For at least the seven years I have been here, any suggestions the Griffins may have mentioned, were considered negative and fault finding. When one does not have internal controls, there is only fault and that fault lies with the Town Manager as well as with the Town Council Members. Each jointly and severally must place together policies which are specific to the goals required. And not using fuel taxes for fixing our roadways so that we do not have huge holes and duct tape on cracks would be one goal. There is enough money if it is not spent foolishly. And of course there are many other things discussed ad nauseum.
As a refresher, internal control activities are the policies and procedures as well as the daily activities that occur within an internal control system. A good internal control system is essential for deterring errors and fraud and includes thorough documentation and authorization practices.
The IMS System suggested by former Town Manager Bob Farley and purchased for approximately $7,500 is a computer software program which would provide the necessary programs for not only accounting but for all areas of the office. In fact a Town Manager could review, as could council members all financial transactions and pull up reports as a preventative measure.
I will start with a couple of controls which I know have been ignored to the fullest. Yes it takes a bit of work to place these controls in a workable system, but it is necessary for the efficiency of any company or any government entity. Internal controls reduce process variation, leading to more predictable outcomes and are a Key element of the Foreign Corrupt Practices Act of 1977 and the Sarbanes-Oxley Act of 2002 which required improvements in internal control in United States public corporations.
Although the ones listed below have been used by companies I have worked for, perhaps, the Florida League of Cities’ Loss Control Department may have something government specific that you may follow. I know when I would periodically talk to Bob Farley in his tenure; he indicated the League helped him immensely in his job because many things he was learning for the first time.
- Reconciliation on a monthly basis of accounts receivable and accounts payable…the bookkeeper should provide a listing to the Town Manager before each monthly meeting showing what monies have been received and what monies have to be paid. These payables in turn should be submitted to the Council for approval of such payments and knowledge of the Money received. I believe the first part of this paragraph is already in our Charter.
- Town Manager should check the monthly bank statement against the reports of receivables and payables. The Town Manager should have the budget done on a monthly basis and compare it to the receivables and payables for that month. All one would need to do is divide the budget by 12 months and do a comparative analysis to see where we are in comparison to where we should be to maintain appropriate levels of financial transaction reviews and approvals by personnel responsible for budgetary divisions.
- No one person should be responsible for the payables. Note although you have two people signing any given check but there is still no review by the Manager or council member whether the invoice being paid is valid. Then there was the Jewett Street Scenario where Pam didn’t realize that she had an invoice from Hamilton County and it said invoice but because it broke down all the segments of road construction and materials she couldn’t see the bottom which said “Invoice”.
- Now Council approval is required for checks to be issued over $2,500 and this should be placed in a booklet as to policies; . The Town Manager must work with the Council to set a procedure as to when specific services are used and whether those service would or would not be automatically agreed to be paid or if approval would be required first. This policy is a common sense practice and should be listed in detail so as to not exceed what is required by the Town. Adversely there was concern that Tracy should not use her check signing authorization for Police Department services or goods; Yet, when Tracy has required such equipment, she seeks approval from the council.. We should not just allow our City Attorney to do as he pleases without guidelines either. Much money is wasted on dual attorneys working the same case..
- When Checks are received for the General Account, a copy of the check with the original check must be given to the Manager. The Manager can then write instructions on the check if it is not apparent for the accountant to input. The Manager may also contact the party from which the check was received, if there is not an explanation, to determine where the check should be applied. It is not required for the Enterprise account or 119 requests because the Administrative Assistant inputs the checks immediately and provides a receipt from the IMS system. Also per the charter, the Town Clerk is to assist the Administrative Assistant when she or he are not there.
- An expense report should be made up by the Town of White Springs. It should include such things as mileage, travel expense for meals and lodging and the purpose for such travel and who they met with. The expense report should also be completed by anyone taking classes on behalf of the Town. Before a check is issued, the expense report would have to be approved in its entirety and signed by the Manager. If the item is questionable, it should be brought forth to the council.
- Ensure all employees are aware of their responsibility to report suspected fraudulent or other dishonest acts and deviations from the Principles of Financial Management to the Town Manager. And if the complaint is about the Town Manager, there should be a member of the council designated to hear the complaint and handle it accordingly with other members of the council in public forum.
- Involve both internal and external parties to provide periodic independent oversight of Town financial activities. Such parties shall include accounting professionals such as an external auditor, the Town Manager and the council as governing bodies.
