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01/12/1989 - Minutes w -a • - 1 MINUTES: Committee of the Whole Thursday, January 12, 1989 6:00 - 10:00 p.m. City Council Conference Room Suite 300, City Hall 324 South State In Attendance: Florence Bittner, Wayne Horrocks, Sydney Fonnesbeck, Alan Hardman, Tom Godfrey, Roselyn Kirk, Willie Stoler, Linda Hamilton, Lee King, Christine Richman, Cam Caldwell, Dennis Robbins, Lance Bateman, John Heiss, John Gust, Rick Graham, Scott Gardner, John Swain, Sgt. Mac Connole, Press 1. Dennis Robbins, Grant Thornton, reviewed the Auditor's Management Letter report for the City's financial reports for Fiscal Year 1988-89. A copy of the report is attached. Mr. Robbins reviewed the recommendations included in the letter. Council Member Florence Bittner questioned the recommendation that the Redevelopment Agency be required to submit backup with their voucher requests. Mr. Robbins indicated that complying with the recommendation would not result in a duplication of/or additional work by the Redevelopment Agency staff, but would allow the Department of Finance better oversight capabilities. Mr. Robbins briefed the Council on the recommendation that additional control be placed over the receipt of fees at the golf courses. He indicated that this has been an ongoing concern of the auditors which has resulted in recommended changes to the system each year. He stated that the latest recommendation has the endorsement of the Department of Finance and the Parks Department and may be a workable solution. 2. John Heiss, Hughes, Heiss, and Associates, reviewed the findings of the recently completed independent management audit of the Department of Parks and Recreation. He indicated that overall the Department is very well run and is effectively utilizing the resources made available to them. Mr. Heiss reviewed the audit recommendations by division for the City Council. a. Parks Maintenance: Mr. Heiss indicated that the service level in this area is quite high while the staffing level is low- to mid-range. He stated that the existing personnel and equipment in this area are being productively utilized. Mr. Heiss stated that the audit recommends transferring the heavy equipment crew to the Parks Development Division and implementing a maintenance management system to better utilize those crews in the construction and heavy work which occurs in parks. Council Member Bittner asked if the possibility of moving the crew to the Public Works Department had been explored. Mr. Heiss stated that placing the crew in Public Works would be legitimate except that there is plenty of work for the crew to do in the Parks alone. Council Member Stoler stated that the problem with transferring the Parks crew to Public Works would be in the establishment of priorities. b. Urban Forestry: Mr. Heiss indicated that in establishing the Urban Forestry program, the City had done all of the right administrative things, but had not been able to implement the program effectively because of a lack of funding. He indicated that there are four steps which should be taken to evaluate and develop the program: 1) Reallocate the crews (1 additional trimmer); 2) better utilize contract tree maintenance; 3) reevaluate the City's commitment to the program; and 4) make organizational changes to have the Forester report directly to the Director of Parks and Recreation. c. Equipment Maintenance: Mr. Heiss indicated that the audit team had conducted extensive review of the equipment maintenance program. The auditors had determined that the manager has established good control through a work order system. Mr. Heiss stated that he could identify no opportunities for improvement, and believes that the program should be used as a model. d. Warehouse: Mr. Heiss stated that the warehouse needs an automated inventory system to help increase turnover of stock. He indicated that the warehouse also would benefit from a reduction in inventory. e. Planning & Development: Mr. Heiss indicated that he had reviewed the relative costs of maintaining an in-house architectural planning and design capability and contract consultants. He stated that the benefits outweigh costs by maintaining an in-house staff. Mr. Reiss indicated that the only significant recommendation the audit makes in the area of Planning and Development is to add the heavy equipment crew in order to better coordinate major work in the parks. f. Tracy Aviary: Mr. Heiss stated that, as with the Urban Forestry Program, Tracy Aviary's problems are primarily attributable to a lack of funding. He indicated that the audit recommends ways to enhance revenues at the Aviary, but that even with the revenue enhancements, full utilization of the asset will require General Fund subsidies. g. Cemetery: Mr. Heiss stated that the biggest issue facing the Cemetery is the exhaustion of the sale of gravesites as a revenue source. He stated that the City should explore unused lot reclamation as one way to generate additional sales revenue, but even with a best-case scenario in reclamation the City will face an increasing general fund subsidy as the cemetery ages. h. Recreation: Mr. Heiss indicated that