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CERTIFIED
CERTIFIED PUBLIC ACCOUNTANTS
FM .LtT11
_P. October 1, 1979 ,•
Mr. W. G. Lawley, City Manager
The Honorable Mayor and City Council
Cape Girardeau, Missouri
Gentlemen:
As a part of our examination of the financial statements of the
City of Cape Girardeau, Missouri, for the year ended June 30,
1979, we reviewed and tested the city's system of internal acounting
control to the extent we considered necessary to evaluate the
system as required by generally accepted accounting standards.
Under these standards the purpose of such evaluation is to establish
a basis for reliance thereon in determining the nature, timing,
and extent of other auditing procedures that are necessary for
expressing an opinion on the financial statements.
The objective of internal accounting control is to provide reasonable,
but not absolute, assurance as to the safeguarding of assets against
loss from unauthorized use or disposition, and the reliability
of financial records for preparing financial statements and maintain-
ing accountability for assets. 'Phe concept of reasonable assurance
recognizes that the cost of a system of internal accounting control
should not exceed the benefits derived and also recognizes that
the evaluation of these factors necessarily requires estimates
and judgments by management.
There are inherent limitations that should be recognized in consider-
ing the potential effectiveness of any system of internal accounting
control. In the performance of most control procedures, errors
can result from misunderstanding of instructions, mistakes of
judgment, carelessness, or other persona]. factors. Control procedures
whose effectiveness depends upon segregation of duties can be
circumvented by collusion. Similarly, control procedures can
be circumvented intentionally by management with respect either
to the execution and recording of transactions or with respect
to the estimates and judgments required in the preparation of
financial statements. Further, projection of any evaluation of
internal accounting control to future periods is subject to the
risk that the procedures may become inadequate because of changes
in conditions, and that the degree of compliance with the procedures
may deteriorate. Accordingly, internal controls must be continually
monitored by the city's personnel to assure that existing controls
remain effective or that new controls are instituted when procedural
changes occur.
Mr. W. C. Lawley, City Manager
The Honorable Mayor and City Council.
Page 2
Our study and evaluation of the city's internal accounting control.
system for the year ended .lune 30, 1474, which was made for the
purpose set forth in the first paragraph above, was not designed
for the purpose of expressing an opinion on internal accounting
control and it would not necessarily disclose all weaknesses in
the system. However, we believe the following comments and recommend-
ations should be given careful consideration.
Court Clerk: Docket and Records:
Our examination included a review of the city court clerk's record-
keeping system. The court clerk prepares and maintains the court
docket, receives payments of fines and court costs, and is charged
with the responsibility of keeping track of delinquencies. Our
first comment must address itself to a violation of the primary
role of internal accounting control, which states that personnel
who receive and handle cash should not have access to the underlying
accounts receivable records. Observance of this rule provides a
significant degree of assurance that receipts will not go unrecorded,
that "lapping" of accounts will not occur, and that effective accounting
control will be established through separation of duties. Under
the court clerk's present system, such separation of duties does
not exist, and although we have no evidence of mishandling of
court receipts, the possibility of such occurence does exist.
Therefore, we recommend that consideration be given to shifting
the task of collecting cash from the office of the court clerk
to the office of the city collector.
Under such a system, the court clerk would continue to exercise
control over the court docket. The entry of cases, and the recording
of fines and costs assessed, cases continued, payments received
or deferred, and the periodic. preparation of delinquency list
would remain the exclusive province of the clerk. The collector
would need a list of fines assessed at each session of the court
to faciliate the collection process. His office would then provide
the court clerk with a list of payments received (or copies of
receipts written) so that the docket may be updated. As a result,
receipts and delinquencies will be verifiable from the city's
books to the court docket and vice versa.
To provide greater control over delinquencies, and to assist the
court in its handling of repeat offenders, the format of the docket
should be modified. Under the present format, a case may appear
several times on the docket, depending on the status of the case
(original entry, continuation, deferral of payment and partial
payments). We are of the opinion that a case should be entered
only once, and the line entry should provide all data necessary
to as of the case s status.
Mr. W. G. Lawley, City Manager
The Honorable Mayor and City Council Page 3
In other words, one entry in the docket should show all pertinent
arrest information, disposition by the court, and a complete record
of payments received from the offender. Subsidiary records (or
lists) of continued cases and deferrals, as well as periodic lists
of delinquencies, can be prepared from the docket without the
need to examine more than one page for any one case. Since the
amount of detail which can be included in docket entries is dependent
on legal as well as accounting considerations, and since such
detail could be fairly extensive in scope, we will omit any specific
enumeration of such detail in this letter. However, we will be
pleased to assist in the design or review of a new docket format
and its use, should our suggestions be desired. Basically, our
recommendation is aimed at a more streamlined and useful tool
for the court clerk. Its ultimate contribution to improved accounting
control will lie in the verifiability of its entries through records
maintained independently by the city collector.
