HomeMy WebLinkAbout09-30-1993
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Report to Management
September 30, 1993
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Report to Management Responses
January la, 1994
Page 1
CASH AND INVESTMENTS
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PA) ervation~ Recent court interpretations have questioned the
right of a governmental entity's security interest in pledged
collateral in the event of the bankruptcy of the designated
depository institution. These interpretations appear to grant
significant power to the Federal Depository Insurance corporation
(under the Financial Institutions Reform, Recovery and Enforcement
Act) to disallow governmental claims that assets which are
collateralized are secured claims in bankruptcy proceedings. Under
these interpretations, if the governmental entity does not have a
written agreement executed by the depository$s board of directors
or loan committee (and reflected in the board or committee minutes)
approving both the depository contract and, on an ongoing basis,
pledged collateral levels, the government's funds may be at risk if
bankruptcy occurs,
Regpmpendatio1U Consult with the City's legal counsel to determine
if the City's policies and depository agreement regarding the
maintenance of pledged collateral aro adequate to ensure
appropriate security of City assets.
RespQlLgQ_L The city agrees with this suggestion and will forward F-.
request to the Legal department.
CONTRIBUTED CAPITAL
observati_qnj The City received significant capital contributions
from developers during fiscal year 1993. In order to record
contributed capital, the engineering department evaluates the value
of the developer contributions and forwards its report the
accounting department. A similar evaluation was, performed by
engineering on City-funded capital projects as welt. For 1993, the
City-funded capital projects were recordef twice; once based on
0 engineering's evaluation and once based on payment of contractor
invoices. This resulted in significant overstatement of City-
funded capital contributions.
$ecomnnenda ion: The accounting department should establish
periodic communication with the engineering department to ensure
that the methodology and responsibility for recording contributed
W capital is clearly defined.
Rasp onset The City has instituted procedures whereby the
engineering department will forward the contributed capital
evaluation to the Sr, Utility Accountant in the accounting
department for recording,
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Report to Management Responses
January 18, 1994
Page 2
INVENTORY PROCEDURES
Obsery tjon; The final September 30 inventory compilation report i
(IN40 report) was not updated based upon the results of the
physical inventory taken at year-end. According to information
systems personnel, a posting report was not prepared to record the
actual counts to the inventory compilation report. A final IN40
report was not requested by the purchasing department for
verification purposes, As a result, the IN40 report usad by
accounting personnel did not include adjustments for the physical
count of inventory.
RQOQ MQndation,L To ensure that the inventory is properly reported,
the purchasing department should verify all inventory reports for
accuracy. In addition, the accounting department should compare
the IN40 report received to a report on physical inventory counts
(IN70 report) to ensure proper recording of year-end inventory.
Response: The City agrees with the recommendation and will comply
with it during the next physical inventory.
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INTERNAL AUDIT
observations The city's internal audit work plan and the results
of the audits performed were reviewed in the course of assessing
the effectiveness of the internal audit position.
The City is commended for the development and use of the internal
audit position in accomplishing key projects which includedi
1) audit of hotel occupancy tax collections] j.
2) audit of hotel occupancy tax recipients) and j
3) fire department overtime resources analysis,
A RecommgtDAgtioh2- Internal auditor should continue to focus on
projects which can provide the City with cost savings through
direct financial recovery or savings for the City as well as
identifying savings through improved workflow and reduced manpower.
Continue identification of areas for financial and operational
review that will result in additional savings to the city in the
future or will provide essential safeguards and control og City
E/ assets.
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)t:ao eQ. The city agrees with this recommendation.
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Report to Management Responses
January 18, 1994
page 3
DATA .PAOCASSINti
4bgr ationi The City has several mainframe applications which
could be more fully utilized. These includes fleet management,
human resources and inventory software.
Hecommendationt Investigate the potential use of current systems
to reduce paper flow and increase efficiency, once opportunities
are identified, City employees should be trained to effectively use
the software.
Resoonsei The City has already begun operational studies on the
fleet management and inventory systems. in addition, a task force
has been formed to look at a long range strategy for both
information and technology, It is hoped that this task force will
identify key arctas for future review,
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