HomeMy WebLinkAbout1986
Nine
t Haskins -Sells
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InlerPirsl Tower
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i 801 Churry Streel, Suile 2340
f Port Worth, Texas 70102.6801
)817) 336.2531
Moroi 854.2777
Telex: 768012
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The Honorable Mayor and December 15, 1986
City Council and City Manager
215 E. McKinney
City of Denton, Texas 76201
Dear Mayor, Council Members and City Managers
We have examined the financial statements and supplemental
schedules of the City of Denton ("City") for the fiscal year
f ended September 30, 1986, and have issued our report thereon
3 dated December 15, 1986, An 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. The purpose of our study and
evaluation was to determine the nature, timing, and extent
of the auditing procedures necessary for expressing an
opinion on the City's general purpose financial
statements. Our study and evaluation was more limited than
would be necessary to express an opinion on the system of
internal accounting control taken as a whole.
The observations reported herein should be considered in the )
context of the responsibility of management for establishing
and maintaining a system of internal accounting control, the {
objectives of and inherent limitations on such a system, and i
the definition of a material weakness for purposes of this
report, which are described in the Appendix of this report.,
Our study and evaluation made for the limited purpose
described in the first: paragraph would not necessarily
disclose all material weaknesses in the system.
Accordingly, we do not express an opinion on the system of
internal accounting control of the City taken as a whole,
However, our study and evaluation disclosed no condition
that we believe is a material weakness.
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Our examination did however, disclose the conditions as set
forth in the followIng table of contents that, although not
considered by us to be material weaknesses, are weaknesses
{ in internal accounting control and other matters for which
corrective action might be taken.
This report is intended solely for the use of the City
Council and management and should not be used for any other
purpose, We will be pleased to discuss these
recommendations with you further and to assist you in
implementing them.
Yours truly,
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ACCOUNTING PROCEDURES 4
CASH RECEIPTS 5
f INVESTMENT POLICY 6
UTILITY BILLINGS 6
INTERNAL AUDIT
BUDGET OFFICER S
FINANCIAL REPORTING 8
DATA PROCESSING $ `
APPENDIX
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Lease Accounting
Observations A complete file of lease agreements and lease
payment amortization schedules is not maintained by the accounting
department, in addition] lease payments on capital leases are _
not recorded properly for all such leases. The lease payable
accounts are not always properly relieved and interest expense is
not always recorded,
a Recommendation: In order to properly account for capital leases,
the account ng department should:
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Maintain a complete file of lease agreements and lease
1 payment/amortization schedules.
Use the lease payment/amortization schedules to properly
j record principal reductions and interest expenses on capital
lease payments,
Fixed Assets
Observation: The Motor Pool Fund's fixed asset records are not
reconc a to the general ledger,
Recommendation: Fixed asset records should be reconciled to the
genera ledger ' on a regular basis in order to reduce the risk of {
unrecorded fixed asset transactions.
Cash ApreaYence Bond;
Observation: The court department does not maintain an adequate
recor. o outstanding cash appearance bonds, preventing the preparation of a detail of the related payable and revenue'
1 accounts at any given time, i
Recommendations The court department should maintain a detail j
record` of all cash appearance bonds that are repnived, and the
record should be updated daily for any refunds oc forfeituros,
The record should also be reconciled to the general ledger on a I
timely basis,
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Routine Accounting Entries
Observation: Several accounting entries of a routine Mature
(such as principal payments on long-terra debt and depreciation
expense on the fixed assets of the City's enterprise funds) were
not recorded,
I Recommendation: Implement procedures to ensure that all routine
E account ng entries are recorded,
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Issuance of Cash Receipt Books
E \ Observation; Cash receipt books are not issued to the Police
tepartment or the library by the cashier's office,
Recommendationi All departments which col.lent cash should be
issued sequenhLally numbered cash receipt books by the cashier's
office in order for the City to properly monitor all cash
transactions,
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4 Ad Valorem Taxes
Observations Dual controls over mailed property tax payments are
not performed by the Tax Department, Also, employees who open
i the mail do not prepare a record or log of tax receipts.
Reccoom~mendation: Mailod property tax payments should be opened by
No emp oy;N and simultaneously recorded in a log or cash receipt I
record,
F State Taxes and fees
Obaervationt Payments such as sales taxes, mixed drink taxes, .
6"M&o taxes and franchise fees are remitted to the senior
accountant to be opened, recorded and deposited,
Recommendation: Request the State to deposit or wire such
amounts directly into one of the City's bank accounts,
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Remittance of Cash-Race. ipts E
Observation: The parks and recreation and animal control
spar ments have no formal, policy regarding the remittance of eanh
receipts to the Cashier's Office,
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Recommendationt Adopt and enforce a formal cash remittance
pMcyl r Beach department within the City.
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N ESThi a j LILY
f Observation; The City has not adopted aVformal investment
po'1 cy. kith the adoption byy The Governmental Accounting
Standards Board of Statement No. 3 entitled "Accounting and
Financial Reporting for Deposits with Financial Institutions,
Investments (includin Repurchase Agreements), and Reverse
d Repurchase Agreements , the City will be required to disolose its
investment policies and activities in the City's Annual Report
next year,
Recommondation; To ensure that the City's funds are invested in
as sa a manner approved by the City Council and to ensure that the
City will be Able to comply with the anticipated disclosure
requirements, the City should adopt a formal investment policy.
Topics addressed in the policy should include;
Safety of principal
Avoidance of unreasonable risk
Liquidity
Investment goal stated as a rate of return
Diversi£,i.cation
4 Avoidance of transactions not specifically authorized
Reporting to the City Council 1
Annual investment reporting
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Adequacy of pledged securities for investments,
UTILITY BILL
Rate ChAMo j
Observation; The City Council revised the utility rate structure '
eMeot va ecomber 1, 1985, However, the new rates were not
implemented until January 1, 1986. j
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Recommandation; Implementation of Council-approved ordinances j
e oMely monitored by management personnel to ensure
timely and propor compliance,
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Detail Listing
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t Observation; A detail listing of utility accounts receivable is
! not generated at the conclusion of each utility billing.
Recommendation; Prepare a detail listing of utility accounts
receivable at the conclusion of each utility billing.
INTFOINAL
Observation; Currently, the City relies on its system of
N term accounting control and annual independent audit to
4 provide assurance that the financial statements are fairly
presented, While this reliance is adequate, an internal audit
function would provide an additional control level and establish a
systnm which would better monitor operations and the accounting j
systei.l of the City.
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Recommendation: The City should consider establishing an
Tn"EernaT`au-d function. Internal auditors' duties and
responsibilities vary widely amon cities. Frequently, internal
auditors are involved with operaty.onal reviews and special
pro acts as contrasted with the traditional role of financial
auditing. The duties of the internal auditor would include,
among; others:
Periodic payroll audi.ta which would review personnel files,
test wage rates and perform surprise delivery of payroll checks
directly to employees
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Surprise counts of petty cash funds at various locations i
Review of account reconciliations prepared by the accounting
department i
Observations of fixed assets and central warehouse inventories '
Operational audits to determine the effectiveness of various
accounting systems.
Some of the benefits that should be achieved from having an
internal auditor are; I
. Improved operating efficiency and cost sc►vinga resulting from
recommendations following review of financial information,
procedures and practices s
. Seduced demand on accounting personnel for special projects f'
Further development of uniform accounting practices
Improved internal control.
