State audit results reviewed
No findings for recovery issued, few accounting problems listed
EAST LIVERPOOL — The state audit of city books for the year ending in December 2016 resulted in no findings for recovery, but auditors did issue findings for a few accounting problems.
City Auditor Marilyn Bosco shared the results of the audit this week with city council’s finance committee, also noting the complete report is available online at the state auditor’s site or in her office at City Hall.
Five findings were discussed in the audit, including continuing problems with cash reconciliation by the treasurer and the issuance of purchase orders, which Bosco has mentioned several times she is trying to remedy.
Auditors recommended the city treasurer obtain a complete understanding of the city’s accounting process in order to diagnose the source of the unreconciled differences and to complete reconciliation monthly.
Bosco said the city was performing more timely reconciliations during 2016 but there are still some unidentified variances that can’t be explained. She said the treasurer will work on identifying all of those items and make sure all necessary adjustments are posted in the future.
Admitting that both she and council are aware of the requirement for purchase orders to be prepared, Bosco has explained in the past it is nearly impossible to completely remedy this situation, since emergencies arise when obtaining a purchase order prior to a purchase is not feasible.
Bosco said auditors want her office to use one purchase order for all city utilities, which she said would be an “accounting nightmare,” due to the number of different utilities that would entail.
“I can’t figure out a way to do it to appease everyone, so I’ll just take the citation,” she said.
A “significant deficiency” was cited by auditors in regard to segregation of duties in the offices of the mayor, auditor and planning department, saying one or two people in each have the ability to collect cash and checks, create deposit slips and make bank deposits, with little oversight.
Although saying the procedures will be reviewed and attempts made to properly segregate duties, Bosco said, “Obviously, we are short-staffed. There are times when one person does everything. (Auditors) do understand that.”
A material weakness finding was issued after it was discovered an intra-fund transfer in the water fund was not properly eliminated on financial statements, causing all other revenues to be overstated by $200,000.
Bosco said the amount was posted wrong and had to be done over.
In a separate management letter, three non-compliance citations were noted as well as suggestions for improving internal controls.
Among those were: Not always depositing collections the next business day; not having a policy regarding a maximum amount for blanket certificates; and not having a written policy regarding the use of drug fines and forfeited monies in the law enforcement fund.
In regard to the law enforcement fund, Bosco said, “We always just followed the Ohio Revised Code in using it, but they want us to adopt a policy for its use.”
The audit noted the city has not updated its indirect cost allocation plan since 1994, which it recommended to ensure costs are reasonable and fair, but Bosco said the money to conduct the study has not been available.
With money tight, the city also finds it difficult to adhere to another issue brought forth in the audit: Not using sequentially-numbered receipt books used in several departments.
“If we get the printed ones, it costs more than if we pick up ones at the local dollar store, but the dollar store ones aren’t numbered,” Bosco explained.
It was also suggested the city establish procedures to ensure invoices are paid in a timely manner, noting the audit had shown a number of late payments made throughout the year.
Bosco said her office often does not receive invoices until they are past due, and a date stamp is being used to show proof when they are received.
Collection of commercial accounts is being tightened up, according to Bosco, after auditors offered some suggestions for establishing policy to address delinquent accounts, which included integrating the refuse billings and collections into the utility department.
The audit noted two issues have been corrected for which the city was issued findings in the last audit: Formulating a fiscal plan and complying with bidding requirements.