Iowa Municipal Professional's Academy
Municipal Oversight
July 26, 2013
Presented by
Susan D. Battani, CPA, Director
Marlys K. Gaston, CPA Manager
Financial Audit Division
Iowa State Auditor's Office
MARY MOSIMAN, CPA
AUDITOR OF STATE
Susan D. Battani, CPA, CGFM
Susan Battani is a Director for Mary Mosiman, CPA, Iowa's Auditor of State (AOS),
and has worked for the office since 1977 upon graduating from Northeast Missouri
State University (now Truman State University).
As a Director in the Financial Audit
Division, Sue's primary responsibilities include providing technical assistance and
training to local governments and to their auditors.
She also participates in the
Auditor's Office Quality Review Program of CPA firm reports and workpapers, is involved
with reaudits of local governments and performs reviews of certain local govemment
audit reports and workpapers prepared by AOS staff.
Sue has been involved for several years with various local government training
programs including programs for the ISCPA as well as the Iowa Association of School
Business
Officials (IASBO),
the Iowa
Superintendent's
Finance and
Leadership
Consortium (ISFLC), the Iowa School Business Management Academy (ISBMA) and the
Iowa Municipal Professionals Institute (formerly the Municipal Clerks Institute).
She is
a member of the Iowa Society of Certified Public Accountants; the American Institute of
Certified Public Accountants and the Association of Government Accountants.
Marlys K. Gaston, CPA, CGFM
Marlys Gaston is a Manager for Iowa's Auditor of State's Office
and has worked for the office since 1985.
Marlys is a graduate of
Buena Vista University. As a Manager in the Financial Audit Division,
Marlys' primary responsibilities include supervising and reviewing local
govemment audits and providing technical assistance and training to
local govemments and their auditors.
She is also actively involved in
the Auditor's Office Quality Review Program of CPA firm reports and
workpapers as well as reaudits of local governments. In addition she is
responsible for
program.
coordinating the Auditor's Office
in-house training
Marlys is a Certified Public Accountant and Certified
Government Financial Manager and is a member of the Iowa Society of
Certified Public Accountants and the Association of
Accountants.
Government
Iowa Municipal Professionals Academy
July 26, 2013
Municipal Oversight
Presented by Susan D.
Battani, CPA Marlys K.
Gaston, CPA
Mary Mosiman, CPA, Auditor of State
Mary Mosiman, CPA, Auditor of State
2
3
MUNICIPAL OVERSIGHT
WHERE WE WERE....
Mary Mosiman, CPA, Auditor of State
3
State of Iowa
Prior Law
Prior Law:
II
Cities over 2,000 population audited annually.
Cities with population from 700 to 2,000
audited once every 4 years.
1!1 Cities with population under 700 not required to
be audited except by petition of the citizens.
Ill All cities may hire an auditor to audit their
cities.
Ill Cities may use the State Auditor or a CPA firm.
1111 Cities pay a filing fee to file their audit report
with the State Auditor's office.
Ill
Mary Mosiman, CPA, Auditor of State
4
MUNICIPAL OVERSIGHT
WHERE WE WERE....
WHERE WE ARE... AND
Mary Mosiman, CPA, Auditor of State
5
State of Iowa
Iowa Code Section 11.6 Changes
House File 2455 Changes effective July 1, 2013 (for
audits j examinations performed beginning in fiscal
year 2014 for fiscal year 2013):
Iiiii
All cities over 2,000 population111111
IIIII
Continue to receive an annual audit
4-year city audit category (population 700-2,000) No longer exists
Cities with population under 2,000II Will receive annual or periodic examinations
II Based on budgeted expenditures/ disbursements
1111
IIIII
Mary Mosiman, CPA, Auditor of State
6
State of Iowa
Iowa Code Section 11.6 Changes
IIWhat
is an examination?
II Chapter 11.1(b) of the Code of Iowa:
II "Examination means procedures that
are less in scope than an audit but
which are directed toward reviewing
financial activities and compliance with
legal requirements."
