Finding Text
Criteria: Management is responsible for establishing and maintaining effective internal controls over financial reporting. Federal regulations and the City’s internal policies require that all expenses be supported by original invoices and adequate documentation to ensure transactions are recorded accurately, timely, and in the proper reporting period, thereby providing reliable financial data Condition: The City has not performed complete reconciliations for key balance sheet accounts, including cash, accounts receivable, fixed assets, debt, deferred revenues, other accrued liabilities, and net position, resulting in material audit adjustments. In addition, we identified instances where invoices and supporting documentation for certain expenses were missing or incomplete. Automatic payments and deposits were not recorded, and other entries required reclassification to correct the balances. Effect: The absence of regular and thorough reconciliations, as well as missing invoices and supporting documentation, increases the risk of misstatements, undetected errors, and misleading financial information that could impair management’s decision-making. Cause: There was a lack of staff training and a failure to prioritize financial reporting, reconciliations of critical balance sheet accounts, and the retention of supporting documentation for expense transactions. Recommendation: We recommend that finance personnel reconcile all balance sheet accounts for accuracy and maintain supporting documentation for all expenses. Procedures should be implemented to ensure that all invoices and supporting documents are retained and reviewed prior to payment and that all balance sheet accounts are reconciled to the general ledger on a timely basis Views of responsible official and planned corrective actions: The City has implemented additional procedures to ensure all balance sheet accounts are being reconciled in a timely basis. Additional training and supervision will be provided to the appropriate personnel. The City will also strengthen its documentation retention policies to ensure all expenses are properly supported.