the City and County currently duplicate basic recreational programs, such as softball and basketball. He stated that City recreation should be treated realistically and should serve the citizens by addressing needs not served by the County. He indicated that, when a realistic division of programs has been established, the City and County should formalize their interaction to avoid the creation of competing programs. Council Member Tom Godfrey asked if the County should, according to his assessment, manage the proposed Sunnyside Recreation Center. Mr. Heiss stated that although the County runs other swimming pools constructed by the City, the City is clearly moving into a new area where the County is not competing. He indicated that all he is suggesting is that when the different programs have been established, responsibilities be clearly established in an Interlocal Agreement. Mr. Heiss stated that an additional recommendation in the area of Recreation is that Golf and Recreation be split and a director assigned to each area. He indicated that the rationale for this recommendation is that the current number of golf courses keeps the current director very busy, and the addition of two new courses will further reduce the amount of the director's time available for oversight of recreational programs. John Gust, Director of Parks and Recreation, responded to Mr. Heiss's audit. He indicated that he felt very good about the audit, and already had plans to move ahead with some of the recommendations. Council Member Florence Bittner indicated that she would like to schedule a discussion of the future of Tracy Aviary on a Council agenda in the near future. She stated that in her opinion the Aviary, like Hogle Zoo, is a regional benefit, and she doesn't feel that City residents should be footing the bill. 3. John Heiss reviewed his recommendations pertaining to the City's Golf program. He indicated that the major issues which he explored in the area were: 1) how to increase revenues; 2) reduce costs; and 3) alternative fee structures. Mr. Heiss indicated that the current golf program achieves a high service level with low investment. He stated that he could not identify any additional opportunities for cutting costs in the maintenance of golf courses. He further stated that the running of the City's golf courses and the profits they generate are equivalent to effective private operators. He stated that there is little opportunity to increase revenue in the golf program short of raising fees. Mr. Heiss indicated that he had investigated the revenue issue and developed some scenarios on alternative fee structures. He stated that the scenarios are based upon "best case scenario" play and construction assumptions. Scenario I: Mr. Heiss indicated that the first scenario maintains regular and senior/junior passes with a 20% green fee increase. This scenario will result in a negative balance the first year and require general fund subsidy. Scenario II: Mr. Heiss stated that the second scenario increases the cost of senior passes significantly, eliminates the regular pass, a 20% green fee increase, and a fee discount for seniors. This scenario will result in a small negative balance the first year and require general fund subsidies for two years, eventually coming into the black in 1991/1992. He indicated that there is no margin for error in this scenario. Scenario III: Mr. Heiss stated that the third scenario is the same as the second scenario except that a 10% error had been built into the variables. This scenario will result in a small negative balance the first year and require increasing general fund subsidies from that point forward. Scenario IV: Mr. Heiss stated that the fourth scenario provides for no passes, a 20% green fee increase, and a discounted senior fee. This scenario will require no general fund subsidy through 1992/1993. Scenario V: Mr. Heiss stated that the fifth scenario is the same as the fourth scenario except that a 10% error had been built into the variables. This scenario will result in a subsidy in 1990/1991. Mr. Heiss indicated that the real question the Council should consider is how much margin for error is acceptable. Scott Gardner, Director of Golf and Recreation, reviewed the Mayor's proposed fee changes with the Council. He stated that the Mayor is proposing the elimination of all passes. He indicated that the fund must maintain the existing courses and deal with the erosion problems caused by a high level of play. Mr. Gust indicated that if a pass is offered it must be priced high enough to allow the department to fully maintain the courses. Council Member Bittner observed that when the fees were increased three years ago, the players had been promised that the two new courses wouldn't affect senior play. She stated that the seniors had paid for the existing courses when they were first constructed and have been told that they would be allowed to keep their passes. Council Member Roselyn Kirk asked what impact selling the Senior pass for $350 to City residents only would have. Lee King, City Council Budget Analyst/Auditor indicated that the golf fund would be an additional $100,000 short in that