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OFFICE OF AUDITOR OF STATE STATE OF IOWA - page 28 / 39

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Villisca Municipal Power Plant

Schedule of Findings

Year ended December 31, 2003

Findings Related to the Financial Statements:

INSTANCES OF NON-COMPLIANCE:

No matters were noted.

REPORTABLE CONDITIONS:

  • (A)

    Segregation of Duties – One important aspect of internal accounting control is the segregation of duties among employees to prevent an individual employee from handling duties which are incompatible. When duties are properly segregated, the activities of one employee act as a check on those of another. One person had control over each of the following areas for the Power Plant.

    • (1)

      Cash – preparing bank reconciliations, initiating cash receipts and disbursement transactions and handling and recording cash.

  • (2)

    Investments – detailed recording keeping, custody of investments and reconciling.

  • (3)

    Receipts – collecting, depositing, journalizing and posting.

  • (4)

    Utility receipts – billings, collecting, depositing, journalizing and posting.

  • (5)

    Disbursements – purchasing, check writing, recording and reconciling.

  • (6)

    Payroll – preparing and distributing.

  • (7)

    Financial reporting – preparing, posting and reconciling.

  • (8)

    Information system (computer usage) – performing all general accounting functions

and controlling all data input and output.

Recommendation – We realize segregation of duties is difficult with a limited number of office employees. However, the Power Plant should review its control activities to obtain the maximum internal control possible under the circumstances.

Response –

1. We will have the Treasurer review and reconcile all fund balances and provide a report to the Board at monthly meetings.

  • 2.

    We will have all bills presented for review and initialed by a Board member.

  • 3.

    We will have as a monthly agenda item at the Board of Trustees meeting, the

review and approval of cash disbursements.

  • 4.

    We will have the Superintendent review, initial and date all timesheets prior to payroll.

  • 5.

    We will have the Secretary prepare and present an accurate monthly statement of revenue and expense also comparing the statement to the budget.

6. We will have an annual audit.

Conclusion – Response accepted.

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