Waste Disposal Receipts:
To assure greater accounting control over waste disposal accounts
receivable, we recommend the adoption of a monthly reconciliation
procedure. With proper programing of the posting machine used
by the waste disposal accounting department, monthly charges for
services can be compared with collections and month-end receivables
to provide a method of analysis and financial control over the
commercial operation of the department. At present, the city
collector cannot determine independently the balance due on services
provided by the waste disposal department. If department clerical
personnel were able to generate, through their posting machine,
total charges for each month, the collector could verify ending
receivables by the following computation:
Receivables, Beginning of Month
Add: Charges for Month
Less: Collections for Month
Equals: Receivables, End of Month
This theoretical ending balance could then be compared with an
adding machine listing of customers' account cards. Posting errors
would be more easily detected, proper amount and classification of
receipts would be proved, and the collector's office would have
one more test for controlling a decentralized accounting function.
Mr. W. G. Lawley, City Manager
The Honorable Mayor and City Council Page 4
Uniformity of Accounts
Several departments operate under some accounts unique to them.
But the majority of accounts applicable to one department are
applicable to the others. Therefore, a chart of accounts and
account numbers, common to each department but distinquished by
a departmental prefix number, can easily be designed and implemented.
We strongly endorse the city collector's intent to design such
a set of accounts and we encourage its adoption at the beginning
of the city's next fiscal year. It will greatly enhance the usefulness
of this new chart if brief descriptions of each account are issued
to the department heads. Uniformity in the classification of transactions
can be achieved throughout the department, and expenditures can
be applied against the proper budget account with a minimum of
misunderstanding and confusion.
Sale of Equipment and Other Assets:
We recommend the use of a separate revenue account for recording
the sale of assets. This new account will provide a better audit
trail for subsequent review of asset dispositions, and by setting
such transactions out separately on the budget balance report
(as opposed to burying them in a "miscellaneous" account), city
officials will be given an opportunity to review the transactions
on a monthly basis.
Federal Shared Revenue Funds:
Our examination disclosed no material weaknesses in the internal
accounting control over receipt and disbursement of federal revenue
sharing monies.
Library Funds:
Our examination disclosed no material weaknesses in the library's
system of internal accounting control.
Mr. W. G. Lawley, City Manager
The Honorable Mayor and City Council. Page S
It has been our pleasure to be of service to the City of Cape
Girardeau. We extend our thanks to the City Collector and the
employees of the City whose courteous assistance so greatly facilitated
our examination. If we may be of further assistance during the
coming year, or if you have questions concerning matters contained
in this letter of any aspect of our audit, we will be pleased
to discuss them with you at your convenience.
Very truly yours,
ROTHAUS, BARTELS, EARLEY & COMPANY
�Ce uy—L, Deck
Audit Manager
TLD:ab
TABLE OF CONTENTS
Auditors' Report on Compliance and
Supplemental Data • • • • • • •
Statement of Changes in Available Funds
for the Year Ended June 30, 1979 •
Statement of Obligations Incurred
for the Year Ended June 30, 1979 •
Page
1
2
3
To the Honorable Mayor and City Council
City of Cape Girardeau, Missouri
We have examined the financial statements of the various funds and account
groups of the City of Cape Girardeau, Missouri for the year ended June 30,
1979, and have issued our report thereon dated September 28, 1979. Our
examination was made in accordance with generally accepted auditing standards
and accordingly included such tests of the accounting records and such
other auditing procedures as we considered necessary in the circumstances.
In connection with our examination, we also performed tests of compliance
with the Revenue Sharing and Antirecession Fiscal Assistance Acts and
regulations as required by Sections II.C.3 and III.C.3 of the "Audit Guide
and Standards for Revenue Sharing and Antirecession Fiscal Assistance Fund
Recipients (Guide)" issued by the Office of Revenue Sharing, U. S. Department
of the Treasury. Comparison of the financial data which is to be included
on the Bureau of Census form RS -9 for the year ended June 30, 1979 was not
possible because the forms were not available to the City at the audit date.
However, the Bureau of Census Form RS -9 for the year ended June 30, 1978
was compared with the audit report for that period, and no material differences
were discovered.
The City was unable to produce evidence of publication in a newspaper of
general circulation the availability of the Revenue Sharing Use Report and
the availability of the Summary Budget. City' oTficia s are con dam`"'
publication requirements were met, but evidential matter was unavailable.
Our examination disclosed no other instances of noncompliance.
The accompanying statements of changes in available funds and obligations
incurred for the year ended June 30, 1979 are submitted as supplemental
information. Although they are not considered necessary for fair presentation
of the City's financial statements, they have been subjected to the tests
and other auditing procedures applied in the examination of the financial
statements and, in our opinion, are fairly stated in all material respects
in relation to the financial statement taken as a whole.