case. Council Member Bittner asked about a senior pass at $400. Mr. King stated that the golf fund would then be an additional $75,000 short. Council Member Tom Godfrey indicated that he would favor a financial break for city resident seniors. Mr. Gust stated that the golf fund will require 25% more revenue in order to make the bond payments for the two new courses. He indicated that the Council can develop any fee proposal they're comfortable with, as long as it is understood that it is mandatory that the bond payments be made one way or another. Council Member Alan Hardman asked what impact increasing regular green fees at the two new courses to make up the deficit from senior passes would have. Mr. Gardner stated that at some point you reach a price people will not be willing to pay and it is his opinion that a $7.00 per nine hole round is too high. Council Member Bittner observed that the golf courses are in the business to provide a service, not to make money. Council Member Stoler indicated that he had no intention of voting against the senior golfers because, it is his opinion, they rely on the ability to golf cheaply and need the exercise for health reasons. The City Council directed staff to develop a scenario which provides for a 20% increase in green fees, a senior pass at approximately $400, and discounted green fees for seniors for review at the public hearing. W. M. ILLIE" S LER, CHAIRPERSON ATTEST: / /444,eatit. - C Y REI bER First Interstate Building Suite 1000 170 S.Main Street P.O.Box 11508 Salt Lake City,UT 84147 801 531.6888 December 16, 1988 GrantThornton The Honorable Mayor and Members Accountants and of the City Council Management Consultants Salt Lake City Corporation The U.S.Member Firm of Grant Thornton International In connection with our audit of the general purpose financial statements of Salt Lake City Corporation (the City) as of June 30, 1988, we reviewed various administrative and financial procedures and controls of the City but did not make a comprehensive review for the purpose of submitting detailed recommendations. As a result of our review, we noted certain areas not involving material weaknesses in internal accounting control where administrative and financial matters should be considered, procedures improved and administrative controls strengthened. This memorandum summarizes our comments and suggestions. We previously reported on internal accounting control under the date of November 16, 1988. We have already discussed our comments and suggestions orally with various personnel from the City Council's staff and finance department; we will be pleased to discuss them further. This report is intended solely for the use of management and the City Council and should not be used for any other purpose. This restriction is not intended to limit the distribution of this report which, upon acceptance by the Council, is a matter of public record. 1 COMMENTS AND SUGGESTIONS COMMENTS AND SUGGESTIONS We have the following comments and suggestions relating to matters that came to our attention during our examination of the City's financial statements for the year ended June 30, 1988. PAYROLL Direct Payroll Deposits The City currently does not require individual employees to authorize direct payroll deposits or deductions. Rather, if an employee wants to make a direct payroll deposit, they notify the credit union and the credit union notifies the City. The information the payroll department has regarding direct payroll consists of lists prepared by the credit union and forwarded to the City. All direct payroll deposits and deductions should be authorized by the individual employees and this authorization should be retained in the employee's personnel file. A copy of this authorization could be obtained from the credit union. Comp Time During our review of accrued compensated absences, we noted several items relating to accrued comp time. Recordkeeping of comp time is the responsibility of the timekeepers in the various departments. The finance department, in booking the liability, relies on reports prepared by data processing for total vacation, sick, and comp hours. This same report, after it is updated from the timekeepers' time registers, is distributed to the timekeepers each pay period. For those employees tested, the timekeepers reconciled the vacation and sick hours to the report prepared by data processing. However, it was noted that the timekeepers did not reconcile the comp time hours to this report. Therefore, the information finance relies on to prepare the comp time liability may not be accurate. Approximately 2,600 hours of negative comp time has been recorded on data processing's vacation, sick, and comp hours report. However, based on our discussions with management, it appears no employees took comp time in excess of what was available. We suggest the same system checks and reconciliation procedures be implemented with regards to comp time as are currently being used for vacation and sick hours. We also suggest the City' s dual system of recording comp time by both the timekeepers and by data processing should be reduced to one system with the vacation, sick, and comp hour report being the official document used at the timekeepers' level in granting comp time and at the financial level in reporting the comp time liability. 