Print
Comment
Rate
City financial audit locates missing accounting records
By CAROL BROEDER/Arizona Range News
Missing accounting records and use of Highway Users Revenue Funds (HURF) were areas of concern in the city's financial audit for 2004.
Auditors have completed the fiscal year 2003-04 review and made recommendations to Willcox for the future.
The City Council unanimously approved the audit at its June 20 meeting.
Kemp Burdick, a Utah-based accounting firm, commended the city for "administrative achievements and oversight of the city's accounting and budgeting system."
In a letter to the council dated Dec. 30, 2004, the auditors said, "However...we noted a few areas needing corrective action in order for the city to be in compliance with laws and regulations and we found a few circumstances that, if improved, would further strengthen the city's accounting system and control over its assets."
The auditor's report also focused on bank reports, noting that the city's "accounting records and documentation appear to be somewhat lacking in specific instances. For example, some of the city's bank statements; bank deposit slips; accounts payable listings and certain debt amortization schedules were missing or unavailable. Also, there were apparently no bank reconciliations available for the magistrate checking and police investment checking accounts."
In a letter to the council dated June 17, Ruth Graham, the city's finance director and Darol Cridlebaugh, a financial consultant, responded:
"Independent of the auditors' findings, we found files poorly organized, not up to date, or not even existing in various areas of accounting to include bonded indebtedness, bank statements and reconciliations, and annual reports to the state and federal governments.
"Some bank accounts had not been reconciled for many months, as indicated by the auditors. As we entered our service with the city, we found piles of unopened and unreconciled bank statements in the finance department office."
"We are working to bring the bank-account reconciliations current in all accounts. We have found it difficult to locate many basic records and have set an immediate goal to organize new current files and develop new procedures to avoid this problem in the future. It will take some time to bring things up to date but we have made a beginning."
The firm also noted that the city's refuse fund has a deficit balance as of June 30, 2004, which accumulated during the current and previous fiscal years.
"We understand the city is aware of the situation in the refuse fund and has taken steps, such as a rate increase in prior years to attempt to rectify the deficit position; however, we recommend that the city continue to review the refuse-fund activities and take steps necessary to enable the city to eliminate the deficit fund balance and repay the amounts shown as due to other funds," the report said.
In their letter, Graham and Cridlebaugh said, "This deficit fund balance has existed since before fiscal year 2000, and the refuse fund has historically run operating deficits that are covered by loans from the general fund. The (council) recently increased the refuse collection and disposal of solid wastes, and has stated its objectives to eliminate operating deficits in the future."
The auditors also said that the state constitution restricts "the use of highway user revenues (HURF) and requires that these funds be used solely for street and highway purposes."
They gave examples of eligible expenditures, such as the cost of right-of-way acquisition, construction, reconstruction, maintenance, repair, roadside development of city roads, streets and bridges and payment of the interest and principal on highway and street bonds.
"The city's expenditures for street lighting utilities recorded within the HURF fund may not be allowable," the authorities said.
The firm added that the Arizona League of Cities and Towns holds the opinion that this type of operating cost may be allowable.
"However, we choose to mention this so that the city will be aware that there is a possibility that the Supreme Court could interpret the Constitution differently and not allow such expenditure of HURF funds," the firm said in its report.
In response Graham and Cridlebaugh said, "We believe that HURF funds have been accounted for and used properly by the city."
Because of the issue was raised by the auditors, and because the city uses the one-percent sales tax for streets, the city separated the street department's expenditures in the daily operating expenses from the HURF fund in the fiscal year 2006 budget.
"This will provide a separation of the two sources and uses of funds for street purposes in the future," they said.
Other findings and recommendations by the auditors are as follows:
Concerning the segregation of duties, "the finance director receipts money, makes deposits, and prepares bank reconciliations; however, two signature requirements, financial statement and budget to actual report reviews by the board mitigate this weakness to a certain extent."
In response, Graham and Cridlebaugh said, "The city is implementing procedures to establish segregation of duties, especially with regards to cash receipts, cash disbursements, and payroll preparation. This is difficult to do with a small staff; however, we will attempt to keep a proper separation of duties and functions in these areas."
Kemp Burdick's other recommendations include stamping paid invoices and purchase orders as paid to document payment and prevent duplicate payments, and performing a physical capital asset inventory yearly or every six months.
The firm suggested that the city consider purchasing a capital asset management system, adding that it would be happy to make a recommendation and assist the city in this effort.
Councilman Phil Rodriguez asked if the city would be fined by the state, and City Attorney Jim Holland said that Willcox "received a stern letter" and that everything is in place.
