(A) General.
(1) The town adopts as policy the internal control standard as set forth by the Indiana State Board of Accounts Uniform Internal Control Standards for Indiana Political Subdivisions manual as expressly written and published by the Indiana State Board of Accounts in September 2015, as amended from time to time.
(2) As required by statute, all erroneous or irregular variances, losses, shortages or thefts of local government funds or property shall be reported immediately to the State Board of Accounts. The Town Council will seek to establish an appropriate materiality threshold (dollar amount of variance, loss, shortage or theft that requires reporting) and may approve or modify the threshold amount as deemed appropriate. The Town Council will communicate the materiality threshold in a detailed policy that shall distinguish between cash and other types of assets, maintenance of documentation and resolution of incidents that do not meet the materiality threshold.
(3) All appropriate town personnel will receive appropriate training on the internal control standards and procedures. PERSONNEL is defined as an officer or employee whose official duties include receiving, processing, depositing, disbursing or otherwise having access to funds that belong to the federal government, state government, a political subdivision or another governmental entity. As required by statute, the fiscal officer of the town (Clerk/Treasurer) will file annual certification of training with the State Board of Accounts.
(4) The Clerk/Treasurer’s office, in coordination with the Town Council, will develop, maintain and train personnel on internal control standards and policies and all new personnel shall receive training timely. All town officers, elected officials and employees are required to comply with the policy. Employees who fail to comply with this policy are subject to disciplinary action, up to but not, limited to termination of their employment.
(B) Purpose. The purpose of this section is to establish internal control standards and procedures for the town, for the purpose of requiring appropriate training of personnel regarding such standards and procedure, for the purpose of adopting a policy regarding such standards and procedures; and for the purpose of establishing a materiality threshold.
(C) Findings. The above recitations are adopted as findings of the Town Council.
(D) Mission. The town further finds that its mission as related to an internal control system is as follows:
(1) Provision of a democratic governmental structure at the grassroots level;
(2) Provision of services as determined through the political process including, but not limited to, police and fire protection, access to town utilities (sanitary sewer) and pursuit of economic development;
(3) Promotion of government efficiency, accountability, reliability and transparency; and
(4) Promotion of safeguards to reduce the risk of loss due to fraud, waste, abuse, mismanagement or errors.
(E) Objectives. The town finds that its interrelated and often overlapping objectives as related to internal control systems are as follows:
(1) Operations objectives which involve the ways governmental services are performed and the performance of those providing governmental services including, by way of example, budgeting, purchasing, permitting, cash management and planning among others;
(2) Reporting objectives which involve the filing of financial and non-financial information to those inside the government and those outside of the government including by way of example filing the annual report, audit and examination cooperation, filing uniform conflict of interest forms and the other filings with any governmental agency or official or information required to be kept such as an OSHA log and responding to a public records request among others; and
(3) Compliance objectives involve the adherence to law and regulations including by way of example following guidance documents such as the State Board of Accounts’ manuals, bulletins, directives and the Department of Local Government Finance’s forms and directions and including other outside of government trainings and documents such as IACT among others.
(F) Standards. The town adopts and directs the minimum level of control standards and internal control procedures for an internal control system that includes the following five standards to promote government accountability and transparency as described in the Uniform Internal Control Standards for Indiana Political Subdivisions guidance document from the State Board of Accounts dated September 2015 and as thereafter modified:
(1) Control environment;
(2) Risk assessment;
(3) Control activities;
(4) Information and communication; and
(5) Monitoring.
(G) Principles. The town adopts and directs the following principles in explanation of the pertinent standards above be followed at all levels of the town government.
(1) Control environment.
(a) The Internal Control Committee, hereinafter named, town department heads and the Town Council, as the fiscal body of the town, (hereinafter collectively referred to as “management”) demonstrate a commitment to integrity and ethical values;
(b) The Internal Control Committee oversees the town’s internal control system, while the Clerk/Treasurer, as the chief fiscal officer of the town, shall implement and manage the internal control policies and procedures;
(c) Management establishes an organizational structure, assigns responsibility and delegates authority to achieve the town’s objectives;
(d) Management demonstrates a commitment to attract, develop and retain competent individuals; and
(e) Management evaluates performance and holds individuals accountable for their internal control responsibilities.
(2) Risk assessment.
(a) Management defines objectives clearly to enable the identification of risks and defines risk tolerances;
(b) Management identifies, analyzes and responds to risk related to achieving the defined objectives;
(c) Management considers the potential for fraud when identifying, analyzing and responding to risks; and
(d) Management identifies, analyzes and responds to significant changes that could impact the internal control system.
(3) Control activities.
(a) Management designs control activities to achieve objectives and respond to risks;
(b) Management designs the town’s information system and related control activities to achieve objectives and respond to risks; and
(c) Management implements control activities through policies.
(4) Information and communication.
(a) Management uses quality information to achieve the town’s objectives;
(b) Management internally communicates the necessary quality information to achieve the town’s objectives; and
(c) Management externally communicates the necessary quality information to achieve the town’s objectives.
(5) Monitoring.
(a) Management establishes and operates monitoring activities to monitor the internal control system and evaluate the results; and
(b) Management remediates identified internal control deficiencies on a timely basis.
(H) Internal control system. The town adopts the internal control standards above so as to establish an effective internal control system for the town through its design, implementation and operation.
(I) Safeguard of assets. The town directs that the above standards be used to design, implement, operate and modify current operations, reporting and compliance objectives that will safeguard the assets of the town, promote reliability, accountability and transparency of financial and non-financial information and to assure compliance with laws and regulations for each office, department and personnel (as defined below) for an effective and reasonable internal control system of the town.
(J) Materiality threshold. The town hereby establishes and adopts a materiality threshold of $5,000 for purposes of the internal control procedures adopted and approved herein.
(K) Parties subject to compliance. The personnel, whether an official or employee, of the town whose official duties include receiving, processing, depositing, disbursing or otherwise having access to funds that belong to the federal government, state government, a political subdivision or another governmental entity shall comply with these minimum internal control standards and procedures and any other policy regarding standards and procedures determined necessary by the town now and as modified in the future.
(L) Training. The personnel of the town whose official duties include receiving, processing, depositing, disbursing or otherwise having access to funds that belong to the federal government, state government, a political subdivision or another governmental entity shall be trained at least once during a calendar year and annually thereafter, unless on leave status, on the minimum internal control standards and procedures determined necessary by the town and shall cooperate with the town fiscal officer or designee so that the fiscal officer can timely certify to the State Board of Accounts that the training was received annually by the personnel as provided by law.
(M) Cooperation required. All elected and appointed officials and employees of the town are hereby directed to abide by and to cooperate fully in the implementation of the internal control system of the town.
(N) Effect of non-compliance by employee. An employee who fails to abide by or cooperate with the implementation, compliance and certifications connected with the Internal Control System commits a violation of and may result in the discipline, including termination, of the employee.
(O) Effect of non-compliance by an official. An elected or appointed official of the town who fails to abide by or cooperate with the implementation and the mandated certifications of the Internal Control System may be subject to any action allowed by law.
(Ord. 2021-6, passed 7-12-2021)