3 CASH DISBURSEMENTS Preparation/Approval of Cash Disbursements City policy for cash disbursements is such that individuals in secretarial positions with responsibility for preparing vouchers also often have authority to approve vouchers up to a certain dollar limit. Specifically, we noted two individuals in secretarial positions who were responsible for preparing voucher requests who also approved the same voucher requests. To assure adequate control over cash disbursements is maintained, we suggest that when an individual is responsible for originating a voucher request, that a second individual be responsible for approving it, even if the person originating the voucher is authorized to approve that dollar amount. Contract Payments The individual in the finance department that prepares the contract payment request is the same person that reconciles contracts and in many cases inputs the data into the contract payment system. To a large degree this work is not reviewed. While all of these contract payment requests have prior departmental approval and are set up as approved contracts on the contract system, we suggest that because of the high dollar amount involved, these contract payment requests be reviewed by another individual to ensure the documentation is adequate and the appropriate approvals have been obtained. Redevelopment Agency (RDA) Disbursements The City provides accounting, payroll, cash disbursements, and other functions for the RDA. The City does not require the RDA to forward to the City documentation (invoices, etc. ) to substantiate cash disbursements. Generally, the only documentation attached to the check copy and filed at the City would be a note signed by someone from the RDA requesting the disbursement. For those cash disbursements tested, adequate documentation was on file at the RDA; however, the documentation processed and on file at the City is less than required from City departments. Even though the RDA is legally a separate entity from the City, we feel that documentation standards for disbursements should be consistent. This will also facilitate the monitoring responsibility the City has for federal grants. 4 Potential for Duplicate Payments The City's accounts payable/cash disbursements system centers around two subsystems, the purchase order system and the voucher system. Departments are to use the purchase order system to encumber and eventually pay for goods that will be invoiced to the City. Before payment is made to a vendor the purchase order, invoice, and purchase order liquidation must be matched up. It is our understanding that the system internally checks to verify that the invoice has not been paid before on the same purchase order number. The system does not check to verify if the invoice number was paid on a different purchase order. Departments are to use the voucher system for services, maintenance contracts, etc. A voucher does not necessarily require an invoice. Typically, a voucher will be paid if it has the appropriate departmental approval. The voucher itself has a field for an invoice number; however, the number input in this field is frequently the voucher number. The possibility for duplicate payments exists when a department requisitions goods using the purchase order system and then uses the voucher system for payment. We noted two duplicate payments. Both were paid off the voucher system and the purchase order system. These duplicate payments were recovered from the vendors. The City does periodically run exception reports. However, much research is required to determine if a duplicate payment was actually made. To enhance the cash disbursement system and reduce the possibility of double payments, we make the following suggestions: 1. When a voucher is filled out for payment the appropriate field on the voucher should, if possible, have the invoice number entered in the proper field. 2. The system should be modified to perform an internal verification on both the purchase order system and the voucher system comparing invoice numbers in the vendor file to verify that the invoice number has not been previously paid to the same vendor. 3. The system should be modified such that when matching invoice numbers on the purchase order the system would match invoice numbers by vendor not by purchase order number. If that invoice number has been paid to the vendor previously, regardless of the purchase order number, the payment would be flagged until further research could determine if the invoice was paid. 5 ADMINISTRATIVE COST ALLOCATION The City has an administrative cost allocation program in place whereby a multi-step process is used to allocate general fund administrative expenditures to user departments. Costs that are allocated benefit other departments and include cash management, payroll, general accounting, personnel, purchasing, accounts payable, budget development, and others. The allocation process in the current year left in excess of t3,000,000 in unallocated costs in the general fund that could be allocated