
THOMAS F.BURKE,JR.,CPA
REPORT OF CERTIFIED PUBLIC ACCOUNTANTS
Honorable Mayor , Members of the
City Council and City Manager
City' of Dublin
Dublin, California
We have examined the combined financial statements of the City of
Dublin as of and for the period February 1, 1982 (Incorporation)
through June 30 , 1982 , as listed in the table of contents. Our
examination was made in accordance with generally accepted audit-
ing standards and, accordingly , included such tests of the
accounting records and such other auditing procedures as we
considered necessary in the circumstances .
In our opinion , the combined financial statements referred to
above present fairly the financial position of the City of Dublin
at June 30 , 1982 , and the results . of its operations for the period
February 1 , 1982 (Incorporation) through June 30 , 1982 , in con-
formity with generally accepted accounting principles applied on
a consistent basis. Also , in our opinion, the combining and
individual fund financial statements referred to above present
fairly the financial position of the individual funds of the City
of Dublin at June 30 , 1982 , and their results of operations for
the period February 1 , 1982 (Incorporation) through June 30 , 1982 ,
in conformity with generally accepted accounting principles applied
on a consistent basis .
October .l , 1982
Page 2
CITY OF DUBLIN
COMBINED BALANCE SHEET - ALL FUND TYPES AND ACCOUNT GROUPS
NNE 30, 1982
Governmental Account
Fund Types Grou
Uene
Special Fixed Total
General Revenue Assets (Memorandum Only)
ASSETS
Cash and certificates of deposit $125,659 $ - $ - $125,659
Investments, at cost 79,322 56,678 136,,000
Accrued interest receivable 2,184 802 2,986
Due from other funds 1,029 1,029
Due from other governments 248,847 17,119 265,966
Prepaid expenses 6,345 6,345
Fixed assets
Equipment 5,363 5,363
Total Assets $462.357 $75 628 $5__363 $543,348
LIABILITIES AND FUND EQUITY
Liabilities:
Accounts payable $ 41,460 $ - $ - $ 41,460
Accrued wages 6,187 6,187
Due to other funds 1,029 1,029
Total Liabilities 48,676 - - 48,676
Fund Equity:
Investment in general fixed assets - - 5,363 5,363
Fund balance
Reserved for street improvement 413,681 413,681
Reserved for authorized expenditures/
projects 75,628 75,628
Total Fund Equity 413,681 75,628 5,363 494,672
Total Liabilities and Fund Equity $462 357 $75 628 $51363 $543-348
The accompanying notes are an integral
part of the financial statements.
Page 3
CITY OF DUBLIN
COMBINED STATEMENT OF REVENUES, EXPENDITURES, AND
CHANGES IN FUND BALANCES - ALL GOVERNMENTAL FUND TYPES
FOR THE PERIOD FEBRUARY 1, 1982 (INCORPORATION)
THROUGH JUNE 30, 1982
Special Total
General Revenue (Memorandum Only)
Revenue:
Taxes $342,861 $ $342,861
Intergovernmental 159,982 71,889 231,871
Fines and forfeits
Use of money and property 2,912 2,912
Interest . 2,306
Miscellaneous 5 827 3,133
5
Total Revenues . 505,154 75,628 580,782
Expenditures:
General government 86,310 -
86,310
Capital projects
Equipment 5,163
5,163
Total Expenditures 91,473 - 91,473
Excess of Revenues Over Expenditures 413,681 75,628 489,309
Fund balance at beginning of period -0- -0-
Fund Balance at June 30, 1982 $413 681 $75 628 $489 309
The accompanying notes are an integral
part of the financial statements.
BRAY,BURKE,WATERMAN,COCKRILL.. _,RTER -CERTIFIEDPUBLICACCOUNTANTS P age 4
CITY OF DUBLIN
NOTES TO FINANCIAL STATEMENTS
JUNE 30 , 1982
1 . Summary of Significant Accounting Policies
The City of Dublin was incorporated February 1 , 1982 under the
Municipal Organization Act of 1977. The City operates under
a Council-Manager form of government and provides. services to
residents primarily by contracting with other governmental
agencies and private contractors .