Ill Agreed-upon procedures engagement
II Less in scope than an audit
II Less cost than an audit
Mary Mosiman, CPA, Auditor of State
7
State of Iowa
Iowa Code Section 11.6 Changes
Changes effective July 1, 2013 (for
audits and examinations performed
beginning in fiscal year 2014):
IICities under 2,000 population with
$1 million or more budgeted gross
expenditures (in two consecutive
years) will have an annual
examination:
Mary Mosiman, CPA, Auditor of State
8
State of Iowa
Iowa Code Section 11.6 Changes
Changes effective July 1, 2013 (for audits and
examinations performed beginning in fiscal year
2014):
Ill Cities may choose their auditor:
II RFP required to engage independent
auditors for annual examination.
II Cities must pay for the annual examination.
Ill Cities pay an annual examination filing fee to
Auditor of State.
II AOS has developed required procedures to be
performed.
Mary Mosiman, CPA, Audrtor of State
9
State of Iowa
Iowa Code Section 11.6 Changes
Changes effective July 1, 2013 (for audits and
examinations performed beginning in fiscal year
2014):
II NOTE: Any additional procedures and/ or
assistance requested by cities will be outside
of (in addition to) the annual examination.
II For example, assistance with bank
reconciliations, Annual Financial Report
assistance and/ or TIF assistance, etc.
Mary Mosiman, CPA, Auditor of State
10
7
State of Iowa
Iowa Code Section 11.6 Changes
Changes effective July 1, 2013 (for
audits j examinations performed
beginning in fiscal year 2014):
IICities under 2,000 population with
less than $1 million in budgeted
gross expenditures will pay an
examination fee to the Auditor of
State each year to cover the costs
of a periodic examination.
Mary Mosiman, CPA, Auditor of State
11
State of Iowa
Iowa Code Section 11.6 Changes
Changes effective July 1, 2013 (for
audits j examinations performed in fiscal year
2014):
Ill Cities subject to periodic examination:
II Cities must exceed $1 million in budgeted
gross expenditures for two consecutive
years to require annual examination.
Otherwise subject to periodic examination.
II Periodic examination required at least
eve:ry 8 years.
Mary Mosiman, CPA, Auditor of State
12
State of Iowa
Iowa Code Section 11.6 Changes
Changes effective July 1, 2013 (for
audits/ examinations performed in fiscal year
2014):
Ill Cities subject to periodic examination:
II AOS will administer the Periodic Examination
RFP process.
Ill AOS will develop the procedures to be
performed.
II Cities paying the audit or annual
examination filing fee are not required to pay
the periodic examination fee each year.
Mary Mosiman, CPA, Auditor of State
13
State of Iowa
Iowa Code Section 11.6 Changes
Periodic Examination - Proposed Fees
IIAuditor of State shall adopt
administrative rules
IITo establish and collect a periodic
examination fee
Ill From cities not required to have an
audit or annual examination
II Fees due initially March 31, 2014
(and then each year thereafter)
Mary Mosiman, CPA, Auditor of State
14
State of Iowa
Iowa Code Section 11.6 Changes
Periodic Examination - Proposed
Fees
Ill Scaled Fee - based on budgeted
gross
expenditures j disbursements:
IILess than $50,000 -- $100
11$50,000 to $300,000 -- $475
11$300,000 to $600,000 -- $900
11$600,000 or more-- $1,200
Mary Mosiman, CPA, Auditor of State
15
Municipal Oversight
AOS Website Resources
• Resources located at:
- http://auditor.iowa.gov/municipal/index.html
Mary Mosiman, CPA, Auditor of State
16
;D
Municipal Oversight
AOS Website Resources
• Informational Article
-Written by former State Auditor David
Vaudt
-Published in the Iowa league of Cities
11Cityscape"
-Includes a preliminary review and
explanation of the 2012 Municipal
Oversight legislation
ove lou.