to general fund departments or to other City funds. While some of these costs apply to the general fund, there are some that do not. The Housing Authority and the Community Development Block Grant Program were not allocated any costs. The Library and the Capital Improvements Fund were allocated less than the amount determined under the cost allocation program. We encourage the City to evaluate their administrative cost allocation program. Full-cost allocation would account for all administrative costs and require a buildup of costs; then these costs would be allocated simultaneously to the user departments in both the general fund and those outside of the general fund. RISK MANAGEMENT The Employee Benefit Self-Insurance Fund is an internal service fund used to account for the costs of providing insurance for employee health, accident, long-term disability, unemployment and workers' compensation. To the degree that these needs are met the fund is meeting its objectives. We noted some weaknesses from an accounting standpoint. Currently, the City is participating with the State in their insurance program. Monthly remittances are made to the State to cover employee medical premiums. The reconciliations made to determine if premiums paid to the State are consistent with payments received from the various departments are not complete nor are they adequately documented. To improve control, we suggest that this process include a formal reconciliation of revenue (interfund charges) to expense (premiums paid) to determine if the State is billing the City for the same number of individuals for which departments are paying premiums. The number of individuals under each type of coverage should agree with payroll records showing insurance deduction or coverage. The same type of reconciliation should be performed for dental, optional life, accidental death, etc. An accounting or finance orientation should be implemented in risk management so that the emphasis not be strictly one of collecting payments and paying premiums; rather, procedures should be applied to determine the accuracy and reasonableness of risk management (insurance) related items. 6 FIXED ASSETS Our primary concern in prior years with fixed assets has been the timeliness of the information. During the current year we have had problems getting fixed asset information regarding the utilities and fleet management. The additions, retirements, and total cost appear to be accurate. However, the system has not been able to generate the necessary information for depreciation and accumulated depreciation in a timely fashion. Numerous attempts have been made to correct this problem, none of which have been completely successful. Due to the problems with the system, there are departments who have set up their fixed assets on separate systems, and there are other departments that upon receiving the fixed asset runs are recomputing everything by hand. Each year, an inordinate amount of time is spent dealing with fixed assets. We suggest a committee be formed with individuals from user departments. The strengths and weaknesses of the system should be evaluated. If the system in place is not capable of providing adequate, reliable, and timely information, a list of alternatives should be generated and evaluated. BUDGET We saw improvement in the preparation of the 1989 budget as it relates to financial reporting issues. For example, items such as demolition, weed abatement, and EMS Grants were budgeted in trust and agency funds in 1988. These items normally would not be accounted for in trust and agency funds. The budget development staff reviewed the 1989 budget and eliminated these and other problems. We feel this is an important process and encourage the annual review of budgets from an accounting/reporting perspective. STATUS OF PRIOR YEAR'S COMMENTS Sales Tax Revenues In our prior year management letter we indicated a good test over sales tax revenue would be to run the tape prepared by the State Tax Commission against the business licensing data base maintained by the City. The purpose of this test would be to verify that those businesses licensed by the City are paying sales tax or have an exempt status. This test would also help the City by identifying all those entities paying sales tax that should likewise have a business license. During the current year the City was able to perform this test. The results indicated approximately 400 businesses that did not have business licenses. Notices were sent to these businesses and follow-up procedures are underway. We commend City personnel for their efforts in this area. 7 Innkeeper's Tax Another of the City's revenues reviewed in the prior year was that of Innkeeper's Tax. We discussed a key source of verification to determine the accuracy of gross room rentals would be a comparison of the amount reported to the City to the amount reported to the State Tax Commission on the State Transient Tax. This comparison has been made by City personnel and was a good method to determine that the City is collecting the appropriate Innkeeper's Tax. Building/Plumbing/Electrical/Mechanical Permits As noted in the prior year Building and Housing