/�Respectfully submit Led,
ROTHAUS, BARTELS, EARLEY & COMPANY
Certified Public Accountants
Setpember 28, 1979
CERTIFIED PUBLIC ACCOUNTANTS
2103 THEMIS STREET
.P.
CAPE GIRARDEU, MO.
34-334-285
J.. G.. BARTELS, C. A.
R. J. EARLEY, C. P. A.
FARMINGTON, MO.
N. C. WATKINS, JR., C. P. A.
314-756-2298
J. R. JANSSEN, C. P. A.
ST. LOUIS. MO.
T. R. BEGLEY, C. P. A.
314-997-2544
W. M. WOLFE, C. P. A.
D. E. BROWN, C. P. A.
G. G. STANLEY, C. P. A.
To the Honorable Mayor and City Council
City of Cape Girardeau, Missouri
We have examined the financial statements of the various funds and account
groups of the City of Cape Girardeau, Missouri for the year ended June 30,
1979, and have issued our report thereon dated September 28, 1979. Our
examination was made in accordance with generally accepted auditing standards
and accordingly included such tests of the accounting records and such
other auditing procedures as we considered necessary in the circumstances.
In connection with our examination, we also performed tests of compliance
with the Revenue Sharing and Antirecession Fiscal Assistance Acts and
regulations as required by Sections II.C.3 and III.C.3 of the "Audit Guide
and Standards for Revenue Sharing and Antirecession Fiscal Assistance Fund
Recipients (Guide)" issued by the Office of Revenue Sharing, U. S. Department
of the Treasury. Comparison of the financial data which is to be included
on the Bureau of Census form RS -9 for the year ended June 30, 1979 was not
possible because the forms were not available to the City at the audit date.
However, the Bureau of Census Form RS -9 for the year ended June 30, 1978
was compared with the audit report for that period, and no material differences
were discovered.
The City was unable to produce evidence of publication in a newspaper of
general circulation the availability of the Revenue Sharing Use Report and
the availability of the Summary Budget. City' oTficia s are con dam`"'
publication requirements were met, but evidential matter was unavailable.
Our examination disclosed no other instances of noncompliance.
The accompanying statements of changes in available funds and obligations
incurred for the year ended June 30, 1979 are submitted as supplemental
information. Although they are not considered necessary for fair presentation
of the City's financial statements, they have been subjected to the tests
and other auditing procedures applied in the examination of the financial
statements and, in our opinion, are fairly stated in all material respects
in relation to the financial statement taken as a whole.
/�Respectfully submit Led,
ROTHAUS, BARTELS, EARLEY & COMPANY
Certified Public Accountants
Setpember 28, 1979
Footnote 1: The City maintains its accounts on the cash basis. Encumbrances
have been applied to the account figures to obtain the figures
for Obligations Incurred during the period.
-2-
CITY OF CAPE GIRARDEAU, MISSOURI
REVENUE SHARING FUNDS
STATEMENT OF CHANGES IN AVAILABLE FUNDS
For the Year Ended June 30, 1979
(26 2 016 001)
Per Books
and Audit
Available Funds, Beginning of Year:
Unappropriated
$ -0
Unencumbered Appropriations
374,527.78
Total
$ 374,527.78
Add Revenue:
Entitlement Payments
661,791.00
Interest
40,985.85
Total
$1,077,304.63
Less Unappropriated, End of Year
-0-
Available for Obligation During Year
$1,077,304.63
Less:
n
Current Expenditures
$ 575,667.72
I�
Encumbrances
2,672.46
Total Obligations Incurred
$ 578,340.18
Unencumbered Balance, End of Year
$ 4989964.45
Unappropriated, End of Year
-o-
$ 498,964,45(1)
Footnote 1: The City maintains its accounts on the cash basis. Encumbrances
have been applied to the account figures to obtain the figures
for Obligations Incurred during the period.
-2-
CITY OF CAPE GIRARDEAU, MISSOURI
REVENUE SHARING FUNDS
STATEMENT OF OBLIGATIONS INCURRED
For the Year Ended June 30, 1979
(26 2 016 001)
Operating/maintenance expenditures:
Environmental protection
(Waste disposal)
Financial Administration
Total Operating/Maintenance
Capital Expenditures:
Fire Station #1
Park Development
Relocate City Hall
Total Capital Expenditures
Total Obligations Incurred
Expenditures
Revenue
Allocable to Sharing
Total Other Funds Funds
$ 631,098.73 $ 225,498.73 $ 405,600.00
1,387.99 -0- 1,387.99
$ 632.486.72 $ 225.498.73 $ 406,987.99
$ 29,227.69 $ -0- $ 29,227.69
39,752.51 623.08 39,129.43
102,995.07 -0- 102,995.07
$ 171,975.27 $ 623.08 �S 171,352.19
$ 804,461.99 $226,121.81 $ 578,340.18
Note: The City maintains its accounts on the cash basis. Encumbrances have been
applied to the account figures to obtain the expenditures per books during
the period.
-I-