Hea
Mary Mosiman, CPA, Auditor of State
Municipal Oversight
AOS Website Resources
• 2013 Individual City Requirements
- lists audit and/or exam requirements for every
City in Iowa
-For 2013
.. 160 Cities required to have an annual audit
• 177 Cities required to have an annual
examination
• 610 Cities subject to the periodic examination
requirements
Mary Mosiman, CPA, Auditor of State
18
If
r
Municipal Oversight
AOS Website Resources
• Frequently Asked Questions
- City Examination Requirements
- City Annual Examinations
• RFP
• Filing Fees
• Report Filing Requirements
- City Periodic Examinations
• RFP
• Periodic Examination Fees
• Report Filing Requirements
Mary Mosiman, CPA, Auditor of State
19
Municipal Oversight
AOS Website Resources
• Annual Examination Agreed Upon Procedures
Engagement Request for Proposal (RFP)
-Sample RFP
- Must use a written,competitive process
• Include the required element in the sample RFP
- May Use AOS- no RFP required
-May use CPA firm- RFP required
Mary Mosiman, CPA, Auditor of State
Municipal Oversight
AOS Website Resources
• City Annual Examination Agreed Upon
Procedures Program Guide
- Established procedures
• Minimum requirements,as applicable
Mary Mosiman, CPA, Auditor of State
21
Municipal Oversight
AOS Website Resources
• Independent Auditor Sample Tools:
- Sample Internal Control Checklist,including Key
Duties Matrix
- Sample Minutes Testing Template
-Sample Disbursements Testing Template
- Sample Payroll Testing Template
Mary Mosiman, CPA, Auditor of State
22
{3
MUNICIPAL OVERSIGHT
WHERE WE WERE....
WHERE WE ARE... AND
WHERE ARE WE HEADED?!
Mary Mosiman, CPA, Auditor of State
23
Municipal Oversight
AOS Website Resources
• More to come:
-City Annual Examination Sample Report
-Periodic Examination Resources
• Check periodically for updates!!
Mary Mosiman, CPA, Auditor of State
24
!4
Iowa Auditor of State - Iowa Municipal Oversight Law
Press Briefings
Audit Reports
City Annual Financial
Report (AFR)
FAQs
Page 1 of5
Iowa Municipal Oversight law
Due to the municipal oversight law passed during the 2012 Legislative Session, several changes will take place
effective July 1, 2013 in regard to requirements for audits or examinations of Iowa cities. This section of the
Auditor of State's website will be devoted to providing resources to cities and independent auditors providing
audit and examination services to cities.
Audit Practice Aids
Technical & Other
Updates
Municipal Oversight Resources:
Municipal Oversight
Article: To view an informational article by former State Auditor Vaudt pertaining to the law and related
requirements, click .HE:RE:
Rules Regulatory Plan
2013 Individual City Requirement: To determine whether a city is subject to an annual audit, an
Peer Review
Employment
Opportunities
Contact Us
Related Links
Home
annual examination or a periodic examination for the fiscal year ending June 30, 2013, click HE:f<E:
RFP: AOS has developed a City annual examination agreed upon procedures engagement request for
proposal (RFP). This RFP or equivalent written document must be used to engage independent auditors
wishing to perform City annual examinations pursuant to Chapter 11.6 of the Code of Iowa. To download
a copy of the Sample City Annual Examination Agreed Upon Procedures Engagement RFP for City
annual examinations (Microsoft Word), right-click HERE and click Save LinkfTarget As... on the contextsensitive menu.
············
Annual Examination Procedures: AOS has developed an agreed upon procedures program guide
which establishes the minimum requirements to be performed for all City annual examinations. To
download a copy of the City Annual Examination Agreed Upon Procedures Program Guide (Microsoft
Word), right-click .H.E:f3.E. and click Save LinkfTarget As... on the context-sensitive menu.