The accounting policies of the City of Dublin conform to gen-
erally accepted accounting principles as applicable to govern-
ments . The following is a summary of the more significant
policies :
a) Fund Accounting
The accounts of the City are organized on the basis of .
funds and account groups , each of which is considered a
separate accounting entity.. The operations of each fund
are accounted for with a separate set of self-balancing
accounts that comprise its assets , liabilities , fund
equity, revenues , and expenditures , or expenses , as
appropriate. Government resources are allocated to
and accounted for in-individual funds based upon the .pur-
poses for which they are to be spent and the means by which
spending activities are controlled. The funds required
by the City of Dublin are grouped , in the financial
statements in this report , into .two generic fund types
and one account group as follows:
Governmental Funds
General Fund - The General Fund is the general operating
fund of the City. It is used to account for all financial
resources except those required to be accounted. for in
another fund.
Special Revenue Funds - Special Revenue Funds are used to
account for the proceeds of specific revenue sources (other
than special assessments , expendable trusts , or major
capital projects) that are legally restricted to expen-
ditures for specified purposes .
Account Group
General fixed assets are recorded as expenditures in the
General. Fund and Special. revenue Funds at the time of pur-
BRAY,BURKE,WATERMAN,COCKRILL 8 CARTER -CERTIFIED PUBLIC ACCOUNTANTS Page 5
chase . Such assets are accounted for in the General
Fixed Assets account group.
Depreciation is not provided for in the General Fixed
Assets account group. All fixed assets are valued at
historical cost . Donated assets are valued at their
estimated fair market value at the date donated.
The City has elected not to capitalize "improvements
other than buildings" which would consist of non-
enterprise expenditures relating to roads , bridges ,
curbs , gutters , streets , sidewalks , drainage systems ,
and lighting systems .
The account group is not a fund. Consequently , it is
concerned with the measurement of financial position
only and not the results of operations .
b) Basis of Accounting
Basis of accounting refers to when revenues and expen-
ditures or expenses are recognized in the accounts and
reported in the financial statements. Basis of account-
ing; relates to the timing of the measurements made , r_e-
gardl.ess of the measurement focus applied.
All governmental funds and Expendable Trust Funds are
accounted for using the modified accrual basis of
accounting. Their revenues are recognized when they
become measurable and available as net current assets.
Taxpayer assessed income , gross receipts , and sales
taxes are considered "measurable" when in the hands of
intermediary collecting governments and are recognized
as revenue at that time. Anticipated refunds of such
taxes are recorded as liabilities and reductions of
revenue when they are measurable and their validity
seems certain.
Expenditures are generally recognized under the modified
accrual basis of accounting when the related fund lia-
bility is incurred. Exceptions to this general rule
include : (1) accumulated unpaid vacation , sick pay,
and other employee amounts which are not accrued ; and
(2) principal and interest on general long-term .debt
which is recognized when due.
The City does not currently require the use of other
than the General Fund and Special Revenue Funds . How-
ever , at such time as may be required, proprietary and
other funds will be used.
All proprietary funds and Nonexpendable Trust and Pension
Trust Funds are accounted for using the accrual basis of
accounting. Their revenues are recognized when they are
earned , and their expenses are recognized when they are
BRAY,BURKENATERMAN,COCKRILL&CARTER'-CERTIFIED PUBLIC ACCOUNTANTS Page 6
incurred. Unbilled Water and Sewer Fund utility service
receivables are recorded at year end.
c) Budgets and Budgetary Accounting
The City of Dublin was incorporated on February 1 , 1982 ,
and did not adopt a. fo.rmally. integra.ted management budget
for the period from incorporation through June 30 , 1982. ,
The City has established a policy with respect to future
years whereby a budget will be adopted by means. .of .a
formalized budget process . The budget so adopted will then
be used as an integrated management control device for all
City financial operations for the ensuing year.
d) Investments
Investments are stated at cost or amortized cost , which
approximates market.
e) Accumulated Unpaid Vacation, Sick Pay, and Other Employee
Benefit Amounts .
