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I APPENDIX III - MANAGEMENT LETTERS DEVELOPED AND ISSUED IN CONNECTION WITH LOCAL GOVERNMENT AUDITS I I TOWN OF SOUTHWEST RANCHES, FLORIDA SCHEDULE OF FINDINGS AND RECOMMENDATIONS SEPTEMBER 30, 2005 (CONTINUED) I I SECTION 11- STATUS OF PRIOR YEAR FINDINGS AND RECOMMENDATIONS (CONTINUED) 2004-1: Out of sequence checks (Continued) I Status: The Town corrected the problem as soon as the problem was discovered by the auditors. However, since this problem was still present for most of the year 2005, this comment will be repeated. I Management's Response: The new financial system implemented in October 2005 will prevent this system design flaw from happening again. I 2004-2: Missing supporting documentation for Journal Entries Condition: During the audit we noted that management of the Town did not have available the documentation supporting the journal entries recorded during the year. The Management of the Town does not maintain a paper copy of the journal entries that were prepared during the year. Journal entries are posted directly to the accounting system without keeping a hard copy of the entry. Therefore, the documentation supporting the journal entry is not attached and the signature of the person authorizing the transaction is not documented. In addition, there are several instances of journal entries with no description of the reason for the journal entry. I I Recommendation: We recommend that all journal entries be filed in chronological order with proper documentation supporting the entry attached. I Status: We noted that the Town has not fully implemented this recommendation. This finding will be repeated. I Management's Response: We agree with the recommendation and will fully implement and maintain a centralized journal entry file. I 2004-3: Invoice date per accounting system is different than actual invoice date I Condition: While performing our search for unrecorded liabilities, we noted several instances where the invoice dates entered in the accounting system and the actual invoice date did not correspond. The date entered in the accounting system was a date subsequent to the date of the actual invoice. I Recommendation: We recommend that management of the Town contact the software vendor to determine if the errors occur as a result of the program not being utilized correctly or the program is not set up properly. We also recommend that control measures be implemented whereby the Invoice Dates are reviewed and corrected in a timely manner before the checks are printed. I I I 14 I