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HomeMy WebLinkAboutTR-53-83 W\S rJ:OWLEDGE .D CORPORATION OF THE TOWN OF NEWCASTLE 40 TEMPERANCE STREET BOWMANVILLE, ONTARIO L1C3A6 TELEPHONE 623-3379 REPORT TO THE GENERAL PURPOSE AND ADMINISTRATION COMMITTEE MEETING OF SEPTEMBER 6, 1983. REPORT NO. : TR-83-53 SUBJECT: POST AUDIT LETTER - Year Ended Dec. 31/82 RECOMMENDATION: It is respectfully recommended that this report be received for information. BACKGROUND AND COMMENTS: Listed below are excerpts from the post audit letter and accompaning responses. CASH Comment "Contrary to existing internal procedures, bank statements are not picked up directly at the bank by the staff member responsible for performing the bank reconciliations. We suggest your staff adhere to existing internal control procedures pertaining to bank reconciliations as outlined in your internal control memo." Response In future, the staff member responsible for the completion of the bank reconciliation will pick the bank statements up from the bank, in person. This will reduce the possibility of any potential tampering with the bank statements prior to preparation of the bank reconciliation. Cont'd. Page 2. . . � I G.P.A. Report Page 2 TR-83-53 CHEQUE DISBURSMENTS: Comment "Signature plates for cheque signing equipment are not maintained in a locked compartment within the main vault. In addition, the Mayor' s secretary controls both keys required to operate the cheque signing equipment. In order to minimize the possibility of unauthorized cheques being signed, we recommend that the signature plates be stored in a locked compartment, accessible only to the operators of the cheque signing equipment, and that one key each be controlled by two responsible individuals who are not involved in the disbursement function". Response This comment is somewhat in error since the Mayor' s secretary does not control both keys required to operate the cheque signing equipment. The Mayor' s secretary has the key which activates the cheque signer head while the key to activate the base unit for the postage meter stays in the machine throughout the working day. In order to alleviate any concerns about misuse of the cheque signing plates, the key which activates the base unit will be entrusted to the Clerk's Department and therefore both keys will have to be sought from departments outside the Treasury department to activate the equipment. Staff will investigate the possibility of constructing a locked cabinet,within the vault for the cheque signer head and the key for they will be maintained in the Treasury department. JOURNAL ENTRIES AND ACCOUNTS VOUCHERS Comment "During the year, a number of journal entries and several accounts payable vouchers were processed without approval signatures or cancelling stamps, respectively, being applied to them. We note that it is a Treasury department policy to approve all journal entries and to cancel payable vouchers with an approval/paid stamp. To control journal entries and to reduce the potential risk of accounts payable items being paid prior to their proper approval , we suggest that these procedures be followed." Page 3 cont' d. . . G.P.A. Report Page 3 TR-83-53 JOURNAL ENTRIES AND ACCOUNTS PAYABLE VOURCHERS: cont' d . . Response All departments have been reminded of the necessity of using the approval stamp and the fact that without it, requests for payment will not be processed. The vouchers, themselves, have been approved for payment but the lack of the evidence in its proper place on the approval stamp is what is in question here. The Treasury Department will police this activity more carefully. BUILDING AND PLUMBING PERMITS: Comment "Prenumbered permits are not issued for building and plumbing permits. As a result there is no accountability for these permits. We recommend the prenumbering of building permits and that this number be referenced on the related cash receipt slip issued on collection of the related fee." Response Staff will not be ordering a prenumber series of permits for building and plumbing permits. It is felt that this measure will have only minimal effect on the control of such revenue, as an inappropriate estimate of the construction value has a direct impact on the fee charged. The Chief Building Official and Director of Planning do not see significant benefit in undertaking these measures. RECORD OF PROPERTY AND OTHER FIXED ASSETS: Comment "The Town of Newcastle does not have an up-to-date fixed asset ledger. Inadequate descriptions of the Corporation's fixed assets could result in the unauthorized appropriation of assets and possibly the disallowance of an insurance claim in the event of an otherwise insurable loss." Page 4 cont' d. . . G.P.A. Report Page 4 TR-83-53 RECORD OF PROPERTY AND OTHER FIXED ASSETS : cont'd . . "To help safeguard the assets against loss and for insurance purposes, we suggest that a fixed asset ledger be established. The ledger should include as a minimum the following information: • serial number of each asset • location • date purchased • initial cost • person responsible for each asset While we recognize the cost of constructing such records would be substantial , we recommend that a program be instituted to maintain proper subsidiary records for recent and future acquisitions and that slack periods be utilized to gradually build up the records for the older items." Response The matter of an up-to-date inventory of moveable equipment will be discussed with senior staff and consider for implementation in the new year. This function will fall under the Purchasing and Supply Agent's responsibility. GENERAL MATTERS 1 . INVESTORIES: Comment "As recommended in our 1981 constructive service letter, the Public Works inventory as physically counted at the 1982 year-end; however, salt, sand and gravel inventory figures were not subsequently recorded in the general ledger as at December 31st. We suggest that in future these items be included in recorded inventory figures at year-end, in order to more accurately reflect the total physical inventory amount in the financial statements." Page 5 cont'd. . . v S-60 G.P.A. Report Page 5 TR-83-53 GENERAL MATTERS: cont' d. . . Response Public Works and Treasury Department Staff will meet with the auditors to discuss the appropriate means of determining the sand, salt, and gravel inventory before year-end. 2. DEBENTURE REGISTERS: Comment "As in prior years' audits, we noted that debenture registers of the Corporation have not been kept up-to-date as to which specific debentures and which specific coupons have, in fact, been cashed. We recommend that where feasible the by-law debenture registers be brought up-to-date and in future be kept current. This can be accomplished by comparing returned cashed coupons and debentures in detail to the debenture register, while simultaneously marking date of payment therein. The year-end reconciliation of outstanding debentures and coupons should be agreed to the open items in the above-noted debenture registers." Response The Debenture Registers have been brought up-to-date and are being kept currently, on a month to month basis. 3. SUBDIVISION AGREEMENTS: Comment "As mentioned in the 1980 and 1981 constructive service letters, the Corporation has no accounting system to control the collection of subdivision levies. The Treasury department should set up a "subdivisions' levies outstanding" ledger, which would serve to monitor the timely collection of all such fees." Response Through a government employment program, the Town is hoping to have this comprehensive file in place no later than early 1984. Page 6 cont' d. . . G.P.A. Report Page 6 TR-83-53 GENERAL MATTERS: cont' d. . . 4. MUSEUM BOARDS-CROSS FUND ENTRIES: Comment "During the course of our year-end audit, we noted that there are still cross fund entries being recorded in the general ledger with respect to the Museum Board accounts. We suggest that the "due to and from" accounts be used continuously throughout the year, in order to keep these inter-board accounts balanced at all times. This would improve internal control and also help reduce external audit field staff time." . Response This matter had been rectified by early 1983, but as Members of Council are aware, the recordkeeping for all boards has been returned to the individual boards, so this problem will no longer exist. 5. FINANCIAL STATEMENT PREPARATION: Comment "As in prior years, the financial statements of the Town were prepared by the external audit staff. We recommend that in future the Treasury staff of the Town of Newcastle prepare these statements prior to the completion of the final audit. This situation would reduce audit field staff time, result in a more efficient audit, and help to keep audit/accounting fees to a minimum." Response Staff are acutely aware of the financial benefits derived from the Town's staff preparing the financial statements for audit. It is our opinion that we have not had sufficient skilled staff in place or sufficient time to complete this task and the budget, at the same time. Each year, we move closer to this objective and will continue to strive to meet this objective. Staff feel that once the year-end position is reasonably established, then the main thrust of staff should be to the upcoming budget. The past financial year is history, while the upcoming year is progressing until March/April without an approved budget. Page 7 cont'd. . . G.P.A. Report Page 7 TR-83-53 GENERAL MATTERS: cont' d. . . Therefore, senior staff have put more effort into the prompt completion of the budget, than finalization of the financial statement. This does not mean, however, that they will not make every effort to complete the financial statements for this fiscal year. In conclusion, staff feel the comments within the post audit letter, although valid, did not create serious internal control problems, and can be corrected in time. Respectfully submitted, Kathryn A. Campbell , C.A. , B.Comm., Treasurer 30.08.83 *�s 1 g 83-AF-1 ,cc. Harry Connolley Deloittes, Haskins & Sells All Departments Purchasing & Supply Agent