Auditors have completed the fiscal year 2003-04 review and made recommendations to Willcox for the future.
The City Council unanimously approved the audit at its June 20 meeting.
Kemp Burdick, a Utah-based accounting firm, commended the city for "administrative achievements and oversight of the city's accounting and budgeting system."
In a letter to the council dated Dec. 30, 2004, the auditors said, "However...we noted a few areas needing corrective action in order for the city to be in compliance with laws and regulations and we found a few circumstances that, if improved, would further strengthen the city's accounting system and control over its assets."
The auditor's report also focused on bank reports, noting that the city's "accounting records and documentation appear to be somewhat lacking in specific instances. For example, some of the city's bank statements; bank deposit slips; accounts payable listings and certain debt amortization schedules were missing or unavailable. Also, there were apparently no bank reconciliations available for the magistrate checking and police investment checking accounts."
In a letter to the council dated June 17, Ruth Graham, the city's finance director and Darol Cridlebaugh, a financial consultant, responded:
"Independent of the auditors' findings, we found files poorly organized, not up to date, or not even existing in various areas of accounting to include bonded indebtedness, bank statements and reconciliations, and annual reports to the state and federal governments.
"Some bank accounts had not been reconciled for many months, as indicated by the auditors. As we entered our service with the city, we found piles of unopened and unreconciled bank statements in the finance department office."
"We are working to bring the bank-account reconciliations current in all accounts. We have found it difficult to locate many basic records and have set an immediate goal to organize new current files and develop new procedures to avoid this problem in the future. It will take some time to bring things up to date but we have made a beginning."
The firm also noted that the city's refuse fund has a deficit balance as of June 30, 2004, which accumulated during the current and previous fiscal years.
"We understand the city is aware of the situation in the refuse fund and has taken steps, such as a rate increase in prior years to attempt to rectify the deficit position; however, we recommend that the city continue to review the refuse-fund activities and take steps necessary to enable the city to eliminate the deficit fund balance and repay the amounts shown as due to other funds," the report said.
In their letter, Graham and Cridlebaugh said, "This deficit fund balance has existed since before fiscal year 2000, and the refuse fund has historically run operating deficits that are covered by loans from the general fund. The (council) recently increased the refuse collection and disposal of solid wastes, and has stated its objectives to eliminate operating deficits in the future."
The auditors also said that the state constitution restricts "the use of highway user revenues (HURF) and requires that these funds be used solely for street and highway purposes."
They gave examples of eligible expenditures, such as the cost of right-of-way acquisition, construction, reconstruction, maintenance, repair, roadside development of city roads, streets and bridges and payment of the interest and principal on highway and street bonds.
"The city's expenditures for street lighting utilities recorded within the HURF fund may not be allowable," the authorities said.
The firm added that the Arizona League of Cities and Towns holds the opinion that this type of operating cost may be allowable.
"However, we choose to mention this so that the city will be aware that there is a possibility that the Supreme Court could interpret the Constitution differently and not allow such expenditure of HURF funds," the firm said in its report.
In response Graham and Cridlebaugh said, "We believe that HURF funds have been accounted for and used properly by the city."
Because of the issue was raised by the auditors, and because the city uses the one-percent sales tax for streets, the city separated the street department's expenditures in the daily operating expenses from the HURF fund in the fiscal year 2006 budget.
"This will provide a separation of the two sources and uses of funds for street purposes in the future," they said.
Other findings and recommendations by the auditors are as follows:
Concerning the segregation of duties, "the finance director receipts money, makes deposits, and prepares bank reconciliations; however, two signature requirements, financial statement and budget to actual report reviews by the board mitigate this weakness to a certain extent."
In response, Graham and Cridlebaugh said, "The city is implementing procedures to establish segregation of duties, especially with regards to cash receipts, cash disbursements, and payroll preparation. This is difficult to do with a small staff; however, we will attempt to keep a proper separation of duties and functions in these areas."
Kemp Burdick's other recommendations include stamping paid invoices and purchase orders as paid to document payment and prevent duplicate payments, and performing a physical capital asset inventory yearly or every six months.
The firm suggested that the city consider purchasing a capital asset management system, adding that it would be happy to make a recommendation and assist the city in this effort.
Councilman Phil Rodriguez asked if the city would be fined by the state, and City Attorney Jim Holland said that Willcox "received a stern letter" and that everything is in place.
 |
 |
|
| I-10 accidents kill seven: Willcox residents step in to help injured victims in 2 crashes | Willcox offers Colorado man city manager position; negotiations continue with Stephen Pauken |
Article Rating
Reader Comments
The following are comments from the readers. In no way do they represent the view of willcoxrangenews.com.