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k The internal auditor should have no authority over nor
responsibility for the activities examined. In order for
objectivity to be maintained, we suggest that the individual
performing this function report directly to the City Manager and
report semiannually to the Audit Committee of the Board. This
type of arrangement should provide a level of internal control
through segregation of responsibility and give the internal
l auditor the authority required to operate across departmental
lines to best perform the ,job.
Observation: The City has not designated to one individual the j
responsibility to review and investigate compliance by all City
departments with the annual budget.
# Recommendation: Consider eatablishi.ngg a budget review function
by e t or - gnating a department or individual with the
oversight responsibility of budgetary compliance,
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Observation; Our review of the major financial reporting areas
o tHe CIE disclosed certain procedural inefficiencies and
reporting deficinneies which are discussed fully in our letter
dated December 15, :1986 to the Mr. Lloyd Harrell, City Manager.
Microcomputer Acquisition Policy
Observations A good Microcomputer Acquisition Policy oxists,
FioWever, tie cost justification requirements Are not specifically
documented and the policy calls for the purchase of ISM 3270 ~
microcomputers instead of less expensive microcomputers.
;a Background: We understand that the cast justification to
i purc-fusae a microcomputer requires a two year payback in time and
puter. This
scat svin s for the person requesting a microcomputer,
is reasonable and prevents the City from purchasing
microcomputers whleh do not contribute significantly to the 1
efficiency of its operations,
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' The policy encourages that all microcomputers purchased have the j
capability for interfacing with the mainframe, This requirement E
is usually met by purchasing IB14 3270 microcompputers, These j
microcomputers are designed to emulate IBM 3270 terminals and i
therefore have the built-in capability for i'nterf'acing with. the
mainframe. Because of the sophistication of the IBM 3270
microcomputers, they are more expensive than other microcomputers.
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I Recommendation,, To strengthen the policy, the City should
consider d ocumenting the specific cost justification requirements
in the policy.
1 To reduce the expense of acquiring microcomputers, the City should
investigate other means of interfacing with the mainframe. One
possibility is the use of microcomputers with standard modems or
through the use of third party terminal emulation equipment.
These microcomputers could serve the same purpose as IBM 3270
I microcomputers at less cost to the City,
Steering Committee/User Planning Group
Observation; The Data Processing (DP) planning activity and
coon nat on with users is not we l defined.
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Back rounds There is an Executive DP Steering Committee;
However, t ere is no charter for the group and no policies exist
to direct its activities, There is no documented procedure for
meeting on a regularly scheduled basis.
Recommendation, A charter with policies should be developed for
the xecut ve~DP Steering Committee and for User Planning
Groups. A quarterly meeting of the Executive DP Steering
Committee and a formalized reporting structure of User Planning
Group to the Executive DP Steering Committee should be established.
Strategic Plan
bbsaryationi The Data Processing Strata~ic Plan is six years old i
arir~''may no longer be relevant to the City s needs,
t?;aclC~fj round~ The Strategic Plan was
prepared six years ago by an f
i <~u~oide consulting firm. Since that time, no major updates have j
been made to the plan, The management personnel who participated
in developing the p an
lan have either moved
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within the org a
or are no longer with the City. Further, over half of theCity
Council members will be replaced in the April elections because of
the statute limiting members to a maximum of three terms on the
council.
Recommendation; A strategic planning process should be !
un erta en to do the following;
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tdentify and prioritize projects
Examine and confirm the purchase software vs, develop software I
philosophy
1 Evaluate staffing requirements l
Evaluate hardware/systems software needs,
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password Protection Policies
} Observations some informal password assignment policies and
proce urea exist; however, these are not strictly enforced.
Hack rounds Passwords should be changed every six months,
ere is no policy for chancing passwords on a regularly scheduled
i basis, When an employee leaves the responsibility for informing
Data Processing to remove that employees password from the system
rosides with the user manager,
Policy for password
maenadnae wEich requires the following:
Mandatory change of passwords after a specific period of time
Change of passwords when an employee is transferred.
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I APPENDIX
MANAGEMENT'S RESPONSIBILITY FOR, AND THE OBJECTIVES AND
LIMITATIONS OF, INTERNAL ACCOUNTING CONTROL AND THE
DEFINITION OF A MATERIAL WEAKNESS
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The following comments concerning management's responsibility for
internal accounting control, the objectives of and the inherent
limitations on a system of internal accounting control, and the
definition of a material weakness are excerpts from Statements on
Auditing Standards of the American Institute of Certified Public
Accountants.
Management's Responsibility
Management is respponsible for establishing and maintaining a
system of interns) accounting control. In fulfilling this
responsibility, estimates and ,judgments by management are required
to assess the expected benefits and related costs of control
procedures.
Objectives
The objectives of a system are to provide management with
reasonable, but not absolute, assurance that assets are
safeguarded ag ainst loss from unauthorized use or disposition, and
that transactions are executed in accordance with management's
authorization and recorded properly to permit the preparation of
financial statements in accordance with generally accepted
accounting principles, i
Limitations
Because of inherent limitations in any system of internal `
accounting control, errors or irregularities nevertheless may
i occur and not be detected. Also, projection of any evaluation of
the system to future periods is subject to the risk that
procedures may become inadequate because of changes in conditions
1 or that the degree of compliance with the procedures may
deteriorate,
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Material Weakness
A material weakness (for the auditor's purpose) is a condition in
which the specific control procedures, or the degree of compliance
with them, do not (in the auditor's ,judgment) reduce Co a
relativelyy low level the risk that errors or irregularities in
amounts that would be material in relation to the financial
statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing
their assigned functions. These criteria may be broader than
Choso that may be appropriate for evaluating weaknesses in
accounting control for management or other purposes,
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CITY OF DENTON, TEXAS
SINGLE AUDIT
REPORTS
FOR THE YEAR ENDED SEPTEMBER 300 1986
TABLE OFQQ N-CEN
PAGE
Auditors' Report on Supplementary Information Schedule
of Federal and State Financial Assistance 1
Schedule of Federal and State Financial Assistance
Auditors' Compliance Report Based on an Examination of
General Purpose Financial Statements Performed in
Accordance With the Standards for Audit Issued by the 3
U, S, General Accounting Office
Auditors' Report on Internal Accounting Controls Based
Solely on a Study and Evaluation blade as a Pert of an
Examination of the General Purpose Financial Statements 4-5
Auditors' Report on Compliance With Laws and Regulations E
3 Related to Major and Nonmajor Federal Financial
Assistance Programs 6`7
Schedule of Findings and Questioned Costs
Auditors' Report on Internal Controls (Accounting and
Administrative) Based on a Study and Evaluation Made as
% a Part of an Examination of the General Purpose Financial I
ri Statements and the Additional Teists Required by the
Single Audit Act 8-10
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Deloitte
Haskins-f-Sells
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j fnlerl'irst Tower
801 Cherry Slreel, Su)le 2340
FON Worth, Texas 76102.6801
(817) 336.2531
Melro: 654.2777
Telex; 758612
AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION SCHEDULE
{ 0 ED._`,_R~L A~"D STATF, FI ANCIA ASS S ANC
The Honorable Mayor and Members of, the City Council
i City of Denton, Texas;
We have examined the general purpose financial statements of
the City of Denton Texas for y
1986) and have issued our report AthereonndatedeDecember31050
1986, Our examination of such general
statements was made in accordance with generallyfaccepted z
auditing standards and the standards for financial and
compliance audits contained in the Standards for Audit of
" Governmental Or anixations Pro rams ct to u ea an -
ct ens, ssue y t e S; Genera ecou
un nt ng`O~fice,
ordin8ly, included such tests of the accounting
records and such other auditing procedures as we considered
1 necessary in the circumstances,
s
Our examination was made for the purpose of forming an
opinion on the general purpose financial statements taken as
r a whole, The 1
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1:inaneial Assistance pforitheSyear ~ended Septembern30,11986
t` is presented, for purposes of additional analysis and is not
a required part of the general purpose financial
' statements. The information in that schedule has been
subjected to the auditing procedures applied in the
examination of the general purpose financial statements and,
in our opinion, is fairly stated in all material respects
when considered in relation to the general purpose financial
statements taken as a whole. 1
fz.. December 15, 1986
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Deloitte
Haskins+Sells
IntorHist Tower
( 801 Cherry Stroel, Suite 2340
1 Fort Werth, Texas 76102.6801
(817) 338,2531
Metro: 654.2777
TOW! 7$8612.