Independent Auditor Sample Tools: AOS has developed tools to facilitate independent auditors in
performing City annual and/or periodic examination agreed upon procedures engagements. As noted,
these are SAMPLE tools to use to document internal control and testing.
To download a copy of the Sample Internal Control Checklist, including Sample Key Duties
Matrix (Microsoft Word), right-click HERE and click Save LinkfTarget As... on the contextsensitive menu.
·············
To download a copy of the Sample Minutes Testing Template (Microsoft Excel), right-click
.r!.E.BE: and click Save LinkfTarget As... on the context-sensitive menu.
To download a copy of the Sample Disbursements Testing Template (Microsoft Excel), rightclick HEB.E: and click Save LinkfTarget As... on the context-sensitive menu.
To download a copy of the Sample Payroll Testing Template (Microsoft Excel), right-click
ljEB.E. and click Save LinkfTarget As... on the context-sensitive menu.
COMING SOON: Check this page periodically for additional resources including:
• City Annual Examination Sample Report
Frequently Asked Questions:
AOS has developed an FAQ to answer some of the frequently asked questions pertaining to the Municipal
Oversight law and related requirements. To view or download a copy of the FAQ, click ljER,E, Otherwise, click
on the following links to specific sections:
ity_E:xarT!ination
ityAnr1ual_
City_f\_n.nual E::2<arnif1<J1ion.filing_f .es.
ityf\nn_uai_Exafllination
http :II auditor.iowa.gov/municipal/index.html
6/25/2013
Iowa Auditor of State - Iowa Municipal Oversight Law
Page 2 of5
(;ity .P..E!ri9.d.ic; f::)(<J.rninati()n t' gu st
City Periodic Examination Fees
:Cify·f': r_l_ ·- x<JiJiibaticiiJ· P<lrt_filing
Ql. What is the Municipal Oversight law?
A1. The Municipal Oversight law was enacted during the 2012 Legislative Session. This law affects oversight of
Cities with a population of fewer than 2,000 and is effective July 1, 2013. To view an informational article by
former State Auditor David A. Vaudt pertaining to the Municipal Oversight law and related requirements, click
HERE.
Q2. Does the Municipal Oversight law require all Cities to be audited?
A2. No. An annual audit will continue to be required for Cities with a population of 2,000 or more. Cities with a
population under 2,000 will be required to have annual or periodic examinations, the frequency of which is
based on budgeted expenditures.
All Cities will continue to be required to have a Single Audit performed in any year the City expends $500,000 or
more of Federal awards or in any year the City receives a citizens' petition for audit pursuant to Chapter 11.6(3)
of the Code of Iowa.
Q3. What is the difference between an examination and an audit?
A3. Iowa Code section 11.1(1)(b) defines "Examination" as "procedures that are less in scope than an audit but
which are directed toward reviewing financial activities and compliance with legal requirements."
Simply stated, an examination is a set of procedures narrower in scope than an audit, but also with less cost
than an audit. Rather than focusing on auditing the financial statements of a City, the examination is designed to
focus on the financial processes of a City to help ensure accountability and compliance and minimize the
opportunity for fraud.
Q4. What is the effective date for annual and/or periodic examinations?
A4. The Municipal Oversight law passed during the 2012 Legislative Session is effective July 1, 2013.
For Cities required to have an annual examination, the period of the annual examination will be July 1, 2012
through June 30, 2013 (fiscal year 2013) performed during the period July 1, 2013 through March 31, 2014
(fiscal year 2014).
Cities not required to have an audit or annual examination will have a periodic examination conducted at least
once every 8 (eight) years. Periodic examinations will commence after July 1, 2013 and cover years ending
June 30, 2013 or later. A periodic examination may be performed as of any month end (rather than fiscal year
end).
QS. How doI know whether my City is required to have an annual examination or a
periodic examination?
AS. Cities under 2,000 population with $1 million or more in budgeted expenditures in two consecutive years
will be required to have an annual examination. Cities with budgeted expenditures of $1 million or more in a
single year will continue to be subject to a periodic examination, not an annual examination.
