Skip to code content (skip section selection)
(1) Mission. The town finds that its mission, as related to an internal control system is as follows:
(a) The provision of a democratic government structure at the grassroots level;
(b) The provision of services as determined through the political process, including, but not limited to:
1. The Winamac Municipal Electrical Utility (the "Electric Utility");
2. The Winamac Municipal Waterworks Utility (the "Waterworks"); and
3. The Winamac Municipal Sewer Works (the "Sewer Works");
(2) Principles of adherence. The town adopts and directs the following 17 principles in explanation of the pertinent standards above, to be followed at all levels of town government:
(a) Control environment.
1. The oversight body and management 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. The oversight body oversees the town's internal control system. 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 those expectations, requiring the 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 Town Clerk-Treasurer will be the Town Council's chief agent in implementing and managing the internal control policies and procedures.
3. Management establishes an organizational structure, assigns responsibility, and delegates authority to achieve the town's objectives. Individuals with delegated approval authority, such as 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. Management demonstrates a commitment to attract, develop, and retain competent individuals. The Town Employee Handbook provides a roadmap for recruiting and maintaining quality employees. Prior to employment, individuals may be subject to pre-employment background screening and/or a credit history check. Job descriptions will be updated where necessary to reflect internal control responsibilities and duties. Employees will be regularly trained in internal control methods and all training will be documented in employees' personnel files. Employees will be regularly evaluated by their supervisors on internal control duties and receive feedback on possible improvements.
5. Management evaluates performance and holds individuals accountable for their internal control responsibilities, as well as adherence to all standards and procedures, as set forth in this section. Individuals will be held accountable for their internal control responsibilities through a recognized structure, which includes relevant job descriptions, operating procedures, periodic reviews, regular feedback, and a disciplinary policy.
(b) Risk assessment.
1. Management defines objectives clearly, to enable the identification of risks and defines risk tolerances. Management conveys and identifies objectives, missions, policies, and risk tolerances to employees.
2. Management identifies, analyzes, and responds to risk related to achieving the defined objectives.
3. Management considers the potential for fraud when identifying, analyzing, and responding to risks. Fraud responses will include statutorily required responses to fraud, including, but not limited to I.C. 5-11-1-27(l) relating to the report of misappropriation of funds to State Board of Accounts and Prosecuting Attorney and I.C. 5-11-l-27(j) relating to the report of material variances, losses, shortages or thefts to the State Board of Accounts. The town shall utilize a materiality threshold of $300 for cash funds, and $500 for non-cash and town property.
4. Management identifies, analyzes, and responds to significant changes that could impact the internal control system. The Town Council, in coordination with department heads, will regularly evaluate and adjust internal control policies in order to accommodate for the impact of future changes, including but not limited to, personnel changes, newly elected officials, new programs, new technology, new laws and regulations, and financial fluctuations.
(c) Control activities.
1. Management designs control activities to achieve objectives and respond to risks. The Clerk-Treasurer, along with the Town Council, will establish and maintain a system of internal controls that satisfies the town's objectives in the following categories:
a. Risks are identified and effectively managed;
b. Safeguarding of town assets.
c. Reliability and integrity of financial information;
d. Compliance with town policy, plans, procedures, laws and regulations.
e. Economic and efficient use of town resources.
f. Meeting established objectives and goals for town operations and programs.
2. General internal controls principles for each department, include:
a. Separation of duties. Duties are separated so that one person's work routinely serves as a check on another's work.
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 are separated from record keeping and accounting for those assets.
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. Furthermore, departmental accounting records and documental are compared with town accounting system reports and financial statements to verify their reasonableness, accuracy, and completeness.
3. Management designs the town's information system and related control activities to achieve objectives to respond to risks. The department heads will work with any information technology units to ensure that information technology is used as an integral part of the internal control system.
4. 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.
(d) Information and communication.
1. Management uses quality information to achieve the town's objectives. The Town Clerk-Treasurer and other department heads attend training and industry seminars to stay abreast of changes and developments in requirements and communicate that information effectively to impacted employees. By adopting standards and investing in systems that exceed state-mandated minimums, town management provides employees and stakeholders with high quality information.
2. Management internally communicates the necessary quality information to achieve the town's objectives. Internal communications on internal controls are communicated through adoption of formal policies by relevant boards and commissions and/or the Town Council, or documented through memos from the appropriate department head.
3. Management externally communicates the necessary quality information to achieve the town's objectives. Communication 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. Logs are kept for information provided verbally. All documents are maintained in accordance with the town and state's record retention policies. Reports and policies are cross-checked for accuracy, relevancy, and timeliness of information.
1. Management establishes and operates monitoring activities to monitor the internal control system and evaluate the results. town administration will monitor and evaluate compliance with internal control policies via multiple vectors. Separation of duties, redundancy policies, layered approval systems, monthly reports, and physical controls allow management to both review and evaluate control systems. Monitoring activities will be documented by signatures, initials, or other appropriate methods.
2. Management remediates identified internal control deficiencies on a timely basis. Breaches of internal controls are subject to significant levels of internal scrutiny. If informed of a material breach of internal controls, the Town Council shall actively investigate and address said breach and adjust policies and procedures to prevent such breaches in the future. Once breaches are identified and investigated, a formal or informal corrective plan will be developed.
(1) Directive. The Town Council directs that the above standards are 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 for an effective and reasonable internal control system of the town.
(2) Application to town personnel. Town personnel, whether an official 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 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.
(3) Training. Town personnel, whether an official 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 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 and any other standards and procedures determined necessary by the Town Council and shall cooperate with the town's 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.
(4) Personnel defined. The town authorizes the Town Council to determine the position and persons who are personnel, as referred to in division (B)(2)(3), and to notify such personnel.
(5) Management defined. As used in this section, Management shall mean the Town Council of the Town of Winamac, the Clerk-Treasurer of the town, and the Town Manager of the town.
(6) Failure to abide. Any 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. 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.
(C) Oversight directive.
(1) Compliance. The Town Council calls upon all town officials, employees, and agents to enforce and comply with this policy on materiality and adhere to the appropriate process for reporting material variances, losses, shortages, or thefts, and to report noteworthy items to the Town Clerk-Treasurer, the Town Manager, or the Town Council.
(2) Oversight body. The Town Council directs its Oversight Committee, as well as the Town Clerk-Treasurer and the Town Manager, to monitor, as it deems necessary, compliance with the policy on materiality and process of reporting material items and report noteworthy items to the full Town Council.
(3) Changes. The Town Council asks the Clerk-Treasurer to advise the Town Council of any changes in the policy on materiality and process for reporting material items, as directed in the corresponding Clerk-Treasurer's directive. This section, and the standards and procedures, will be inspected annually, on the first meeting in January, and changes will be made as mandated by state law or as otherwise needed according to the town's needs.
(Ord. 7 of 2016, passed 6-13-2016)