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AUDITORS' COMPLIANCE REPORT BASED 014 AN EXAMINATION OF
f
OEWAL PURPOSE CAL ST 1'EtfE Tu P It 0 U IN
A 0 DtNCZ TP T STANDARDS FOR A D ISSUED-B-7 THE
~---C GENERAL OFFICE
The Honorable Mayor and Members of the City Council
City of Denton, Texasl
We have examined the general purpose financial statements of
111 the City of Denton, Texas City') for the year ended
September, 30, 1986, and have issued our report thereon dated
December 15 1986, Our examination was made in accordance
with genera.ly accepted auditing standards and the standards
for f n4ncia1 and compliance audits contained in the
Standards for Audit of Governmental Organizations Programs,
ct v t as an uncC ons, slue by the U. q. Khra
Anou~ nEing ottice, a`nd`, accordingly, included such tests of
I the accounting records and such other auditing procedures as
we considered necessary in the circumstances,
The management of the City is responsible for the City's
compliance with laws and regulations. In conneotion with
our examination referred to above, we selected and tested f
transactions and records to determine the City's compliance I
with laws and regulations, noncompliance with which could i j
have a material effect on the general purpose financial F
statements of the City. i
The results of our tests indicate that for the items tested,
the City complied with those provisions of laws and
regulations, noncompliance with which could have a material
effect on the general. purpose financial statements, i'
Nothing came to our attention that caused us to believe that
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for the items not tested the City was not; in compliance with
laws or regulations, noncompliance with which could have a
material effect on the City 'a general purpose financial
statements.
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December 15, 1986
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Deloifte
Haskins-Sells
InlerFiol Tower
801 Cherry SUeol, Suilo 2340
Foil Worlh, Texas 76102.6801
(817) 336 2531
a Molro: 654.2777
P Telex: 758612
AUDITORS' REPORT ON INTERNAL ACCOUNTING CONTROLS BASED
o t~
S(0 `MY 0-R A-S`1VDY-AWD---RVAE MTI N MADE AS A PART
~AFf N 0 OF E E PURPOSE NA~1 YAL VTS
~I 41
The Honorable Mayor and Members of the City Council
City of Denton, Texas:
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We have examined the general purpose financial statements of
the City of Denton, Texas ("City') for the year ended
• September 30, 1986, and have issued our report thereon dated
December 15, 1996, As a part of our examination, we made a
study and evaluation of the system of internal. accounting i
control of the City to the extent we considered necessary to
evaluate the system as required by generally accepted F
auditing standards and the standards for financial and
compliance audits contained in the U. S, General Accounting
Office Standards for Audit of Governmental Or anizations
1'rngram,` ASE iv t es arid Functions. or the purpose o !
this report, we nave 61a`ss e t e significant internal {
Accounting controls into the following categories: j
0 Billings #
Receivables
y . Cash receipts
, Purchasing and receiving
Accounts; payable
, Cash disbursements
M , Payroll l'
Inventory control
Property and equipment
General ledger }
Our study included all of the control categories listed
W above. The purpose of our study and evaluation was to
determine the nature, timing and extent of the auditing E I;'
procedures necessary for expressing an opinion on the City's
general purpose financial statements, Our study and
evaluation was more limited than would be necessary to
s express an opinion on the system of internal accounting
control taken as a whole or on any of the categories of ,
controls identified above,
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The management of the City is responsible for establishing
and maintaining a system of internal accounting control,
00 In fulfilling this responsibility, estimates and judgments
by management are required to assess the expected benefits
and related costs of control procedures. The objectives of
a system are to provide management with reasonable, but not
absolute, assurance that assets are safeguarded against loss
from unauthorized use or disposition, and that transactions
i are executed in accordance with management?s authorization
and recorded properly to permit the preparation of general
i purpose financial statements in accordance with generally
accepted accounting principles. Because of inherent
tF limitations in any system of internal accounting control,
errors or irregularities may nevertheless occur and not be
0 detected, Also, projection of any evaluation of the system
to future periods is subject to the risk that procedures may t
become inadeqquate because of changes in conditions or that
the degree of compliance with the procedures may deteriorate,
l ,
F y Our study and dvaluation made for the limited purpose
I' 0 described in the first paragraph would not necessarily
disclose all material weaknesses in the system,
Accordingly, we do not express an opinion on the system of
internal accounting control of the City, taken as a whole or
on any of the categories of controls identified in the first
fr Paraggraph, However our study and evaluation disclosed no
r condition that we believe to be a material weakness,
This report is intended solely for the use of management and
federal and state grantor agencies, and should not be used
y for any other purpose, This restriction is not intended to
limit the distribution of this report which, upon acceptance
0 by the City Council is a matter of public record, l
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Deloitte
Haskinslells
InlorFirsl Tower
7{ 801 Clrorry Sheol, Suite 2340
Foil Worth, Texas 76102.6801
{817) 338.2531
Molro: 654.2777
telox: 758612
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AUDITORS' REPORT ON COMPLIANCE WITH LAWS AND REGULATIONS
RELATED T OR ~6RON OR Dh F ' ' CIAL
ASSISTANCE PROGRAMS
e The Honorable Mayor and Members of the City Council
} City of Denton, Texas.
We have examined the general
purpose financial statement;s of
the City of Denton, Texas ("City') for the year ended
September 50, 1986, and have issued our report thereon dated
December 15 1986, Our examination was made in accordance
1 with generally accapt:ed auditing standards; the standards
for f nancial and compliance audits contained in the
Standards for Audit of Governmental Orranizations Pro rams,
ct v t es an unat ons i3sue by tf Genera
jM ceount ng cam" e"s. ngle Audit Act of 1984; and the
provisions of OMB Circular A-1213, Audits of State and Focal
Governments and, accordingly, incl.ucTecT suc tests o t to
y accounting records and such other auditing procedures as we
considered necessary in the circumstances,
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9 0 The management; of the City is responsible for the City's
i compliance with lawa and regulations. Yu connection with
the examination referred to above, we selected 'and tested
transactions and records from each major federal financial
assistance program and certain nonma,jor federal financial
assistance programs. The purpose of our testing of G
transactions and records from thoao federal fillanoial
assistance programs was to obtain reasonable assurance that
the City had, in all material res p sofa , administered 1 I
majur
programs, and oxecuted the tested nonma,jor pro ram
transactions, in compliance with laws and regulations
including those pertaining to financial reports and efaims
for advances and reimbursements, noncompliance with which we
believe could have a material effect on the allowability of
program expenditures.