Accumulated unpaid vacation, sick pay, and other employee
benefit amounts are accrued when incurred in proprietary
funds (using the accrual basis of accounting) . Such
amounts. are not accrued in governmental. .funds (us.ing the
modified accrual basis of accounting) ,.
f) Total Columns on Combined Statements
Total columns on the Combined Statements are captioned
Memorandum Only to indicate that they are presented only
to facilitate financial analysis . Data in these columns do
not present financial position, results of operations , or
changes in financial position. in .conformity with generally
accepted accounting principles. Neither is such data com-
parable to a consolidation. Interfund eliminations have not
been made in the aggregation of this data.
2. Due From Other Governments
Amounts due from other governments at June 30 , 1982 consist of
the following:
General Special Revenue
Fund Fund Total
Documentary taxpayer tax .* 3 ,501 $ - $ 3 ,501
Fines and forfeitures 638 638
Cigarette tax 3 ,232 3 ,232
State motor vehicle
in-lieu tax 25 ,515 25 ,515
Gas tax 17 ,119 17 ,119
Sales and use 215 , 961 215 ,961
$248 ,847 $17 ,119 $265 , 966
BRAY,BURKE,WATERMAN,COCKRILL&-ARTER -CERTIFIED PU13LICACCOUNTANTS Page 7
3. Long-Term Debt
The City had no long-term debt at June 30 , 1982.
4. Changes in General Fixed Assets
A summary of changes in general fixed assets follows :
Balance Balance
February 1 , 1982 Additions Deletions June 30 , 1982
Land $ - $ - $ - $ -
Buildings
Equipment 5 ,363 5 , 363
Construction-in-
progress
$ $5 ,363 $ - $5 ,363
5. Other Required Individual Fund Disclosures
Generally accepted accounting principles require disclosure ,
as part of the Combined Statements , of certain information
concerning individual funds including:
a) Summary disclosures of debt. service requirements .to matur
ity for all types of outstanding debt. . This requirement
is met by Note 3.
b) Summary disclosures of changes in general fixed assets
by major asset class. This requirement is met by Note 4.
c) Individual fund interfund receivable and payable balances.
Interfund balances at June 30 , 1982 consist of the following:
Interfund Interfund
Receivable Payable
General Fund . $ - $1 ,029
Special Revenue Fund
Traffic Safety Fund 1 ,029
$1-,-029 $1--,029
6. Retirement Commitments
At June 30 , 1982 the City had not yet provided for retirement
benefits.
7. Commitments
The City was not obligated under any long-term lease agreements
for facilities or equipment at June 30 , 1982
8 . Litigation
The City was not a defendant in any litigation. at June 30 , 1.98 2.
BRAY,BURKEMATERMAN,COCKRILL, .ATER -CERTIFIED PUBLIC ACCOUNTANTS -
COMBINING AND INDIVIDUAL FUND STATEMENTS
AND
GENERAL FIXED ASSETS
BRAY,BURKEMATERMAN,COCKRILL a .rER •CERTIFIED PUBLIC ACCOUNTANTS '
GENERAL FUND
To account for resources traditionally associated with City Govern-
ment , which are not required to be accounted for in another fund.
NOTE : This section would normally contain additional
financial statements , such as comparative balance
sheets , a statement of revenues , expenditures and
changes in fund balance compared to budget , and
an expanded statement of expenditures. However ,
due to the fact that the period being reported ,
February 1 , 1982 (Incorporation) through June 30 ,
1982 , represents the first period of operations
for the City, comparative information was not
available.
