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I I APPENDIX III - MANAGEMENT LETTERS DEVELOPED AND ISSUED IN CONNECTION WITH LOCAL GOVERNMENT AUDITS I II. STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS (CONTINUED) I 04-3 Report Submission (Continued) Manaqement Response I Management has drafted the required reports for FY 2004 and 2005 will submit to the State immediately. Going forward, we assigned this task to a responsible staff member. I 04-4 Disbursement Process I Condition I We reviewed the control procedures surrounding the disbursement processes and noted the following weaknesses: I (a) Posting of vendor invoices in the accounts payable ledger is not properly segregated from the check preparation activities. (b) The system allows for posting of non-purchase order invoices in the accounts payable ledger and to be processed for payment more than once. (c) There are inadequate receiving and verification procedures for the purchase of goods and services. Currently, the City processes invoices for payment based solely on the approval of Department Heads without verifying that the goods and services were actually received. I I Recommendation I I (a) We recommend that the City establish written policies and procedures that provide proper segregation of duties and responsibilities in the Accounts Payable Function. Personnel involved in the posting of invoices in the Accounts Payable Ledger should be separated from the check preparation functions. (b) We also recommend that paid vendor invoices and check vouchers be stamped "PAID" as mitigating control to prevent possibility of processing vendor invoice for payment twice. (c) We further recommend that the City develop policies and procedures on receiving activities to verify and reconcile invoice details with the actual receipt of goods or services before any payment is made. I I Current Year Status I The City did not implement any of the recommendations during the Fiscal Year 2005. This comment will be repeated. I I 9 I