Our testing of transactions and records selected from major
federal financial assistance programs disclosed instances of )
noncompliance with those laws ans regulations. All
1 instances of noncompliance that we found and the programs to
fF which they rolate are identified in the accompanying
j schedule of fibilings and questioned costs,
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in our opinion, subject to the effect of the ultimate
resolution of those instances of noncompliance referred to
;ice in tho preceding paragraph, for the year ended September 30,
1986, the City administered each of its major federal
financial assistance programs in compliance in all material
S respects, with laws and regulations, including those
pertaining to financial. reports and claims for advances and
reimbursements noncompliance with „hieh we believe could
;E have a material effect on the allowability of program
expenditures,
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The results of our testing of transactions and records
selected from nonmajor federal financial assistance programs
indicate that for the transactions and records tested the s
r_ City complied with the laws and regulations referred to in
the second paragraph of our report. our testing was more
limited than would be necessary to express an opinion on
whether the city administered those programs in compliance j
in all material respects with those laws' and regulations
y noncompliance with which we believe could have a material
effect on the allowability of program expenditures;
j however, with respect to the transactiona and records that
were not testyW by us, nothing came to our attention to
i indicate that the City had not complied with laws and
regulations.
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December 15, 1986
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CITY OF DENTON, TEXAS
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oA SCHEDULE OF FINDINGS AND QUESTIONED COSTS
FOR THE YEAR ENDED SEPTEMBER 302 1986
r PROGRAM QUESTIONED
FINDING/NONCOMPLIANCE COSTS
Federal Revenue
Ea-r rn~ i
Grant Number
44-2-061-002 Fin,d~i~na: The public notice of the None
availa-ility for public inspection of
4" the use report, as required h 31 CFR
51.13(a), was not issued. The public
notice of the availability for public
inspection of the Audit report relating x
to the Revenue Sharing ProIram, as y
N required by 31 CFR 51.55(e5, was not
issued.
Recommendations All required public i5
Rtices sou be made on a timely i
basis.
0 Res onset Procedures have been
esta shed so that all filings of
grant related reports are timely and
that adequate records are maintained to
r substantiate timely publication.
t CDBd
Grant Number I.
g-85-MC-48-0036 Findin t Funds were obligated for $61,511
non-a minietrativo expenditures prior
to the receipt of HUD's approval of a
Request for Reledse of Funds, which is
p prohibited by 24 CFR 5$(J).
Recommendation: Establish procedures j
ME will ensure compliance with the
above regulation.
Res onset Management believes that
funds d not become obligated until
the actual closing on the property
f which occurred after the release of
funds,
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CITY OF DENTON, TEXAS {
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A SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONTINUED)
FOR THE YEAR ENDED SEPTEMBER 3O, 1986
QUESTIONED
PROGRAM FINDINQ/NONCOMPLIANCE COSTS
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` CDBG
Grant Number
k B-85-MC"48-0036 F'indin : The Grantee Performance None
Repport for the period July 17 1985 to
!1 July 180 1936 was not reconciled to the
f city's general ledger.
Recommendation; The CDBG Department f
siou ensure that the Grantee
Performance Reports are reconciled to
• the general ledger by the accounting
division on a timely basis, I
Response: Procedures have been
esta shed requiring the CDBG
Department to submit all required
r financial reports to the accounting
division for verification prior to
submission to the federal agency.
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Deloitte
Haskinsi-Sells
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lnlorPirsl Tower
801 Cherry Slreol. Sulte 2340
Poll Worih, Texas 76102.6801
(817( 336.2531
Metro: 654.2777
li Telex: 768612
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AUDITORS' REPORT ON INTERNAL CONTROLS ACCOUNTING AI4b
ADMINISTRATIVE) B S ED EVALUATION ON A STUDY AND MADE-AS A
PART 0 EXAMINATION ON E GENERAL PURPOSE S .MEN S D TnE ADDITIONAL E REQUIRED BYE SINGLE
AUDIT ACT r
s,
The Honorable Mayor and Members of the City Council
City of Danton, Texasl
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We have examined the general purpose financial statements of
the City of Denton, Texas ("City r) for the year ended
September 30, 1986, and have issued our report thereon dated
December 15, 1986, As a part of our examination, we made a
study and evaluation of the internal control systems,
including applicable internal administrative controls, used
in administering federal financial assistance programs to
the extent we considered necessary to evaluate the systems
as required by generally 'accepted auditing standards, the
standards for financial and compliance audits contained in
i' the Standards for Audit of Governmental Organizations,
Pro ram ct v ties and unea ensj issued by the . S. I
i enera Accounting 0 ee; t e nis Audit Act of 1984;
and the pprovisions of OMB Ciroular N128j Audits of State !
and Looa1 governmentq. For the purpose obis report, we
have c ass e the significant internal accounting And
administrative controls used in administering federal
financial assistance programs into the following categories:
Accounting Controls
Billings
Receivables
Cash receipts
Purchasing and receiving 1
Accounts payable
Cash disbursements
payroll
Inventory control
r Property And equipment
General ledger
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Administrative Controls
General Requirements
Political activity
Davis-Bacon Act
Civil (tights
s Cash management
x'ederal financial reports
Specific Requirements
Types of services
Reporting
Special requirements E
0 The management of the City is responsible for establishing
y and maintaining internal control systems used in
administering federal financial assistance programs. In
` fulfilling that responsibility, estimates and judgmonts by
management are required to assess the expected benefits and
related costs of control procedures, The objectives of
f internal control systems used in administering federal
financial assistance pproggrams are to provide management with
reasonable, but not absolute, assurance that, with respect
to federal financial assistance programs, resource use is
consistent with laws, regulations and policies; resources
are safeguarded against waste, loss and misuse; and
r w reliable data are obtained, maintained and fairly disclosed
in reports.
Because of inherent limitations in Any system of internal
y accounting and administrative controls used in administering
federal financial assistance programs, errors or °
• irregularities may nevertheless occur and not be detected. '
a Also, prc,jection of any evaluation of the systems to future
periods is subject to the risk that procedures may become
inadequate because of changes in conditions or that the
degree of compliance with the procedures may deteriorate, i
w Our studyy included all of the applicable control categories j:
listed above, During the year ended September 30, 1486,
the City expended % of its total federal financial
assistance for major federal financial assistance
programs, With respect to internal control systems used !
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• solely in administering major federal financial assistance
0 programs of the City, our study and evaluation included
considering the types of errors and irregularities that j
could odour, determining the internal control procedures
that should prevent or detect such errors and
irregularities, determining whether the nocessary procedures
are prescribed and are being followed satisfactorily, and
%o evaluating any weaknesses.
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With respect to the internal control systems used solely in
administering the nonmajor federal financial assistance
programs of the City our study and evaluation was limited
{ to a preliminary review of the systems to obtain an
understanding of the control environment and the flow of
transactions througgh the accounting system. Our study and
evaluation of the internal control systems used solely in '
administering the nonmajor federal financial assistance
N4 programs of the City did not extend beyond this preliminary
review phase,
our study and evaluation was more limited than would be
necessary to
express
Y an opinion on the internal control
systems used in administering the federal financial
assistance programs of the City. Accordingly, we do not
express can opinion on the internal control systems used in
administering the federal financial assistance programs of
the Citq. Further, we do not express an opinion on the
internal control systems used in administering the major
federal financial assistance programs of the City,
M
Also our examination, made in accordance with the standards
mentioned above, would not necessarily disclose material
weaknesses in the internal control systems used solely in
administering nonmajor federal financial assistance programs,
0 However, our study and evaluation and our examinations
disolosed no condition that we believe to be a material
weakness in relation to a federal financial assistance
program of the City.