I
BRAY,BURKE,WATERMAN,COCKRILL 8 fER -CERTIFIED PUBLIC ACCOUNTANTS Page 8
CITY OF DUBLIN
GENERA1 FUND
BALANCE SHEET
JUNE 30 , 1982
ASSETS
Cash and certificates of deposit $125 , 659
Investments , at cost 79 ,322
Accrued interest receivable 2 ,184
Due from other governments 248 ,847
Prepaid expenses 6 ,345
Total Assets $462,357
LIABILITIES AND FUND EQUITY
Liabilities:
Accounts payable $ 41 ,460
Accrued wages 6 ,187
Due to other funds 1 ,029
Total Liabilities -. 48 ,676
Fund Equity:
Fund balance
Reserved for street improvement 413 ,681
Total Fund Equity 413 ,681
Total Liabilities and Fund Equity $462 ,357
The accompanying notes are an integral
part of the financial statements .
BRAY, BURKE. WATERMAN & COI. .iLL CERTIFIED PUBLIC ACCOUNTANTS Page 9
CITY OF DUBLIN
GENERAL FUND
STATETENT OF REVENUE, EXPENDITURES AND
CHANGES IN FUND BALANCE
FOR THE PERIOD FEBRUARY 1 , 1982 (INCORPORATION)
THROUGH JUNE 30 , 1982
Revenue :
Taxes
Sales and use tax $328 ,630
Documentary transfer tax 14 ,231 $342 ,861
Intergovernmental
Motor vehicle in-lieu tax 145 ,710
Cigarette tax 14 , 272 159 ,982.
Use of money and property
Interest 2 ,306
Miscellaneous 5
Total Revenue 505 ,154
Expenditures :
General government
Personal services 11 ,227
Services and supplies 75 ,083 86 ,310
Capital outlay
Equipment 5 ,163
Total Expenditures 91,473
Excess of Revenues over Expenditures 413 ,681
Fund balance at beginning of period -0
Fund Balance at June 30 , 1982 $413 ,681
The accompanying rotes are an integral
part of the financial statements.
BRAY,BURKEMATERMAN,COCKRILL d _—ATER -CERTIFIED PUBLIC ACCOUNTANTS
SPECIAL REVENUE FUNDS
Traffic Safety Fund - Resources of this fund are required to
be used exclusively for official traffic control devices , main-
tenance thereof, equipment and supplies for traffic law enforce-
ment and maintenance , improvement , or construction of public
streets , bridges and .culverts within the City.
State Gasoline Tax Fund - Resources of this fund are required
to be used primarily for the research, planning, construction ,
improvement , maintenance and operation of public streets and
highways , and for certain other transportation related activities .
BRAY,BURKE,WATERMAN,COCKRILL&CARTER -CERTIFIED PUBLIC ACCOUNTANTS Page 10
CITY OF DUBLIN
SPECIAL REVENUE FUNDS
COMBINING BALANCE SHEET
JUNE 30 , 1.982
Traffic State
Safety Gasoline
Fund Tax Total
ASSETS
Investments , at cost $.1 ,$83 $54 , 795 $56 ,678
Accrued interest receivable 802 802
Due from other funds 1 ,029 1 ,029
Due from other governments _ 17 ,119 17 ,119
Total Assets $2 ,912 $72 ,716 $75 ,028
LIABILITIES AND FUND EQUITY
Liabilities $
Fund Equity :
Fund balance
Reserved for authorized
expenditures/projects 2 , 912 72 ,716 75 ,628
Total Liabilities and
Fund Equity $?_ ,912 $72 , 716 $75 ,628
The accompanying notes are an integral
part of the financial statements .
BRAY,BURKE,WATERMAN,COCKRILL a .TER -CERTIFIED PUBLIC ACCOUNTANTS Page 1-1-
CITY OF DUBLIN
SPECIAL REVENUE FUNDS
COr�,BINING STATEMENT OF REVENUES , EXPENDITURES AND
CHANGES IN FUND BALANCES
FOR THE PERIOD FEBRUARY 1, 1982 (INCORPORATION)
THROUGH JUNE 30 , 1982
Traffic State
Safety Gasoline
Fund Tax Total
Revenues :
Intergovernmental
Gasoline tax $ - $71 ,889 $71 ,889
Fines and forfeits
Vehicle code .fines 2 , 912 2 , 912
Use of money and property
Interest 827 827
2 , 912 72 , 716 75 ,628
Expenditures - - -
Excess of Revenues over Expenditures 2 ,912 72 ,716 75 ,628
Fund balance at beginning of period -0-_ -0- -0-
Fund Balance at June 30 , 1982 $2 , 912 $72 , 716 $75 ,628
The accompanying notes are an integral
part of the financial statements .