issues permits throughout the day, and unless the individual purchasing the permit pays with cash, Building and Housing collects the checks for the permits and at the end of the day forwards them to the Treasurer's office for input. We also noted that while the permits are prenumbered in a numerical sequence, there is no reconciliation performed reconciling and verifying the numerical sequence. Finally, there is no reconciliation performed of the permits issued to the revenue recorded. We understand that City personnel are currently considering the method being used to receipt monies by Building and Housing. The proposed change would be to require all monies to be receipted by the Treasurer's office; then the receipt would be returned to Building and Housing and a permit issued. We encourage the City to follow through with this change. We also encourage the City to review its methods and procedures for reconciling the numerical sequence of permit numbers and the revenue being recorded. Parks and Recreation Department Our primary concern in the prior year was with regards to a lack of separation of duties. The receipt of cash, preparation of the deposit, and reconciling cash to detail records were being performed by the same individuals. This problem has been eliminated to a degree through the installation of a cash register at the Parks Department. We also reviewed concession revenues where concession fees are based on a percentage of the concessions' gross receipts. The gross receipt amounts submitted by the concession owners are not examined or verified by City personnel. We recommend a remittance form be prepared which will allow the concession owner to account for daily gross receipts and accumulate a total monthly figure. The form would then accompany the remittance to the City. On a cyclical basis, the City's internal auditors should then agree the daily totals shown on selected remittance forms to the totals per the concessionaire's cash register tape. This procedure would verify the accuracy and increase the control over concession revenues. 8 Parking Tickets Data processing is capable of printing out a list of parking tickets unaccounted for. This report prints out the ticket numbers which have yet to be entered on the computer system that are below the highest ticket number issued. We suggest that when the City and County building is completed and the tickets are ordered with the new address better controls over unissued tickets be implemented. As ticket books are issued the officer to whom they are issued and the series being issued should be documented. Then on a periodic basis, as data processing prepares the report of parking tickets unaccounted for, a determination could be made as to what has happened to tickets that have not been entered into the system. Police Department The State pays the City a fee when an officer appears in court. The possibility exists that an officer could appear in court and not fill out the required appearance form. We understand that a policy is currently being considered that would mitigate the possibility for the City to not receive the reimbursement. With the assistance of the payroll clerks a form will be submitted each pay period indicating those officers with court appearances and those for which the officer is requesting reimbursement. We encourage the City to follow up on this policy change. We also understand that the Police Department is considering a policy change with regards to the handling of cash receipts. In the past the reconciliation of cash and preparation of the deposit were performed by the same person. The proposed policy change is to have the Treasurer's office prepare the deposit and to have accounting personnel in the Police Department reconcile the cash receipts to the deposit at the Treasurer's office. We encourage the timely implementation of this policy. Golf Course As in the prior year, we observed that the same personnel at the golf courses handle the cash, fill out the start sheets, prepare deposit slips, and reconcile cash in the cash register to the cash register tape before sending the information to the finance department. As in the past, the finance department performs some verification procedures; however, an opportunity does exist to abuse the system if golf course personnel are so inclined. We continue to suggest the City evaluate the alternatives available that would reduce the opportunity for mishandling of funds. Federal Grants In the prior year the City had not established a loan servicing agreement on the City Centre Urban Development Action Grant (UDAG) on a timely basis and as a result had missed interest payments. This servicing has now been set up and procedures are in place to insure that in the future these loan servicing agreements are set up on a more timely basis. 9 We commend City personnel involved with the Federal Grants for the improvements made in general organization and monitoring of disbursed funds. We noted that audit plans have been tailored to the Community Development Block Grant, Housing Development Action Grants, and the UDAG. Personnel in Capital Planning are performing "mini audits" and any findings or concerns are being appropriately addressed. 