This report is intended solely for the use of management and
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federal and state grantor agencies, and should not be used
for any other purpose. This restriction is not intended to
limit the distribution of this report, which, upon ! i
acceptance by the City Council, is a matter of public record.
9
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December 15, 1986
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clrrofGEWON,TEXAS MUNICIPAL BUILDING / DEN TON, TEXAS 76201 / TEL Epjq0NE (817) 566-8200
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DATE: March 10, 1987
TOi Lloyd V. Harrell, City Manager ;
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FROMi John F,,McGrane, Director of Finance
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5UBJECTs RESPONSE TO DELOITTE HASKINS & 'SELLS REPORT TO MA14AGEMENT FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1986.
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The purpose of this memorandum is to respond to observations of the Deloitte
Haskins & Sells audit for Fiscal Year ended September 30, 1986. Each of their
observations will be addressed sequentially as enumerated indicating the.
current status of each point raised, i
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r ACCOUNTING PROCEDURES
Lease Accountina
e
(1) RECOMMENDATIONt In order to
accounting department should: properly account for capital leases, the
I E
7 o Maintain a complete file of lea t
se agreements and 'lease
payment/amortization schedules,
o Use the lease payment/amortization schedules to properly record
principal reductions and interest expenses on capital lease r
payments. If
RESPONSEi As a result of interaction with auditors on this
documentation of files including amortization schedules point,
have been
prepared for all leasee, Procedures and processes are enacted to I
accommodate future lease contract recording and documenting,
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Memo to Lloyd V. Harrell
March 10, 1987
Page Two
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Fixed Assets
I RECOMMCNDATIONt Fixed asset record should be reconciled to the
ledger on a regular basis in order to reduce the risk of unrecorded fixed
asset transactions,
RESPONSE; The accounting department has completed the installation of
the fixed asset system and will utilize the system in its
? financial report. System design will necessitate reconciliation6`of
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records,
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Cash A earance Bonds
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I RECOMMENDATIONt The court department Should maintain a detail record of
all cash appearance bonds that are received, and the record should be
updated daily for any refunds or forfeitures, The record should also be
reconciled to the general ledger on a timely basis,
RESPONSEt Extensive work was
formed in the Fall Al 1, the reconcile
revenues and liabilities in the general ledger, of 986 to
court is presently installing an automated courts system and should pbe
on-line in fiscal year 1987,
Routine ACCountin Entries
RECOMMENDATION;
Implement procedures to ensure that all routine !
accounting entries are recorded,
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RESPONSE; We agree with the recommendation and will take steps necessary
to implement,
g g CASE RECEIPTS
?ssuance of Caeh Receipoks
RECOMMENDATION; All departments which Collect cash should be issued
sequentially numbered cash receipt books by the Cashier's office in order
for the City to properly monitor all cash transactions,
f RESPONSE; All departments that collect cash receipts are issued numbered
{ receipt books, We will make
every
that are issued will be used byother fcity depaett~entsthat all cash books i
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Memo to Lloyd V. Harrell
March 10, 1987
Page Three
Ad Valorem Taxes
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RECOMMENbATION1 Mailed property tax o
employees and simultaneously recorded ipn aaymenlogts or shcaoulshd re be receipt penreed do by two
RESPONSEr We agree with the recommendation, records,
to limitations
of staff and the added responsibilities in the tax division, we will
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endeavor to incorporate the recommendation when Possible.
State T,9xea and Peeu
REC(1MMENbATIONi
to deposit or wire transfer such
amounts directly inttouone of thetCityls bank accounts, '
i RESPONSEr The City presently accepts and mails wire transfer of funds to
TMPA, the Federal Covernmentr and selected recipients.
Texas will not at the present The State is
j process was examihed In 1986 and them meth d that Would appto ochan
( tramsfez would ekpoa,9 funds to loss in bank
the event. of a third party This an actual
failure, The procedure was laid aside until more secure transfer methods
can be attained.
Remittance of
Cash Recce
RECOMMM ATION: Adopt and enforce a formal ca;:h remittance
each department within the city, J
policy for
RESPONSEr we agree with this recommendation and will take steps in the
f of INVESTMENT POLICY
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RECOMMENDATION: To
k1 manner a ensure that the City's funds are invested in a safe
pproved by the City Council and to ensure that the City will be
able to comply with the anticipated disclosure requirements, the City
should adopt a formal inveetment policy,
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City Council has adopted Investment Policy No, 408,04
(Attachment S) to ensure investable funds
with applicable disclosure requirements, procedures to be in compliance
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Memo to Lloyd V. Harrell
March 10, 1987
Page Four
UTILITY SILLINOS
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Rate Chang
RECOMMENDATION: Implementation of Council approved utility rate
ordinances should be closely monitored by management personnel to ensure
timely and proper compliance,
RESPONSE: Rate ordinances issued since audit have been monitored as to ;
compliance with ordinance intent.
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RECOMMENDATION: PrOpare a detail listing of utility accounts receivable
at the conclusion of each utility billing.
a RESPONSE: The Customer Information System (CIS) does generate two. (2)
reports of Accounts Receivable detail at the and of each billing. They are
j the RP390 and RP550 reports, The RP390 is the accounts receivable detail and
the RP550 is the transaction activity with the outstanding balance by account
at the time of billing, In addition, a RP721 report listing all accounts
receivables over $1400 is submitted to the Director of Finance and Customer
Service Manager on the 1st and 15th of each month,
' INTERNAL AUDIT
ky RECOMMENDATION: The City should consider establishing an internal Audit
l function,
t RESPONSEi We presently use existing staff to review 1
procedures and to go
to departments to perform appropriate examinations and recommend applicable
procedures for uniform accounting practices and procedures, {
BUDGET OFFICER i f
S) RECOMMENDATION: Consider establishing a budget review function by ef.ther i
' designating a department or individual with the oversight responsibility of
the budgetary compliance.
RESPONSE: A budget officer could provide an amiable function of
determining from a third party position if budgeted funds were being used as
specifically requested in the budget process, Currently, existing staff
monitors expenditures and requests for expenditure but cannot determine the 1
'quality' of the use of these kunds. Presently, our managers perform the
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oversight responsibility,
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memo to Lloyd V. Harrell
March 10, 1987
' Page Five
FINANCIAL REPORTING
s The Financial Reporting study conducted by the auditor's was presented under
separate cover to you in the document dated December 15, 1986, As
you are
E aware these are efforts presently underway to generate reports showing
comparable and periodic data. in addition, the Accounting Division has
improved its procedures to reduce the time necet%sary for month end close,
permitting data to be available earlier for managements review and use. This
1 Department in coordination with Data Processing is constantly
striving
to
k improve its financial reporting capabilities, the timeliness of this data for
f i its users, and to provide current information for City Council consideration,
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DATA PROCESSINO
! The Director of Data Processing will provide responses to recommendations that i
i concern data processing policy or procedures, His responses are identified as
Attachment A,
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SINGLE AUDIT REPORTS
i The Single Audit report for the year ended September 30, 1986 contains five
(5) opinion letters, a schedule of financial position, and a Schedule of
Findings and Questioned Costs, Overall, our opinions are clear with only-
limited exposure in the Schedule of Findings and questioned Costs, The
Findings and Questioned Costs are as followsr
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ii FrNDINOS NONE-COMPLIANCE
V Federal Revenue Sharing
A public notice was not placed in the newspaper indicating the Audit Report
was available for public inspection,
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RESPONSE1 TFls oversight was corrected for the September 30, 1986 report,
Community Development g1np1 . Grant
8-85~MC-980036 l
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Funds were obligabcd for expenditure before the approved release of funds, date approved for
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RESPON$Ej In this particular case, a check was prepared and withheld from use
until the date of closing on a piece of property, Since the check was written
prior to the approved date of release of funds, we were teChnlcally using
funds before the approved date, The check was not released for use until the
approved, date, 'the transaction occurred within the grant period and for. the
approved purpose,
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Memo to Lloyd V. Harrell
March A$ 1987
page Six
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B45-MC-48-0036
Performance reports did not reconcile with the general ledger in the specific
performance period.