Cities under 2,000 population with less than $1 million of budgeted expenditures will be subject to a periodic
examination to be performed at least once every eight years.
To determine whether a City is subject to an annual audit, an annual examination or a periodic examination for
the fiscal year ending June 30, 2013, click
.H.E:BI::-
Q6. May Cities choose to have an audit instead of an examination?
AS. Yes. Cities may have an audit performed for any fiscal year in lieu of an annual or periodic examination.
Likewise, Cities subject to periodic examinations may choose to have an annual examination performed.
Cities may not choose to have an examination in lieu of an audit when an audit is required. Likewise, Cities may
not choose to have a periodic examination in lieu of an annual examination when an annual examination is
required.
http://auditor.iowa.gov/municipal/index.html
6/25/2013
/0
Iowa Auditor of State - Iowa Municipal Oversight Law
Page 3 of5
Q7. Are there specific examination procedures to be performed,and are these required
procedures or simply suggestions?
A7. For consistency, the Auditor of State has established required procedures for annual examinations.
To access and download a copy of the required City Annual Examination Agreed Upon Procedures Program
Guide (Microsoft Word), right-click lj_ERE and click Save Link!Target As... on the context-sensitive menu.
QB. Are there other resources available pertaining to annual and/or periodic
examinations?
AS. Yes. Click HERE to access other resources available on the AOS website.
Q9. What ifI have other questions about these new requirements?
A9. For questions concerning these new requirements, Email to i_nf()@;;I_ljcj_i_t(Jr.:s.t<Jle)<l·.L1S. or call our Office at
515-281-5834.
Ql. Are Cities required to use a written request for proposals (RFP) process for annual
examinations?
A1. Yes. Cities must use a written RFP process to engage a CPA firm to perform the City's required annual
examination. Cities are not required to use an RFP if the City hires the Office of Auditor of State to perform the
required annual examination.
Q2. Does the Auditor of State have a sample RFP form to use when requesting a written
proposal for the City's annual examination?
A2. Yes. To download the City Annual Examination RFP form (Microsoft Word), right-click I:"IE:.I3.E: and click Save
Link!Target As... on the context-sensitive menu.
Q3. Is the City required to use this RFP form?
A3. No, the City is not required to use this RFP form. The RFP form is designed to facilitate the City's annual
examination requirement, including the City's requirement to use a written competitive RFP process.
_<;i Y.!:\1111
Ql. What are City annual examination filing fees and when does the City have to pay
these?
A1. Filing fees are provided for under Chapter 11 of the Code of Iowa and are paid by Cities when the City files
an annual examination report with the Office of Auditor of State.
Q2. How doI determine the amount to pay for a City annual examination filing fee?
A2. A fee scale has been established by administrative rule. Fees are determined based on the budgeted
expenditures of the City using the certified budget as last adopted or amended for the fiscal year of the City
annual examination report being filed. The designated strata and applicable fees are as follows:
Budgeted Expenditures in
Fee Amount
Millions of Dollars
Under 1
At least 1 but less than 3
At least 3 but less than 5
At least 5 but less than 10
At least 10 but less than 25
25 and over
$100.00
$175.00
$250.00
$425.00
$625.00
$850.00
Q3. Where doI send the City annual examination filing fee payment?
A3. City annual examination filing fees should be mailed to:
Office of Auditor of State
PO Box 333
Des Moines, lA 50302-0333
http://auditor.iowa.gov/municipal/index.html
6/25/2013
Iowa Auditor of State - Iowa Municipal Oversight Law
Page 4 of5
City J\n.l1.uai.I::>CC1111illa i()ll.
Ql. What are the City annual examination report filing requirements?
A1. City annual examination reports are due by March 31 (nine months after year end).
Q2. Where doI send the paper copies of the City annual examination
report,invoice and news release?
