(A) (1) Management designs control activities to achieve objectives and respond to risks. The Clerk-Treasurer will establish and maintain a system of internal controls that satisfies the town’s objectives in the following:
(a) Controls over information processing;
(b) Control over vulnerable assets;
(c) Establishment and review of performance measures and indicators;
(d) Segregation of duties;
(e) Proper execution of transactions;
(f) Accurate and timely recording of transactions;
(g) Access restrictions to and accountability for resources and records;
(h) Documentation of transactions; and
(i) Meeting established objectives and goals for city operations and programs.
(2) General internal control principles for departments are as follows.
(a) Separation of duties. Duties are separated so that one person’s work routinely serves as a check on another’s work. No one person has complete control over more than one key function or activity (e.g., authorizing, approving, certifying, disbursing, receiving, or reconciling).
(b) Authorization and approval. Proposed transactions are authorized when proper and consistent with town policy and the department’s plans.
(c) Custodial and security arrangements. Responsibility for physical security/custody of town assets is separated from record keeping/accounting for those assets. Unauthorized access to town assets and institutional data is prevented.
(d) Timely and accurate review and reconciliation. Departmental accounting records and documents are examined by employees who have sufficient understanding of the town accounting and financial systems to verify that recorded transactions actually took place and were made in accordance with town policies and procedures. Departmental accounting records and documentation are compared with town accounting system reports and financial statements to verify their reasonableness, accuracy, and completeness.
(e) Application. The general internal control principles should be applied to all departmental operations, especially accounting records and reports, payroll, purchasing/receiving/disbursement approval, equipment and supply inventories, cash receipts, petty cash and change funds, billing and accounts receivable.
(3) All town systems, processes, operations, functions, and activities are subject to evaluations of internal control systems. The results of these evaluations provide information regarding the town’s overall system of control.
(4) Information must be timely and communicated in a manner that enables people to carry out his, her, or their responsibilities. All covered employees must be trained on Internal Controls according to I.C. 5-11-1-27(g).
(5) Internal control is meant to keep the town focused on achieving its mission while avoiding surprises. All levels of management must assess the costs, benefits, and risks when designing controls to develop a positive control environment and compensate for the risks of noncompliance, loss of assets, or unreliable reporting while accomplishing the town’s mission. The Clerk-Treasurer will specifically monitor compliance with payroll activities, disbursement activities, receipting activities, cash activities, and credit cards transactions.
(B) Management designs the political subdivision’s information system and related control activities to achieve objectives and respond to risks. The Clerk-Treasurer and department heads will work with a technology representative the town is contracted with to ensure that information technology is used as an integral part of the internal control system. This may include, but not be limited to:
(1) Disaster recovery;
(2) Backing up systems;
(3) Setting permission such that only certain users may perform certain tasks;
(4) Using technology to accomplish segregation of duties;
(5) Limiting the authority to access different components of various softwares to employees with duties specifically related to that component;
(6) Prohibiting user ID and password sharing among employees;
(7) Restricting the authority to correct or make adjustments to records to key employees; and
(8) Requiring the use of prescribed forms or the approval of alternative forms.
(C) 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. All procedures are in writing and communicated frequently to all relevant employees. Policies are available both electronically and in hard copy form.
(Ord. 2016-07, passed 12-19-2016)