BRAY,BURKEMATERMAN,COCKRILL&L;ARTER -CERTIFIED PUBLIC ACCOUNTANTS
GENERAL FIXED ASSETS
To account for fixed assets not used in proprietary fund . operations
or accounted for in Trust Funds .
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BRAY. BURKE. WATERMAN & COCKRILL - CERTIFIED PUBLIC ACCOUNTANTS Page 12
CITY OF DUBLIN
SCHEDULE OF GENERAL FIXED ASSETS
BY . SOURCES
JUNE 30 , 1982
General Fixed Assets :
Equipment $5 ,363
Investment in General Fixed Assets From: .
General fund purchases $5 ,163
Gifts 200
$5 ,363
BRAY,BURKEMATERMAN,COCKRILL d CARTER -CERTIFIED PUBLIC ACCOUNTANTS
C .
CITY OF DUBLIN
MANAGEMENT LETTER
JUNE 30 , 1982
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BRAY, BURKE, WATERMAN, COCKRILL & CARTER
CERTIFIED PUBLIC ACCOUNTANTS
NORMA J.WATERMAN,CPA CITY CENTER BUILDING,SUITE 509
GERALD L.COCKRILL,CPA 22300 FOOTHILL BOULEVARD
PERRY H.CARTER,CPA
HAYWARD,CALIFORNIA 94541
OF COUNSEL:
(415)886-6471 6 357.3200
CHARLES E.BRAY,CPA
THOMAS F:BURKE,JR.,CPA
Honorable Mayor , Members of the
'City Council, and City Manager
City of Dublin, California
We have examined the ' financial statements of the City of Dublin
for the period February 1, 1982 (incorporation) through June 30,
C" 1982 and have issued our report thereon dated October 1, 1982.
As part of our examination, we made a study and evaluation of the
City's system of internal accounting control to the extent we
considered necessary to evaluate the system as required by
generally accepted auditing standards. under these standards,
the purposes of such an evaluation are to establish a basis for
reliance on the system of internal accounting control in
determining the nature, timing, and extent of other auditing
procedures that are necessary for expressing an opinion on the
financial statements and to assist the auditor in planning and
performing his examination of the financial statements.
The objective of internal accounting control is to provide
reasonable, but not absolute, assurance as to the safeguarding of
assets against loss from unauthorized use or disposition, and the
reliability of financial. records for preparing financial
t'• statements and maintaining accountability for assets. The
concept of reasonable assurance recognizes that the cost of a
system of internal accounting control should not exceed the
benefits derived and also recognizes that the evaluation of these
factors necessarily requires estimates and judgments by
management.
There are inherent limitations that should be recognized in con-
sidering the potential effectiveness of any system of internal
accounting .control. in the performance of . most control
procedures, errors can result from , misunderstanding of
instructions, mistakes of judgment, carelessness, . or other
personal factors. Control procedures whose effectiveness depend
upon segregation of duties can be circumvented by collusion.
Similarly, control procedures can be circumvented intentionally
by management either with respect to the execution and recording
of transactions or with respect to the judgments required in the
preparation of financial statements.
Further projection of any evaluation of internal accounting
control to future periods is subject to the risk that the
procedures may become inadequate because of changes in conditions
�J BRAY,BURKE,WATERMAN,COCKRILL 8 CARTER -CERTIFIED PUBLIC ACCOUNTANTS
Honorable Mayor, Members of the
City Council, and City Manager
Page 2
and that the degree of compliance with the 'procedures may
deteriorate.
.Our examination of the financial statements was made in
accordance. with generally accepted auditing standards, including
�- the study and evaluation of the system of internal accounting
control for the period ended June .30, 1982. The examination,
which was made for the .purposes set forth above, - would not
necessarily disclose all weaknesses in the system because it was
based on 'selective tests of accounting records and related data.