RESPONSSt The CDBC office maintained records differently than the way
i reported in the general ledger. No funds were exceeded, but the reports did
j not tie directly with expenditures as indicated on the general ledger although
they did agree in total. The CDBO office have given their assurances that
reports will be prepared directly from general ledger data and votified by the
accounting division to avoid compliance questions in the future.
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i' If you need any further information or have any additional questions, please
j advise.
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I Attachments
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ATTACHMENT "An
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? gE6C111y~M~
CITY of DENTON / 216 E, McKinney / Donlon, Texas 76201
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ff~ DATES March 10, 1987
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TOt Jay Anderson, Controller
i FROMt Gary A. Collins, Director of Data Processing
SUBJECTi RESPONSE TO AUDIT REPORT
Attached you will find my response to the Audit Report,
It you have any questions about this response, please f
k+ feel free to call me at anytime,
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Gary A Collins
Director of Date Processing i
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cot Betty McKean
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ATTACHMENT "A"
DATA PROCESSXNGS RESPONSE
{ TO AUDIT REPORT
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f 1, Microcomputer Acquisition 'Policy-
We concur with the observation that less expensive Microcomputers exist
but feel that currently most microcomputers installed within the City
serve a dual purpose as well as personal terminal functions as'well"
as personal computer functions. While the practice of Acquiring IBM
3270 personal computers involves more expense than other microcomputers
and modems, this practice ensures standardization and transferability
d of microcomputers between departments as well as ensuring the avail-
ability of maintenance service for this equipment,
2, Steering Committee/User Planning Group the Data Processing Steering
Committee is comprised of moat of the Executive Management Group and as
such is representative of All Departments/Divisions within the City,
This Committee meets at least Annually for establishing the priorities
k associated with Major System Implementations, In addition, this
Committee will meet on a "As need Basics" to resolve problems and
conflicts associated with Mayor System Implementation, In addition,
i small task groups, representative of the effected Departments/
Divisions, are frequently formed to determine the user needs, solutions
and alternatives for Major System Implementation, These teak forces
are generally dissolved after the Implementation of a Major System
is completed, We feel the formation of another User Planning Group 1
would be redundant and counter productive to the establishment of
priorities in Implementing Major Systems.
3, strategic Plan
While the Data Processing Strategic Plan is six years old, it hag been
reviewed annually by the Data Processing Steering Committee, This
review consists of re--valuating the priorities of the Major System,
adding new projects and dropping completed projects, This review
process is performed prior to the Budget process so that funds for
the Major. Systems can be included in the Data Processing Budget,
We concur with the Audit Report that the philosophy of purchase
software va developing software has not bean reviewed in six years
but would point out the Financial implications of changing philos-
ophies would be quite significant,
4.1 Password Protection Policies
g We concur with the observation reported in the Audit Report and will
2i develop a Data Processing Department Policy for changing all existing
passwords every six months,
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ATTACHMENT "B"
INVESTMENT POLICY NO, 408,04
I. Pur ose
This policy shall provide the guidelines by which the
City of Denton will maintain the minimum amount of cash
in its bank accounts to meet daily needs, and to provide
protection for its principal while receiving the highest
yield possible from investing all temporary excess cash.
It also satisfies a statutory requirement to define and
` adopt a formal investment policy,
{ II, scope
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A. This investment policy applies. to the investment
activities of the City of Denton, excluding the
specific funds cited hereafter.
B, This policy shall not govern funds which are managed
under separate investment programs, Such funds
currently include; Employees' Retirement Fund of the
City of Denton; the Firemen's and Policemen's Pension
Funds of the City of Denton; other funds established
by the City for deferred employee compensation;
revenue bond reserve funds; and certain private
donations. The City shall and will maintain
responsibility for these funds to the extent required
by; Federal and State Law; the City Charter; and
donor stipulations, f
C. The following funds, as well as other funds that may
be created from time to time, shall be administered in
accordance with the provisions of this policy,- Cash
equivalent assets of the General Fund, Community
Development Block Grant Fund, Recreation Fund, Crime
Prevention Fund, Airport Grant Fund, Airport Master
Plan Fund, Street Bond Fund 1985, Northeast Park Fund, 4
Revenue Sharing Fund, Emily Fowler Library Fund, Debt '
Service Fund, Street Improvement Fund, General Project
Fund, Electric Fund, Electric Bond Fund, Water 8 Sewer
Fund, Water Bond Fund, Sanitation Fund, Landfill kl
l Construction Fund, Working Capital Fund, Defensive
` Driving Fund, Self-Insurance Fund, Employee Health
Fund, and any other fund of the City not specifically
excluded In these policy guidelines, !
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A, There are three (3) objectives this Investment Policy
will address. The primary objective of the City's
investment activity is the preservation of capital in
the overall portfolio, Each investment transaction
E shall seek to first ensure that capital losses are
{ avoided, whether they be from securities defaults or -
erosion of market value, The second objective shall
s be liquidity and the final objective shall be the
yield of the investment.
B. To prevent the possibility of loss of resources,
funds shall not be exposed to market price risk,
be invested in a manner which is
risk or
default
c
cotrary to applicable Eedera'. and state regulations,
C. To enable the City to meet operating requirements that
might be reasonably anticipated, the City's investment
portfolio will remain sufficiently liquid, Liquidity
shall be achieved by matching investment maturities
with forecasted cash flow requirements and by invest-
ing in securities with active secondary markets,
n, It shall be the City's goal, in the area of yield, to
establish and maintain a portfolio which regularly
exceeds the average rate of return on three (5)
months U,S, Treasury Bills, or the average Federal
Reserve Discount rate, whichever is higher, The
first measure of success in this area will be the
# attainment of enough income to offset inflationary 4
i increases. Even though steps will be taken to obtain
$ this goal, the City's staff shall constantly be
cognizant of risk limitations,
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E. All participants to the investment process shall seek i
to act responsibly as stewards of public assets, The
t Treasurer shall avoid any transactions that might I
impair public confidence in the City's ability to
governed effectively, The governing 'body recognizes
that In diversifying the portfolio occasional t
measured losses due to market vo{atility are
must be considered within the context
inevitable, and
of the overall portfolio13 investment return, provided
that adequate diversification has been implemented. 1
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IV. Investment Committee
There is hereby created an investment committee consisting
of the City Manager, Director of finance, Treasurer, and
I one member of the City Council, The investment committee
` shall meet at least quarterly to determine general
i strategies and to monitor results, included in its
deliberations will be such topics as; economic outlook,
} portfolio diversification, maturity structure; potential
risk to the City s funds, authorize brokers and dealers,
and the target rate of return on the investment port
folio, The committee shall establish its own rules of
procedures,
V. Responsibility
A. The management responsibility for the investment
program s hereby delegated to the Director of
3 Finance, who shall establish written procedures for
the operation of the investment program, consistent
f with this investment procedures shall
include explicit delegation ofu~ authority to the
individual(s) responsible for investment transactions,
s, The primary individual who shall be involved in
4 , investment activities will be the Treasurer. No
A persons may engage in investment transaction except as.
provided under tL, terms of this policy and the
procedures established by the Director of Finance,
The Director of finance shall be responsible for all
transactions undertaken, and shall establish a system
of control to regulate the activities of the Treasurer.
