The town adopts and directs the following principles in explanation of the pertinent standards above be followed at all levels of the town government.
(A) Control environment.
(1) The Town Council and town department heads demonstrate a commitment to integrity and ethical values. The town has the responsibility to establish and maintain an adequate system of internal control and to furnish to the Town Council, various boards and commissions, governmental agencies, creditors and others reliable financial information on a timely basis. An adequate system of internal control is necessary for the town to discharge these responsibilities.
(2) As the fiscal body for the town, the Town Council is responsible for setting the institutional expectations for internal control; ensuring management is aware of the those expectations, requiring that upward communications channels are open through all levels of management; and evaluating management’s effectiveness toward monitoring the control environment and implementing sound control policies and procedures. As the town’s chief fiscal officer, the Clerk-Treasurer will be the Town Council’s chief agent in implementing and managing the internal control policies and procedures.
(3) Individuals with delegated approval authority, e.g., elected officials and department heads, are responsible for establishing, maintaining and supporting a system of internal controls within their areas of responsibility and for creating the control environment that encourages compliance with town policies and procedures.
(4) The town’s employee handbook provides a roadmap for recruiting and maintaining quality employees. Prior to employment, individuals may be subject to a preemployment background screening and/or a credit history check. The town will continue to assess the best recruitment pools and tools for the different skill sets of skills necessary to adequately implement and maintain quality internal controls.
(5) Individuals are held accountable for their internal control responsibilities through a recognized structure which includes relevant job descriptions, operating procedures, periodic reviews, regular feedback and a progressive disciplinary policy. Additionally, town administration seeks to address issues in specific departments and positions through regular one-on-ones with department heads.
(B) Risk assessment.
(1) Management defines objectives clearly to enable the identification of risks and risk tolerances. Through the creation of standard operating procedures and accurate organizational reporting charts, management conveys and identifies objectives, missions, policies and risk tolerances to employees.
(2) Management identifies, analyzes and responds to risks related to achieving the defined objectives.
(3) Management considers the potential for fraud when identifying, analyzing and responding to risks. Management is committed to fraud prevention by utilizing a “trust but verify” approach. The potential for fraud, misappropriation and outright theft are contemplated as controls are designed for various town divisions.
(4) Management identifies, analyzes and responds to significant changes that could impact the internal control system.
(C) Control activities.
(1) Management designs control activities to achieve objectives and respond to risks. General internal control principles for departments include separation of duties; authorization and approval of expenses and transactions; and timely and accurate review and reconciliation.
(2) Management designs the town’s information system and related control activities to achieve objectives and respond to risks. The Clerk-Treasurer and department heads will work to ensure that information technology is used as an integral part of the internal control system.
(3) Management implements control activities through policies. The town has an employee handbook that is regularly updated to communicate policies to employees. Additionally, the Clerk-Treasurer regularly works with departments and employees who handle financial transactions to recommend and ensure best practices.
(D) Information and communication.
(1) Management uses quality information to achieve the town’s objectives. By adopting standards and investing in systems that exceed state-mandated minimums, town management provides employees and stakeholders with high-quality information and informatics systems.
(2) Management internally communicates the necessary quality information to achieve the town’s objectives.
(3) Management externally communicates the necessary quality information to achieve the town’s objectives. Communications with the State Board of Accounts, other state agencies, grantor agencies and regulatory agencies are documented by email, memos, letters and other forms of written correspondence.
(E) Monitoring.
(1) Management establishes and operates monitoring activities to monitor the internal control system and evaluate the results. Town administration monitors and evaluates compliance with internal control policies via multiple vectors. Separation of duties, layered approval systems, monthly reports and physical controls allow management to both review and evaluate control systems.
(2) Management remediates identified internal control deficiencies on a timely basis. If informed of a material breach of internal controls, the Clerk-Treasurer and Town Council actively investigate and address said breach and adjust policies and procedures to prevent such breaches in the future.
(Ord. 2016-1A, passed 6-14-2016)