§ 33.03  INTERNAL CONTROL STANDARDS.
   (A)   Findings.
      (1)   I.C. 5-11-1-27 requires the town to maintain a system of internal controls in order to promote accountability and transparency.
      (2)   In September 2015 pursuant to I.C. 5-11-1-27(e) the Indiana State Board of Accounts developed and published the Uniform Internal Control Standards for Indiana Political Subdivisions in order to provide the basis of common understanding to assist public sector managers in complying with the internal control requirements.
      (3)   The Uniform Internal Control Standards for Indiana Political Subdivisions Manual is available on the government website at www.in.gov/sboa and contains the acceptable minimum level of internal control standards.
      (4)   I.C.  5-1 1-1-27(g) provides that after June 30, 2016, the town must develop local policies regarding internal controls and insure that personnel receive training on internal controls.
      (5)   The fiscal officer of the town is the Clerk-Treasurer, and pursuant to I.C. 5-11-1-27(h), the Clerk-Treasurer shall certify in writing that the Uniform Internal Control Standards have been adopted.
      (6)   I.C. 5-11-1-27(g) requires and mandates that the Town Council ensure that personnel as defined in I.C. 5-11-1-27 shall receive training concerning the internal control standards and procedures adopted by the town, and that the Clerk-Treasurer as the fiscal officer shall certify in writing that the personnel as defined by statute have received the required training.
   (B)   State policy adopted. The town adopts as policy the internal control standards 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, and as amended from time to time.
   (C)   Specific policies. The town adopts the following specific internal control policies to be implemented to the extent feasible with the manpower available:
      (1)   General policies for departments.
         (a)   Separation of duties. Duties shall be separated so that one person's responsibilities serve as a check on another employees work.
         (b)   Authorization and approval.
            1.   Transactions shall be approved by the person who has been delegated approval authority, which is usually delegated on the basis of special competency or knowledge.
            2.   Proposed transactions shall be authorized when proper and consistent with town policy, the department’s plans, and the applicable approved appropriations and budgets.
         (c)   Custodial and security arrangements. Responsibility for physical security and custody of town assets shall be separated from record keeping and accounting for those assets.
         (d)   Timely and accurate review and reconciliation.
            1.   Departmental accounting records and documents shall be 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.
            2.   Departmental accounting records and documentation shall be 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.
      (2)   Training. All covered personnel shall be trained on the town's internal control standards and procedures in accordance with I.C. 5-11-1-27(g).
      (3)   Payroll activities.
         (a)   Salaries and wages shall be verified by the Clerk-Treasurer.
         (b)   Employees’ time and attendance records shall be approved by their supervisors.
         (c)   Corrections to recorded time and attendance records must be approved by the employee and employee’s supervisor.
         (d)   Payroll disbursements shall be reviewed and approved by an authorized individual prior to payment.
         (e)   Access to payroll software shall be appropriately controlled by user logins and passwords.
         (f)   Payroll checks shall be accounted for in numerical order and reconciled to the payroll check register.
         (g)   Employees shall be cross-trained on the payroll process, and those assigned to payroll must take periodic vacations.
      (4)   Disbursement activities.
         (a)   The responsibility for approving claims shall be segregated from those preparing the claims.
         (b)   Checks shall be written by an individual other than the one approving the claim.
         (c)   Claims for payment shall be reviewed and approved by the governing body prior to payment.
         (d)   A reconciliation shall be completed between the claims for payment approved by the Board and the actual disbursements posted to the ledger.
         (e)   The responsibility for acknowledging the receipt of goods or services shall be segregated from those preparing claims and writing checks.
         (f)   Vendor checks shall be accounted for in numerical order and reconciled to the disbursement ledger.
         (g)   Invoices or other receipts shall be attached to each claim to support the disbursement.
         (h)   Access to disbursement software shall be appropriately controlled by user logins and passwords.
      (5)   Receipting activities.
         (a)   The responsibility for collecting money and issuing receipts shall be segregated from those preparing the bank deposit.
         (b)   Pre-numbered receipts shall be issued for all money collected and the receipt shall be retained with supporting documentation.
         (c)   Receipts shall be reconciled to the cash receipts ledger by an individual other than the one collecting money and issuing receipts.
         (d)   Receipts shall indicate the type of payment received (cash, check, etc.) and shall be reconciled to the make-up of the bank deposit.
         (e)   Adjustments to customer accounts above the managerial threshold shall be approved by the governing body only after review.
      (6)   Cash activities. A reconciliation between the recorded cash balance and the bank balance shall be completed monthly.
      (7)   Credit card transactions.
         (a)   The Clerk-Treasurer shall oversee the issuance and use of the credit cards along with the Town Manager.
         (b)   Credit cards shall be used only in accordance with the credit card policy adopted by resolution of the Town Council.
         (c)   A designated person separate from disbursement process shall review transactions listed on the credit card statements for sufficient documentation and inclusion on the claims presented to the Board for approval.
      (8)   Breaches; remediation. Management shall remediate identified internal control deficiencies on a timely basis. Breaches of internal controls shall be subject to significant levels of internal scrutiny. If informed of a material breach of internal controls, the Clerk-Treasurer and Town Manager’s office shall actively investigate and address such breach and adjust policies and procedures to prevent such breaches in the future. Once breaches are identified and investigated, a formal or informal corrective action plan shall be developed and implemented.
   (D)   At the time the annual financial report is electronically filed, the Clerk-Treasurer as fiscal officer of the town shall certify in writing that the Uniform Internal Control Standards for Indiana Political Subdivisions have been adopted and shall certify that the town’s personnel have been trained as required by law.
(Res. 2016-005, passed 11-17-2016)