- Maintain accounting records in accordance with Generally Accepted Accounting Principles (G.A.A.P.) which provide full-disclosure of compliance with stewardship responsibilities of the university. The IMS System is set up in this manner.
- Ensure that applicable laws, regulations or restrictions are complied with and that documentation standards provide assurances of such compliance
- Keep an eye on weaknesses in your organization and manage it in a timely basis. If an employee or other employee, volunteer or council member violates specific goals or cannot handle their position effectively, the Manager must make a decision as to what can be done. This doesn’t mean throwing a council member off the council but discussing the rules if they are not in writing and agreed upon by the council in its entirety at a meeting.
- Ensure compliance – Internal controls help to ensure the Town is in compliance with the many Federal, State and local laws and regulations affecting the operations of the Town.
- Accomplish goals and objectives – an Internal controls system can provide a mechanism for management to monitor the achievement of operational goals and objectives. Currently we have no goals and everything is run by the seat of our pants or by crisis management.
- The IMS computer system is set up for all correspondence. Electronic files may be kept instead of utilizing paper copies and filing, except where specific backup is required. This information may be safely stored in the Cloud provided. Therefore, it would save the expense of ink and paper supplies as well as filing the materials.
- If electronic mail is not used but rather letterhead, that letterhead must be scanned and placed in the appropriate electronic file of the customer, of the County or of any contractor who does business with the Town of White Springs. Right now a customer’s complaint may be with the Meeting Minutes; however, another copy should be scanned in the customers electronic file.
IT IS UP TO THE TOWN MANAGER AND THE COUNCIL TO SET UP THESE POLICIES WHICH ARE BASICALLY COMMON SENSE OR LOGICAL PRACTICES. I KEEP HEARING THE SEWER RATES ARE TOO HIGH; THE TOWN IS BROKEN, WE ARE BANKRUPT, ETC. ALL THESE THINGS ARE TRUE STATEMENTS. YET IF WE HAD POLICIES IN PLACE AND BUDGETED APPROPRIATELY, NOT SPENDING MONEY EARMARKED FOR A SPECIFIC ACCOUNT, PERHAPS WE WOULD NOT HAVE TO BE IN THE RED AND KEEP BORROWING FROM THE ENTERPRISE ACCOUNT EVERY TIME THE GENERAL ACCOUNT IS LOW.
IN FACT THAT IS ANOTHER SUGGESTION for Policy, I USED THE WORD BORROW WHEN IT IS ACTUAL TAKING OR STEALING FROM THE ENTERPRISE ACCCOUNT. THERE SHOULD BE CHECKS AND BALANCES THAT IF MONEY IS TAKEN FROM THE ENTERPRISE ACCOUNT THAT IT SHOULD BE RETURNED WHEN THE GENERAL ACCOUNT IS STABLE. WE CAN’T JUST TAKE AND TAKE WITHOUT POLICIES. THIS IS WHAT HAS CAUSED THE PROBLEM AND WE OBVIOUSLY NEED AN EFFECTIVE MANAGER WHO WILL SET UP POLICIES WITH COUNCIL APPROVAL WITH PUBLIC input IF NECESSARY. THERE ARE OTHERS WHO HAVE WORKED IN BUSINESS AND HAVE PLACED SUCH POLICIES FOR ALL TO FOLLOW.
Karin for the Blog
p.s. Also even though this is and may not be an internal control but the Town Manager, even though she has the ability to pay people with leaway, she should follow the personnel manual on sick time issues. We are certain for all the Time Tracy Rodriquenze was out of work for an injury not work related, she was paid for many more hours than was stated. I realize the 30 days maximum in one calendar year doesn’t seem sufficient for long time workers but paying someone for over six months doesn’t seem right unless council approval is received at a meeting.
We also dearly love Kenny Hutcherson who has been the backbone of White Springs for over forty years. Yet, since he contracted cancer, I understand that he has been paid continually instead of his securing disability pay through the Government and Medicaid (If COBRA is not available )and other benefits. It is not a usual business practice to continually pay for sick leave. And I agree for 40 years of service, there should be some other rules but certainly one does not pay someone for a year. That is not a good business practice nor is money being spent in the council’s fiduciary capacity. The spending of other peoples money for personal purposes has to stop. Why was this not brought up by council members when Richard Marshall initially discussed Kenny’s condition and his inability to return to work..