A2. Mail two paper copies of the City annual examination report, invoice and news release to:
Office of Auditor of State
State Capitol Building
Room 111
1007 East Grand Avenue
Des Moines, lA 50319-0001
Q3. Where doI send the electronic PDF copy of the City annual examination report
for posting on the AOS website?
A3. Email to: SIJbf1litRE)P0.rt§@a[J i.t()r..sta.te,i<J,U!;
Q1. Are Cities required to use a written request for proposals (RFP) process for periodic
examinations?
A1. No. For Cities subject to the periodic examination requirements, the Municipal Oversight law requires the
Office of Auditor of State (AOS) to administer periodic examinations, including the RFP process. AOS will
perform some periodic examinations and send RFPs and hire CPA firms to perform other periodic examinations.
The cost of the periodic examinations will be paid from the periodic examination fees paid to the AOS.
Q1. What are City periodic examination fees and when does the City have to pay these?
A1. Cities not required to have an audit or annual examination will pay a periodic examination fee each year to
AOS to cover the costs of a periodic examination. Periodic examination fees are provided for under Chapter 11
of the Code of Iowa and are to be established by administrative rule. Periodic examination fees will be paid to
AOS by Cities on or before March 31 every year except years the City has an audit or annual examination
performed.
Q2. How doI determine the amount to pay for the City periodic examination fee?
A2. Periodic examination fees are provided for under Chapter 11 of the Code of Iowa and are to be established
by administrative rule. Working with the Iowa League of Cities, AOS determined the following periodic
examination fee structure in order to execute the statutorily required periodic examinations for Cities with
budgeted expenditures of:
Less than $50,000 -- $100
$50,000 to $300,000 -- $475
$300,000 to $600,000 -- $900
$600,000 or more-- $1,200
Q3. Where doI send the City periodic examination fee payment?
A3. City periodic examination fees should be mailed to:
Office of Auditor of State
PO Box 333
Des Moines, lA 50302-0333
http://auditor.iowa.gov/municipal/index.html
6/25/2013
Iowa Auditor of State - Iowa Municipal Oversight Law
Page 5 of5
Ql. What are the City periodic examination report filing requirements?
A1. City periodic examination reports are due within 9 (nine) months after the period of the periodic
examination. For example, if the periodic examination is as of April 30,2014, the report should be completed
and filed with AOS on or before January 31, 2015.
Q2. Where doI send the paper copies of the City periodic examination report and
news release?
A2. Mail two paper copies of the City annual examination report and news release to:
Office of Auditor of State
State Capitol Building
Room 111
1007 East Grand Avenue
Des Moines, lA 50319-0001
Q3. Where doI send the electronic PDF copy of the City periodic examination report
for posting on the AOS website?
A3. Email to: §1Jb.rJ1itl3t=.P()rt @C11J!:Jit()f. tate)<J_.us
State of Iowa
1 Privacy Statement I Adobe PDF Reader I Send Comments to Webmaster
http://auditor.iowa.gov/municipal/index.html
6/25/2013
Preparing
cities for the
Municipal
Oversight
law- change
By David A. Vaudt, CPA
A law passed
the 2012 Legislative Session will change the oversight of cities with a
population of fewer than
starting on July 1, 2013. Tbis article will explain the changes
and outline
the affected cities should prepare for
changes.
Current law
Under current law, cities of 2,000 or more in population are
required to be audited annually, while cities with populations from
700 to 2,000 are required to be audited once every four years.
rities with populations fewer than 700 are not required to be au.d except by citizen petition or as required by the Single Audit
Act Amendments of 1996 and the Office of Management and
Budget Circular A-133, Audits of States, Local Governments, and
Non-Profit Organizations (Single Audit). Cities may hire the State
Auditor's Office (AOS) or, through a request for proposal (Rf'P)
process, a certified public accounting (CPA) firm to conduct their
audit. Cities must file their audit report with AOS and pay a filing
fee.