10 SALT IAI WIY1 GORtRA'I DEPARTMENT OF FINANCE 324 SOUTH STATE STREET, 5TH FLOOR LANCE GATEMAN, CPA SALT LAKE CITY, UTAH 84111 PALMER DEPAULIS DIRECTOR OF FINANCE MAYOR (801) 535-7676 January 12, 1989 The Honorable Mayor and Members of the City Council Salt Lake City Corporation RE: Management Letter From Grant Thornton The management of Salt lake City Corporation is responsible for establishing and maintaining a system of internal accounting control and upgrading those controls as determined appropriate. Each year an independent certified public accounting firm reviews our internal controls to help us determine if there are any weaknesses in our systems that might need management ' s attention. This year the firm of Grant Thornton evaluated our internal accounting controls as a function of their engagement of the City' s annual financial audit for the year ended June 30, 1988. Grant Thornton issued a letter on December 16, 1988 that provides the City some suggested areas where internal accounting controls can be improved. Their review disclosed no condition or area that they believed contained any material weaknesses. As indicated in their letter, the review of internal controls is not extensive enough to determine all possible corrective actions, nor does it determine whether resources are available for alternative measures which they proposed. Therefore, we respectfully submit the following explanations and proposed corrective actions, for each of the comments or suggestions of the Grant Thornton Management Letter. Direct Payroll Deposits - The employees of all credit unions must first authorize any deduction through their credit unions which notify us of any changes. It should be noted that the City, to our knowledge has never had any problem or complaint in this area. As commented by the auditors, the responsibility and burden of proof of employee authorization would rest with the City. Since this appears to have legal repercussions, we will seek the City Attorney' s advice on this item and follow their counsel. 1 Comp Time - Until recently the City allowed each department to keep its own comp time records. We programmed the payroll system to allow the recording of comp time as a convenience to the departments, but did not put controls on the system. Thus the system did not have all comp time recorded on the mainframe payroll system. The problem discussed by the auditors was due to a couple of departments inputting comp used but not comp earned. Negative compensatory time was not nor was it ever permitted. At no time did an employee have negative compensatory time. The City's policy regarding compensatory time has been updated to require the same procedures as we have for vacation and sick leave. System controls are in place to insure that negative compensatory time is not allowed and all time keepers are using the automated payroll system. Preparation/Approval of Cash Disbursements - Although, there are instances of secretarial approval, they do not approve the documentation which must be attached. Finance will not process any vouchers without the required documentation. Approval powers were given to some secretaries to speed up the payment process when their supervisors were unavailable. We are careful to note that payments are not reimbursed back to the secretary who approved the payment or prepared the voucher. However, we do not want these occurrences to provide a false or misleading appearance. We will request to all department heads and finance staff that all vouchers will have two different signatures before a voucher will be processed. We will further suggest that secretaries be taken of the authorized list. Contract Payments - The segregation of duties has been an ever increasing problem in Finance because of escalating workloads and a shrinkage of employees. One of our supervisors that performed a secondary review was killed in an accident a year and a half ago and was never replaced. Contracts are an area with which finance is very concerned and they are heavily monitored by Finance, the Attorney' s Office, Engineering and by each department. We will reestablish a secondary review in Finance and ensure all documentation is adequate without compromising any other function. Redevelopment Agency (RDA) Disbursements - Documentation for loan related disbursements and land purchases is extensive and perhaps a duplication to store this documentation in two locations. Prior audits have not been concerned with RDA' s handling of disbursements. We agree that if we require RDA to submit documentation they will then be consistent with other City departments. We will make the recommendation to the Redevelopment Agency Board. Potential for Duplicate Payments - The Department of Finance is aware of the problem of possible duplicate payments through the voucher system. We do monitor and review areas where duplicate 2 payments might arise and have been very successful in keeping this to a minimum. We have reservations that the time and operating costs necessary to reprogram the FICS system might prove more costly than the benefits derived. However, we will examine this area