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B. The 'Director of Finance shall submit
a quarterly an ;
k investment report, to the investment committee, that
summarizes recent market conditions, economic deve-
lopments and anticipated investment conditions, The
report shall summarize the investment strategies
employed in the most recent quarter, describe the 4
portfolio in terms of investment securities,
aI maturities, risk characteristics and other features,
The report shall explain the quarter's total invest-
meet return and compare the return with budgetary
expectations or projections.
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{ C.'Within sixty (60) days of the end of the Fiscal Year
the Director of Finance shall present a comprehensive
j annual report to the city council on the investment
I program and investment activity, The annual report
shall provide a separate quarterly comparison of
returns and suggestions for improvements that might be
made in the investment program,
D. In the event of the absence of the Treasurer, the
authority to invest in maturities beyond six (6)
months shall be regulated by the controls and
procedures outlined by the Director of Finance,
Vi, Investment
A. Idle funds of th. !A ty of Denton may be invested in;
o U.S. Treasury securities maturing in less than
three (s) years;
o Short term obligations of the U,S. Government
agencies which are guaranteed by the full faith and
credit of the United States of America as to
principal and interest;
o Fully insured or collateralized certificates of
deposits at commercial banks;
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o Repurchase agreements collateralized by U.S,
Treasury Securities;
f o Other such securities or obligations approved by
the investment committee,
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B. Except for debt service funds, special assessment E'
funds, bond proceeds and reserve funds, assets of the I
J City of Denton shall h-i invested in instruments whose
3 maturities do not exceed two (2) years, at the time of
purchase, The General Fund and other operating
maturities shall not exceed one (1) year, unlessnda
temporary extension of maturities is approved by the
investment committee, Idle funds held in special
assessment funds, bond proceeds and other reserve
funds may be invested in maturities exceeding two (2) a
years with, special approval of the investment
committee. Idle funds he id in the Debt Service Fund
may be invested in maturities not exceeding thirteen
(13) months,
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C. It is the policy of the City of Denton to diversify
1 its investment portfolios. The diversification will
protect interest income from the volatility of In-
terest rates a'nd the avoidance of undue concentration
1 of assets in a sppecific maturity sector; therefore,
portfolio maturities shall be staggered, Securities
` i shall also be selected which provide for stability of
income and reasonable liquidity, Diver'si£ication
strategies shall be determined and revised
periodically by the invenrmont committee. In
establishing specific diversification strategics, tha
two (2) following general policies and constraints
shall apply; ,
w (1) Risk of market price volatility shall be con-
trolled through maturity diversification such
that aggregate price losses on instruments with
maturities exceeding one (t) year shall not be
greater than coupon interest and investment
income received from'the balance of the portfolio.
(2) The investment committee shall establish
strategies and guidelines for the percentage of
the total portfolio that may be invested in
securities other than repurchase agreements;
treasury bills, or insured/collateralized
certificates of deposit, The investment committee
shall conduct a quarterly review of these guide- j
lines, and shall evaluate the probability of is
market and default risk in various investment
sectors as part of its considerations, i
fs M. Selection of Hanks and Dealers
A. City Council shall, by ordinance,_ "select and f
designate a banking institution located within the
f corporate city limits as the depository for the
monies and funds of the City." The bank shall be
selected primarily on "solvency and stability" arid
secondly, on rate of interest available.
B. The Treasurer shall conduct a comprehensive review of
prospective depositories credit characteristics and
financial history.
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C. The bank shall be selected through a formalized
bidding process in response to the City's request for
proposal (RFP) outlining all services required, The
investment committee shall have the discretion to
determine the time span for rebidding the banking
y services contract; however, a two year period will be
L the maximum length of time between rebidding,
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0. Banks and savings and loans associations 'seeking to
establish eligibility for the 'City's competitive
certificate of deposit purchase program, shall submit
financial statements, evidence of Federal insurance
and other information as required by the Director of
Finance.
E. The investment committee shall be responsible for
selecting brokers and dealers of government
securities. Their selection shall be among only
primary government securities dealers that report
k directly to the New York Federal Reserve bank. In
the dealing with City funds, the Treasurer shall not
? conduct business with any securities dealers with
whom or through whom public entities have sustained
losses on investments, To guard against default
possibilities under these conditions, and to,assure
diversification of bidders, business with any one
i issuer, or investment broker, should be limited to
twenty-five (2St+) per cent of the total portfolio at
any point in time. In this way, bankruptcy,
receivership or legal action would not immobilize the
City's ability to meet payroll or other expenses.
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VIII4 Principal Protection and Safekeeping ;
A. All deposits and investments of City funds other than
direct- purchases of U,S. Treasury, or U. S, Agency
notes shall be secured by pledged collateral with a
market value equal to no less than 100 percent of the
deposits or investments less an amount insured by
FDIC or FSLIC. Evidence of pledged collateral shall
be maintained by the Treasurer or a third party
financial institution. Repurchase agreements shall
be documented by a specific agreement noting the
collateral pledged in each agreement. Collateral
will be reviewed monthly to assure the market value
of the securities pledged equal or exceeds the
related bank balances, The Committee shall request
additional collateral in the event they deem that
their deposits and investments are not sufficiently
f protected by the pledged collateral.
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B, Safekeeping procedures shall be established by the
investment committee which clearly define steps for
gaining access to the collateral should the City
determine that the City's funds are in jeopardy,
C. Treasury Bonds, Notes & Bills and Government Agencies
securities shall be purchased using the delivery vs.
payment procedure, The securities shall be delivered
to the City's depository bank and held by the
depository bank (also referred to as the "holding
bank") on behalf of the City. Safekeeping receipts
shall be delivered to the City. The bank records
will be reviewed monthly to assure the notation of
I the City's ownership of such securities.
D. only securities allowed by Section C, Articles
2SS9-2599A of the 'texas Revised statutes shall be
eligible to be pledged as collateral.
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January 29, 1987
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ATTACHMENT „C„
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Ctry of VeNTON
6
pnea orrice
11oa west oak 9
Denton, TWO 76201
j (817) 66644
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Mt3+pRr~IDLA1
TOs Jay Anderscm, Controller
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FROMI Elizabeth Evans, CCM ni.ty 17evelOSWnt Manager ~
DATES Maroh 6, 1987
SUBJ. Finding/Noncarpliance in 1965 Audit
7n response to the audit findings the COBG Office will subnkit
our Grantee performance Report to Accounting for verification prior i
to final submission to HUD.
F We do not believe that funds were Obligated prior to the Ralease r ~
of Funds from HUD because an expenditure was not incw'red until closing
on the property which was after the release. The city's accounting !
system required that tae submit our request for a check can the Tuesday
prior to closing so that the owner could be paid at closing. If you E
3 have any questions please contact me at 8480, Thank yaa.
