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I APPENDIX III - MANAGEMENT LETTERS DEVELOPED AND ISSUED IN CONNECTION WITH LOCAL GOVERNMENT AUDITS I I II. STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS (CONTINUED) I 04-4 Disbursement Process (Continued) Manaqement Response I a. Management disagrees and feels that we have sufficient segregation of duties to ensure internal control. For example, the person responsible for posting invoices does not have the ability to print or sign checks. The entire accounts payable process involves a minimum of four employees. which we feel provides sufficient separation of duties. I b. Management disagrees: our current system will not allow double payment of the same invoice. Under our current system, non purchase order purchase (check requests) is required to submit an original invoice for payment. Our current computer system will not allow the payment of a single invoice twice. In addition. all invoices are signed by the accounts payable clerk to signify payment of the invoice and a copy of the check is attached to the invoice after processing. I I c. Management will revise current purchasing and receiving policies and procedures to ensure adequate receiving procedures. Currently, the department director for the department of the received merchandise is required to approve all invoices to signify that they have received merchandise and to authorize payment. I I 04-5 Delinquent Accounts Condition I Our review of the Account Receivables Aging Analysis disclosed the existence of various accounts that have been delinquent for more than a year. Currently, the City has no established written policy in calculating its exposure for possible losses from uncollectible accounts. I Recommendation I I We recommend that written policies and procedures be established to properly compute the allowance for doubtful accounts to ensure that amount reported in the general ledger for accounts receivable fairly states the financial position of the City. Also. we recommend that the management develop systematic and aggressive method of collecting these delinquent accounts to maximize resources of available funds to support the City's operations. Current Year Status I Recommendation has not been implemented, this comment will be repeated. ManaQement Response I I Currently, accounts such as lot clearing and code violations are reviewed periodically, to address any outstanding balances. As an administrative policy, all accounts that are more than one (1) year past due are forwarded to a collection agency to further our collection efforts. In addition, the City records all outstanding debt that is associated with lot clearing and code violations as a lien against the property to ensure collection upon change of ownership. I 10 I