In recent years, small city frauds have been on the increase.
When comparing a six-year period ending in 2011 with the previous six-year period, reported frauds in cities fewer than 700 in
population increased more than 350 percent. It was clear the
current system of oversight was not working. A new system was
needed to limit the opportunity for fraud by providing a level of
oversight, but also needed to be economical for small cities.
Law change
With those goals in mind, the law was changed to provide oversight of all cities. To allow cities to budget for the new examination requirements, the law will not take effect until July 1, 2013.
Under the new law, an annual audit will continue to be required
for cities of 2,000 or more in population. However, the four-year
audit requirement will cease for cities between 700 and 2,000. In- ad,
e annual or periodic examinations, the frequency of which is
based on budgeted expenditures. (However, all cities will continue
to be required to have a Single Audit performed in any year the
city expends $500,000 or more in federal awards.)
An examination is a set of procedures narrower in scope than
january 2013
Cityscape 24
an audit, but also with less cost than an audit. Rather than focusing on auditing the financial statements of a city, the examination
is designed to focus on the financial processes of a city to help
ensure accountability and compliance and minimize the opportunity for fraud.
Cities with $1 million or more in budgeted expenditures in two
consecutive years will be required to have an annual examination. (The requirement for two consecutive years ensures cities
with one-time surges in expenditures continue to be treated as
periodic examination cities.) As with annual audit cities, these annual examination cities may hire AOS or, through a RFP process,
a CPA firm, to conduct their examination. Annual examination
cities must pay for their examination and the statutory filing fee
to file their examination report with AOS. The filing fee will be
used to pay for development of sample reports and examination programs used by AOS and CPA firms performing annual
examinations.
Cities not required to have an annual examination will pay a
periodic examination fee each year to AOS to cover the costs of a
periodic examination. Under the law, a periodic examination 'W'ill
be required at least once every 8 years, but may be done more frequently. AOS will administer the periodic examinations, including
the RFP process to select CPA firms. If a periodic examination
city elects to have an annual audit or examination, the city would
not be subject to the periodic examination fee.
Budgeting for the new law
Cities with a population of 2,000 or more should continue
budgeting for an annual audit. Cities with fewer than 2,000 population should budget for either the costs of an annual examination
or the periodic examination fee. The original certified budget for
the fiscal year subject to examination is used to determine whether the examination will be annual or periodic. For example, for the
J!
annual examination conducted in fiscal year 2014, the determination will be based upon the original fiscal year 2013 budget certified in March 2012. (Cities with $1 million or more in budgeted
expenditures in fiscal year 2013 will need to also consider the
j.nal fiscal year 2012 budget to determine whether they have
.-vo consecutive years with $1 million or more in budgeted expenditures.)
Cities with a population fewer than 2,000 and under
$1 million in budgeted expenditures (or $1 million
or more in expenditures for only one year)
For periodic examination cities, fees will be set by administrative
rule. Working with the Iowa League of Cities, AOS determined
the following periodic examination fee structure in order to execute the statutorily required periodic examinations. The fees are
based upon budgeted expenditures.
Conclusion
The new municipal oversight law represents a good opportunity to strengthen oversight of small cities. All cities want to
do the right thing for their citizens. The new law will give them
unprecedented, affordable access to the expertise needed to help
ensure they are operating effectively. While conducting annual and
periodic examinations, CPA firms and AOS will identify changes
cities can make to their operations to help increase accountability and compliance and reduce the opportunity for fraud. With
advance planning, cities can ensure smooth transition to the new
requirements.
David Vaudt is Iowa's State Auditor and began his third four:Jear term
in January 2011. More information on the State Auditor's Office can be
found at auditor.iowa.gov.