I
x th Evans
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Wry of DENTON / 215 E. MoKlnney / Denton, rexas 76201
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i DATE: April 150 1987
TOi Betty McKean, Executive Director of Municipal Services
PROM: Gary A, Collins, Director of Data Processing
SUBJECT; ACQUISITION OF MICROCOMPUTERS
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In response to Council member McAdams' request that we have the Data
Processing Advisory Board review our policy regarding the Acquisition
of 113M Mlorocomputers, we took this policy to the Data Processing
a Advisory Hoard on October 19, 1986. I have nttaohod for your review ~
a copy of the minutes from that October 29, 1988 meeting and a copy
_i of the Administrative Dlrectivo regarding the Acquisition of Microcomputer,".
I will be happy to present this issue to the Data Processing Advisory l
Board but I feel they have addressed this issue in the October 29, 1988
meeting.
' If you have any questions or I can be of further assistnnce; pleaso feel
free to call on me at anytime,
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Gary o 1 ns i
Director of Data Processing
GAC/li
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MINUTES
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"i CI^.'Y OF AENTOh' ~
DATA PROCESSINQ ADVISORY BOARD
October 29, 1986
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Members Presents Jim Kuykendell r~
" Dale Maddry
Ronald McDade
Members Absents Charles Ridens
Others Prasenti Cary Collins of the City staff
I Dale MAddry !wade a motion that the Minuses of the meetings of Deosfaber 9, 19650 and
September S, 19861 be Approved as written. Jim Kuykendall seconded the motion and
it passed unanimously.
n In reviewing the policies regarding microcomputers there was a consensus that the
cvrvont policies provide for a central review of the acquisition and are flexible
,.,ough regarding, those miorooomputere that perform infor,nation procesAing functions
A versus stand-alono functions, Dale Maddry indicated he felt a centralizid review
was necessary to avoid expending tremendous amounts of money with little payback,
but tha Data Procossing Steering Committee should be the group that.gives approval
or disapproval. Dale MAddry also indicated that the payback should be in "hard"
dollars versus "soft" dollars, Ron McDade indicated that if the microcomputers
were to be used in a stand-Alone process with no connection to the mainframe, no
' file transfer, and no networking needs, the acquisition process should be a budget-
ing and justification decision of the requesting department head/division manager,
Jim Kuykendn", pointed out that once a personal computer wed install6d, it is easy
and inexpensive to modify the equipment to connect to the mainframe, have network
capability, and have the need for mainframe data, Dale Maddry and Oary Collins"
concurred with Jim Kuykendall's obaervetion. Ron McDade suggested that once this
additional, equipment or capabilities were acquired then the centralized review and
! justification would be required, Ron McDade stated that he felt these policies
{ were adeauAte for that equipment involved in a.nformation processing, but a separate
policy could be used for the acauisition,of stand-alone personal computers. Jim
Kuykendall suggestoe that a statement be added to the current policies "that if any
eiscrepnncips r•y,tated between mainframe data bases and personal computer data bases,
the mn!nfrAtm ?ata baseh would be assumed correct until the user department/division C
# proved the personal computer data base was correct, There being no ction necessary
on this issue, no votA was taken,
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Dale Maddry made a motion that the Advisory Board recommend that the Council approve '
the maintenance agreement with TRES Corporation on the utility billing system known
as "CIS" and that the Advisory Board be involved in the budgeting process when funds
ere committed for those types 61 maintenance agreements. Jim Kuykendall seconded
1 the motion and it passed unanimously.
There being no further business, the meeting was adjourned.
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CITY OF DFNTON
P4LIGT/ADUINISTRATIVE PROCEDO'88/ADVINISTxATIV$EDiBEQTIVB
SdCTIONi
GENERAL POLICIES/PROCEDURES/DIRECTIVES AEREAli NCE
NUMbdA1
503,01
$U84eCTMICROCOMPUTERS
EFFECTIVE OArE;
Sept. 1, 1984
r rlr u, ACQUISITION OF MICROCOMPUTERS
REPLACES:
The Nsad for Diatributed Prooesai Rero izedi The City of Denton
recognises at e advent o microoomputers and the proliferation of
software developed for microcomputers may provide the opportunity to make
t significant strides in improving the productivity of its workers,
advantage of this opportunity, the city will not require that all To take
information processing and use of computers be centralized, Conse
these policies are eetabliahed to standardize the crit ' quently,
distributed prooassin method eria for es 1e
8 s and hax otin
benefit ratio, dxere while insuring a favorable cost
2. Redundancy Disoouragedl Although the City soaks productivity improvement b
doo~ntralizing its information processing, the City will maintain a y
r pos which discourages redundant applications and data bases, To develop oe
ition
effective distributed processing system, the City will require that proposed
} processing hardware, meeting standard speoifioations, include the ability to
communicate with the City's information processing network.
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3. City Coordinatori The Data Processing Director shall serve as the
door na or or City-aide distributed processing. This position includes
coordinating original purchases, upgrades, software questions and
maintenance,
4. ji
Review of Pro deed Distributed Processin A lioationel The City shell
seta ish a process to doterm ne a 'sot vsnese or proposed distributed
processing applications,
this process. In the firsthstoprofttheoprocess) thesdepartment coordinate
distributed processing methods shall develop detailed requirements for its
data processing a proposing
pplication$, Next the department must provide
Justification for these requirements,
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l+inally, a cost effectiveness analysis will identify the cost associated
with alternative approaohes. Approaches that can be evaluated include
continuing current manual operation, the Use of time sharing or service
buroaus, development of the application on the computer main frame, and the
distributed processing approach. The Data Processing Director will
{ determine the beat approach,
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PAOE? OF?
P0WCT/ADMINI3T$ATI'VZ P100EDVII/ADMINISTSATIVI DIIICTIVI. (Contiaaed)
REFERENCE
TITLEi NUMSERi
AC4UISITION OF MICROCOMPUTERS 503,01
5. Review of Existing Applications: After implementation of distributed
processing applications, the Data Processing Director shall maintain a
continuing review to insure effective and produotive use of the resources,
After identifying any application which is ineffective or inappropriate, the
f Data Processing Director will make a recommendation to the City Manager for
the removal of the subject hardware and software for better use at other
locations.
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6, standard Hardware Speoifioations: It is to the benefit of the City of
Denton to standardize the purchase of computer hardware, Standard hardware
facilitates transferring teohnology, data, and programs between departments=
simplifies maintenance requirements= and helps the City obtain volume dis-
counts, Therefore, the City shall conduct an evaluation of hardware and
establish, on the basis of that evaluation, a standard set of specifications
r and hardware manufaeturero, There are, however, circumstances in which the
proposed applications dictate hardware manufaoturare which do not conform to
f this standard. These applications must be ones which do not share common
data on the main frame and, in fact, by its nature prohibit sharing common
information,
7. Centralized Programming Staffs Although the City of Denton encourages
distri u ed prooesaing, all programming staff shall be centralized within
the Data Processing Department„ This insures proper supervision and the
ability to allocate the resources most effectively. Departments purchasing
computers obtain the cost efficiency through the use of packaged software, j
Departments are discouraged from having positions which do a major portion 1
of their work In programming new applioations, Departments outside Data
Processing may require in job specs that positions have computer literacy or j
familiarity, but job apeos that require knowledge of programming languages
are discouraged, {
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kr~ B, Nn~ditg of Distributed Prooessingr The purchase of all computer hardware
wi- be funded in the Data rod-easing budget or the General Project Fund. F
However, departments will develop the initial request and it will be E
submitted as part of the Data Processing budget, j
R 9. Role of the Staff Steering Committee: The Staff Data Prooessing Steering
MEMO reviews data proceeding plans and aeleots application priorities,
' Also, the Steering Committee will earve usor departments as an appeal beyond
the Data Processing Director for any actions authorized under these policies,
0206]
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