and determine whether some modification can be justified. Administrative Cost Allocation - The Library and Housing Authority have agreed to pay for the full cost of services rendered by the City. The unallocated funds noted by Grant Thornton apply to the governmental funds and as such do not provide additional revenue nor indicate lost revenue from other funds to the General Fund. Administrative costs are currently being directly charged to the Community Development Block Grant Program (CDBG) and therefore, they are not allocated through the allocation plan to prevent double billing CDBG. The City's cost allocation plan is soon to be reviewed by an independent consultant and will be revised and updated to provide for full- cost recovery. Risk Management - The auditors concern for Risk Management indicates that some of the accounting skills required for this organization are not sufficient. Finance does assist them in these areas, but does not have the staff to provide full support. Additional orientation might be helpful but may not fully solve the problem. We will explore this and other corrective action with the Administration. Fixed Assets - We agree that the problems exist in our software and have held many meetings to solve the problem. The committee suggested to evaluate a possible solution will be established. Budgeting - The problem of budgeting contrary to accounting principles was discovered by this department and corrected last spring as indicated. Because the functions of Accounting/Reporting and Budgeting are in the same department, review between these areas is a continuing process. PRIOR YEAR MANAGEMENT COMMENTS Sales Tax Revenues - The comparisons we are now performing has been a project our division has been refining for some time. We are now seeing the efforts of our labors. Innkeeper's Tax - The new method for determining the accuracy of the innkeeper' s tax is working well. Building/Plumbing/Electrical/Mechanical Permits - We have already implemented and are testing new procedures. All new procedures 3 are written and reconciliation procedures are an integral part of the new process. Modifications will be made as required in the refinement process. Parks and Recreation Department - Finance will periodically review the new improvements Parks has made to their cash collection system. The documents submitted by the concessionaires to Parks has created difficulty reconciling revenues to gross receipts. The Parks Department will renegotiate concession contracts this year. All concessionaires will be paying the City based on a flat lease fee by June 1989. This change should eliminate these problems. Parking Tickets - The City is currently requesting a report on a periodic basis which lists parking tickets which have not been entered into the computer system. This report will be reconciled with tickets issued to determine discrepancies. Police Department - The new forms have been designed and the new procedures for payroll clerks are in the draft stage. Court time appearance will then be easily reviewed. Cash collected by the Police and reconciled before depositing is currently being reviewed and modified. The Treasurers Office and the Police Department are discussing the proposed changes. Golf Course - A new policy for all golf courses which will improve the present methods they use for handling cash was drafted several months ago and is in the process of being implemented. The nature of the changes and the number of personnel involved require substantial training and acceptance before full implementation is possible. The golf professionals are working closely with Parks and Finance to finalize this new policy for the upcoming season. Federal Grants - Capital Planning as mentioned has improved their loan servicing procedures and we commend them on their efforts to tighten their internal controls. We will be glad to discuss any of the above comments in greater detail at your convenience. We appreciate the auditors assistance which helps us to ensure that the City has ample internal controls. ' cerel nce R. Bateman Director of Finance 4 GOLF GREEN FEES PHOENIX resident : $ 12 . 00 non-resident 18 . 00 senior pass 160 . 00 resident 25/18 hole rounds carts 14 . 00 range 1 . 35 2 . 70 PORTLAND green fees 5 . 00/ 9 . 00 weekend 6 . 00/ 11 . 00 seniors 2 . 75 for 9 holes ( city resident ) 100 . 00 October/March ( city resident ) cart 16 . 00 range 4 . 00 LAS VEGAS resident 18 . 00/ includes cart non-resident 29 . 00" seniors 4 . 00 walking ( 18 hole/resident ) 12 . 00 with cart" " carts 7 . 50 range 3 . 25 ' DENVER resident 10 . 00 non-resident 13 . 00 seniors 5 . 00 9 holes/ 62+ with I . D . card carts 16 . 00 resident 325 . 00 weekdays only resident 425 . 00 weekends and holidays also BOISE green fees 10 . 00 ( regular ) senior 9 . 00 senior season 500 . 00 reg . season 550. 00 carts 15 . 00 range 1 . 50 No 9 hole rounds sold . Seniors may come back later in the day ( space permitting ) and play a 2nd 9 holes . You do not have to be a resident to buy a season pass , but all pass holders at this time are residents . MURRAY green fees 6 . 00/ 12 . 00 no coupons no passes carts 7 . 50 per person no private carts