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Sample Government, FLORIDA SCHEDULE OF FINDINGS AND QUESTIONED COSTS-FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE PROJECTS (Continued) SECTION II - FINANCIAL STATEMENT FINDINGS (Continued) Effect Revenues and expenditures in the Five Year Capital Improvement Fund, as well as the governmental activities capital assets were understated. Cause It has been the City's practice to record donations of this type as escrow deposits, rather than recording the transaction as a revenue, and recording an expenditure when funds are disbursed. The primary reason is that these items were not budgeted. Recommendation We recommend that the City, in the future, record transactions of this nature as revenues and expenditures within the respective fund. Further, if the items are not included in the original adopted budget, the budget of the respective fund should be amended. Views of Responsible Officials and Planned Corrective Action The City has revised its practice to provide that any donations or contributions from developers or outside parties will be recognized as revenue and a corresponding expenditure/expense in the respective fund. This will also ensure that the capital asset additions are recorded in the fixed asset system. This will be accomplished either as part of the annual development of the approved budget or through the quarterly budget amendment process, 2007-03 Information Technology Policies and Controls Criteria Information technology policies and procedures, including the data backup process, provide the framework for the City's security over electronic data. The lack of such policies and procedures can result in not identifying errors and irregularities on a timely basis, as well as the loss of data, Conditions . There is not a system in place for monitoring unauthorized software installed on individual desktops. . The City does not currently maintain a log to track licensed software installed on individual desktops. 3