City Audit 2009 Report

I received this morning some rather alarming news about our city audit which came to me in the form of a letter from Alexander Thompson Arnold PLLC.

December 8, 2009

Honorable Jerry Gist, Mayor

Members of the Council

City of Jackson, Tennessee

We have completed our audit of the City of Jackson, Tennessee, and have submitted our report thereon. In connection with our audit, we have the following comments and recommendations in addition to those listed in the schedule of findings and recommendations accompanying our audit report. None of the comments below involves any risk of material loss or noncompliance.

  1. We noticed several minor problems with cash receipts. There were numerous violations of the three-day deposit requirement for receipts collected at certain locations outside of City Hall. We also noted that the amount of cash versus checks collected is not being completed on all receipts. Finally, we noted some receipts written to John Doe rather than the actual person from whom the monies were collected as well as some voided receipts that were not marked void. We recommend that daily deposits be made to the extent possible to ensure proper compliance with the three-day deposit rule, the cash/check detail be completed for all receipts, voided receipts be marked void and left intact in the receipt book, and that all original receipts be given to the individual from which monies are being received.
  2. In previous years, we noted that the City’s grant documentation could not be easily located and was dispersed among several individuals. No one seems to be in charge of reconciling the grant documentation to the general ledger for all grants on a routine basis. Also, we had to determine the proper classification of amounts received under the grants as deferred or current revenues as well as accruing amounts due under some of the grants. While we noted extensive improvements in grant documentation during the current year, we still recommend that oversight on all grants, except for those operated by the Jackson Housing Authority, not only be vested in one person but that the accounting staff should be responsible for reconciling all grant transactions to the general ledger on a routine basis.
  3. During our audit, we noted actual expenditures exceeding appropriations in the CDBG Grant Fund, Home Grant Fund, and the Home Match Grant Fund. We recommend that proper care be taken to ensure that actual expenditures do not exceed budgeted amounts.
  4. We noted some discrepancies in the reconciliation of gas and diesel usage. It appears to be an error in reports provided by the City’s vendor, Petrovend. We recommend that the City discuss this issue with the vendor and work to resolve the problem.
  5. During our audit, we noted that the City’s various insurance accounts, including health insurance premiums and claims paid, are not being reconciled and agreed to the general ledger by Risk Management personnel. We recommend that these accounts be reconciled on a monthly basis.
  6. During our audit, we noted that the City does not have a formal policy regarding the collection or write-off of City Court receivables. The City Court receivables total approximately $5.3 million at year end, with only $130,000 being less than 60 days past due. We recommend that the City adopt a formal plan of action for these receivables and either try to collect them or write them off as uncollectible.

The resources of our firm are available to aid in the implementation of these suggestions as well as those comments made in our reports on internal control and compliance.

Signed:

Alexander Thompson Arnold PLLC

Certified Public Accountants

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