Finding 1131531 (2024-002)

Bank Reconciliations Criteria – An effective internal control system provides for internal controls related to ensuring proper accounting for all funds by maintaining appropriate accounting records and reconciling bank to book balances each month. Supervisory review of bank reconciliations can help ensure the accuracy of recorded amounts. Condition – Although monthly bank reconciliations are prepared for the City’s Water and Waste Disposal Systems for Rural Communities program checking account, the reconciliations did not include evidence of an independent review. Cause – Policies have not been established and procedures have not been implemented to require the bank reconciliations to be reviewed by an independent person. Effect – Lack of review by an independent person could result in unrecorded transactions, undetected errors and opportunity for misappropriation. Recommendation – The City should establish procedures to ensure an independent person reviews the City’s bank reconciliations and documents the review by the signature or initials of the reviewer and the date of the review on the monthly bank reconciliations. Response and Corrective Action Planned – We will review procedures and attempt to make necessary changes to improve internal control. We plan to implement these changes November 1, 2025. Conclusion – Response accepted.