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HomeMy WebLinkAbout03/04/1991 B A K E R S F I E L D Kevin McDermott, Chair Patricia DeMond Ken Peterson Staff: John Stinson AGENDA BUDGET AND FINANCE COMMITTEE Monday, March 4, 1991 12:00 Noon City Manager's Conference Room 1. City Audit 2. Business Licenses/Downtown Improvement District 3. Convention Bureau 4. Management Compensation 5. Bid Process 6. Set Next Meeting CITY RESPONSE TO MANAGEMENT LETTER The following City responses were prepared by the appropriate departments. Senior Citizens Refuse Refunds ~ We noted a lack of controls regarding the refunds. Annual .~. ~./ verification of eligibility is not performed. This area could ~-~be.-examined by the-City-.-.Internal Auditor.-and control..~pronedu~es .~ ~~established. . City's response: The Sanitation Division staff currently verify ownership via microfiche 'records and randomly select 'certain ~..~ applications to field check in order to verify applicant occupancy. A perceived "flaw" in this process is the verification of age: the applicant is required to sign under the penalty of perjury, which indicates some type-of .review by the regulating agency, necessitating honesty on the part of said applicant. On a rare occasion, some form of birth date verification i.e. copy of birth certificate maY be required, but this is not normals. f th t t t In summation, it is our belie a the exis lng sys em provides adequate documentation and no better means of handling such a rebate program is currently available. Siqnature Policy - Public Works ROMC While testing compliance with the City's policies and procedures related to cash receipts, we noted that the Daily Report of Monies Collected in the Public Works Department did not hage the proper signature authorization. After discussing this point with the Public Works Business Manager, the department implemented procedures. City's response:The procedure has been implemented. Refuse Fund - Fixed Assets The Refuse Enterprise Fund was created in 1986. Since inception no fixed assets have been recorded in this fund. The City's capitalization.requirement is $400. After reviewing expenses in this fund, it was determined that while immaterial to the audited financial statements, capitalized .assets should appro~Limate $17,000. In addition to capitalization, depreciation should be calculated on these assets. We recommend the City capitalize all fixed assets of the Refuse Enterprise Fund to comply with the fixed asset capitalization policy. City's response: The $17,000 of. assets being discussed is primarily office furniture and personal computers each item less than $2,000. The refuse service is intertwined with general corporation yard services and as such, office equipment is traded freely among City staff members. The Finance Director has chosen to account for these items within the Fixed Assets of the City of Bakersfield as opposed to within the Enterprise Fund. Airpark Fund Grants Finance was required to.prepare a year-end reconciliation of grant claims submitted for reimbursement because of discrepancies with accounting records. We recommend the Public Works Business Manager prepare all claims and submit them to Finance for review prior to submission for payment to facilitate accurate recording in the books. City's response: This suggestion was acceptable to the Public Works Director and will be implemented. Some reimbursements were not processed in a timely manner. We noted some 1988 and 1989 expenditures not processed at June 30, 199-0. To insure effective budgeting, we recommend r%imbursements be processed expediently. City's resDonse: All.claims are currently up to date and special attention will be taken by City staff to process claims on a ~imely basis. krc RER BROWN, WAITS AniI~BuIlo~M.H.WadS.Ar~i~ng.CPA CPA Accountancy Corporation c,~s~ w. ~, CPA Certified Public Accoun~n~ Jer~ Ra~all, CPA Ben~min P. Rey~, CPA 4 I00 Truxtun .Avenue, Suite ~t~,~ m~. ~ {80~) 324-4071 m~ sm~. ~a FAX: ~805) To the Honorable Mayor, Audit Committee and Members of the City Council City of Bakersfield, California Statement on Auditing Standards #61, "Communication with Audit Committees" concludes that certain matters related to the audit should be communicated to those who have responsibility for oversight of the financial reporting process. The purpose of this letter is to assist the audit committee ih overseeing the financial reporting and disclosure process for which managemenT is responsible. While performing the. audit of the financial statements of the City of Bakersfield, California for the year ended June 30, 1990 certain items came to our attention, that while not material or reportable for Federal and State compliance purposes, offer an opportunity for improvement or efficiencies in operations or internal controls. Ail findings have been discussed with the appropriate level of management. This letter details those findings for your information as follows: 'Senior Citizens Refuse Refunds - We noted a lack of controls regarding the refunds. Annual verification of eligibility is not performed. This area could be examined by the City Internal Auditor and control procedures established. Signature Policy - Public Works ROMC While testing compliance with the City's policies and procedures related to cash receipts, we noted that the Daily Report of Monies Collected in the Public Works Department did not have the proper signature authorization. After discussing this point with the Public Works Business Manager, department implemented procedures. Refuse Fund - Fixed Assets - The Refuse Enterprise Fund was created in 1986. Since inception no fixed assets have been recorded in this fund. The City's capitalization requirement is $400. After reviewing expenses in this fund, it was determined that while immaterial to the audited financial statements,' capitalized assets should approximate $17,000. In addition to capitalization, depreciation should be calculated on these assets. We recommend the City capitalize all fixed assets of the Refuse Enterprise Fund to comply with the fixed asset capitalization policy. Airpark Fund Grants Finance was required to prepare a year-end reconciliation of grant claims submitted for reimbursement because of discrepancies with accounting records. We recommend the Public Works Business Manager prepare all claims and submit them to Finance for review prior to submission for payment to facilitate accurate recording in the records. Some reimbursements were not processed in a timely manner. We noted some '88-'89 expenditures not processed at J~une 30, 1990. To insure effective budgeting, we recommend reimbursements be processed expediently. We are available to discuss the above findings in more detail if you'so require. Very truly yours, BROWN, WAITS & ARMSTRONG ACCOUNTANCY CORPORATION By' Burton H.