(A) Management designs control activities to achieve objectives and respond to risks.
(B) The Clerk-Treasurer will establish and maintain a system of internal controls which satisfies the city’s objectives in the following categories:
(1) Risks are identified and effectively managed;
(2) The safeguarding of city assets;
(3) The reliability and integrity of financial information;
(4) Compliance with city policies, plans, procedures, laws and regulations;
(5) The economical and efficient use of city resources; and
(6) Meeting established objectives and goals for city operations and programs.
(C) General internal control principles for departments are as follows.
(1) Separation of duties.
(a) Duties are separated so that one person’s work routinely serves as a check on another’s work.
(b) No one person has complete control over more than one key function or activity, such as authorizing, approving, certifying, disbursing, receiving, reconciling and the like.
(2) Authorization and approval.
(a) Proposed transactions are authorized when proper and consistent with city policy and the department’s plans.
(b) Transactions are approved by the person who has delegated approval authority, which is usually delegated on the basis of special competency or knowledge.
(3) Custodial and security arrangements.
(a) The responsibility for physical security or custody of city assets is separated from the record keeping or accounting for those assets.
(b) Unauthorized access to city assets and institutional data is prevented.
(4) Timely and accurate review and reconciliation.
(a) Departmental accounting records and documents are examined by employees who have a sufficient understanding of the city’s accounting and financial systems to verify that recorded transactions actually took place and were made in accordance with city policies and procedures.
(b) Departmental accounting records and documentation are compared with city accounting system reports and financial statements to verify their reasonableness, accuracy and completeness.
(5) Applied to all. The general internal control principles should be applied to all departmental operations, especially accounting records and reports, payroll, purchasing, receiving and disbursement approval, equipment and supply inventories, cash receipts, petty cash and change funds, billing and accounts receivable.
(D) All city systems, processes, operations, functions and activities are subject to the evaluations of internal control systems. The results of these evaluations provide information regarding the city’s overall system of control.
(E) Information and communication information must be timely and communicated in a manner which enables people to carry out their responsibilities.
(1) All covered employees must be trained on internal controls according to I.C. 5-11-1-27(g). All personnel must receive a clear message from the city’s administration that control responsibilities are to be taken seriously. Failure to comply with established practices will subject individuals to the terms of disciplinary action or dismissal.
(2) Employees must understand their own roles in the internal control system, as well as how individual activities relate to the work of others. To this end, whenever a new budgetary unit, financial activity and the like is set up, the Controller will provide notification to the appropriate parties of the responsibilities incumbent on them for good business practices and sound financial management, including reference to the principles within this policy.
(3) Employees must have a means of communicating significant information to the city’s administration.
(4) The city must communicate effectively with external parties, such as auditors, creditors, contractors, suppliers, regulators and other stakeholders.
(F) (1) Internal control is meant to keep the city focused on achieving its mission while avoiding surprises. There is a balance between effective controls and mission accomplishment. Costs associated with internal controls should not exceed their benefit, nor should controls be allowed to stifle mission effectiveness and timely action.
(2) All levels of management must assess the costs, benefits and risks when designing controls to develop a positive control environment and to compensate for the risks of noncompliance, loss of assets or unreliable reporting while accomplishing the city’s mission.
(Ord. 2016-04, passed 7-5-2016)