However, such evaluation disclosed the following conditions that
we believe to be weaknesses, excluding those which were corrected
before they came to our attention. In addition, we have included
our recommendations for improving the accounting system.
These conditions were considered in determining the nature,
timing, and extent of audit tests to be applied in our
� . examination of the financial statements, and this report of such
conditions does not modify our report dated October 1, 1982, on
such financial statements.
I Sate nalAcc�ounting Controls
l A basic requirement of good internal control is adequate
division of duties. The degree to which this type of control
can be implemented is, of course, restricted to the number of
personnel available. D1ith respect to the City of Dublin, the
number of individuals is limited, however, certain key duties
can and should be divided.
Our recommendations for internal accounting controls are
divided into two sections; 1) division of duties and 2) an
internal control checklist.
1. Division of Duties
Cash receipts - This function should be assigned to the
city manager's. secretary. All funds received by the .
City would be receipted by the secretary and entered
into the cash receipts journal.
Cash disbursements - The cash disbursements journal
should be prepared by the city manager 's secretary.
All disbursements of the City should be made by check.
Exceptions would be petty cash disbursements. The
secretary would prepare the checks for signature and
enter all disbursement information into the cash
disbursements journal.
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r BRAY,BURKE,WATERMAN,COCKRILL d CARTER -CERTIFIED PUBLIC ACCOUNTANTS
Honorable rlayor , Members of the
City Council, and City Manager
Page 3
Check custodian - The city manager's secretary should
be made custodian of the City's checks. Specifically,
this would entail accounting for all checks, both
issued and unissued. Secured storage should be
provided for this purpose.
Bank reconciliation- All checking accounts should be
reconciled on a monthly basis . If the bank
reconciliation is prepared by the city manager 's
secretary then it should be reviewed by the city
manager. If the bank reconciliations are prepared by
the city manager then they should be reviewed by a
member of the City Council. In any event a person
other than the one _ reconciling the accounts should
review and approve the reconciliation.
2. Internal Control Checklist
The following procedures represent minimum steps that
should be taken to provide for internal control.
Additional controls should be considered as resources
are made available, or as conditions change.
Cash Receipts -
o All funds should be receipted through the system and
pre-numbered receipts should be used.
o Deposits should be made by the secretary on a daily
basis.
o Direct deposits should be receipted through the system.
o Remittance advices should be retained when submitted.
J1. o If cash is received at the city offices then a change
fund should be established.
Cash, Disbursements -
o The bank should be instructed not to pay any . checks
made out to the City.
o Petty cash reimbursement checks should be made out to
the custodian of the fund by name.
o All cash disbursements should be authorized.
BRAY,BURKE,WATERMAN,COCKRILL&CARTER -CERTIFIED PUBLIC ACCOUNTANTS
Honorable Mayor , Members of the
City Council, and City Manager
Page 4
o Prenumbered checks should be used and all checks
accounted for. Unused checks on hand should be
inventoried on a .routine basis.
o A current list of authorized check signatories should
be maintained.
o Except for petty cash disbursements, all disbursements
of the City funds should be made by check.
o All bank accounts should be reconciled on a monthly
basis. o All . bank accounts, investment accounts or
other deposit accounts should be authorized.
II Written Accountinc2rQcedures
To the extent practical the City should have written proce-
dures for the accounting function. It is not necessary to
implement "a formal operating manual in order to benefit from
this type of control. A list of procedures followed for each
function in step by step format - would be adequate. The
primary objective is to protect the City from disruption of
business due to .employee vacation, illness, termination, etc.
Also, writtten procedures establish responsibility for various
., functions, and add to the general efficiency of the operation.
We wish to thank the City 'Manager and his staff for their
cooperation during the course of the audit. Should you .wish to
discuss any of the comments we have made, we will be happy to
meet with you at your convenience.
Sincerely yours,
BRAY, BURKE, WATERMAN, COCKRILL . & CARTER
C
November 9, 1982