Periodic examination cities should budget to pay the yearly fee to
AOS starting with the fiscal year 2014 budget. Periodic examination fees will be due March 31, 2014.
ties with population fewer than 2,000 and $1
million or more in budgeted expenditures for two
consecutive years
Cities meeting the requirement for an annual examination
should budget for the cost of an annual examination starting with
the fiscal year 2014 budget. The number of hours and hourly
rates to complete an annual examination will vary. Recent CPA
firms' average hourly rates for four-year city audits ranged from
$35 to $157 per hour, and the average AOS hourly rate is $52 per
hour. Additional examination costs cities will incur include AOS
or CPA firm travel expenses and the statutory filing fee payable to
AOS.
While a specific timeline for annual examinations is not set by
the Code of Iowa, the following is a suggested timeline:
Update
The Iowa Public Agency Investment
Trust is a jointly sponsored program for
members of the Iowa League of Cities,
the Iowa State Association of Counties and
the Iowa Association of Municipal Utilities.
As of December 20. 2012
Number of Trust members ... 439
• 216 cities
• 96 counties
• 89 utilities
• 38 28E agreements
Simple avg. monthly rate ... .0.010%
Current daily rate ......... 0.010%
For more information call:
July 1, 2013-March 31, 2014
Fiscal year 2013 annual examination
should be performed and filed with
AOS.
1-800-872-4024
or (515) 224-2763.
January 2013
J.d-
Cityscape 25
Audit/Exam Requirement for FY12-13
Budget Expenditures
City
Population
FY 2012
FY 2013
Is Population
Over 2,000?
Are Budget
Expenditures
Over $1M for 2
Consecutive
Years?
Yes
Audit/Exam Requirement
Annual Audit
Annual Exam Periodic Exam
X
Winfield
1'134
$1,601,615
$1,520,220
No
Winterset
5,190
$9,957,586
$12,344,021
Yes
Winthrop
850
$1,569,567
$1,632,367
No
Yes
Wiota
116
$72,505
$101,385
No
No
X
Woden
229
$1,977,196
$760,540
No
No
J(
Woodbine
1,459
$3,553,183
$2,196,255
No
Yes
Woodburn
202
$115,947
$109,365
No
No
"1 0odward
1,024
$3,818,072
$1,564,201
No
Yes
,olstock
168
$461,800
$501,000
No
No
J(
Worthington
401
$450,446
$404,167
No
No
J(
Wyoming
515
$2,143,895
$1,584,975
No
Yes
Yale
246
$190,942
$149,637
No
No
J(
Yetter
34
$43,583
$57,690
No
No
J(
Yorktown
85
$27,900
$32,820
No
No
X
Zearing
554
$551,404
$664,813
No
No
j(
Zwingle
91
$56,900
$72,250
No
No
J(
Audit/Exam counts:
160
Total:
Monday, December 17, 2012
177
610
947
Page 50 of 50
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
NOTE to Cities: This annual examination agreed upon procedures engagement RFP or
equivalent written document (written RFP) must be used to engage independent auditors wishing
to perform annual examinations pursuant to Chapter 11.6 of the Code of Iowa. The "Specific
Requirements" listed in Part I should be addressed in the written RFP.
The agreed upon
procedures program guide prepared by the Office of Auditor of State establishes the minimum
requirements to be performed for all annual examinations and should, therefore, be specifically
referred to or otherwise incorporated in the written RFP.
Date
_
REQUEST FOR PROPOSALS (RFP)
RFP NUMBER
_
The City of
, Iowa (City) will receive proposals to perform agreed
upon procedures to satisfy the annual examination requirements of Section 11.6 of the
Code of Iowa for the
year(s) ending June 30, 201_. Attached is information
relating to minimum specifications of services, data to be included in the proposal,
evaluation criteria and selected information relating to the City to be examined.
Sealed proposals
201_,
at
the
office
copies) will be accepted until 4:30 p.m.,
of
the
, Iowa. If mailed, the proposals should be mailed to:
ill
Those submitting sealed proposals should indicate on the outside of the envelope
in the lower left-hand comer that it is a sealed proposal for the RFP number indicated
above and the name of the firm submitting the proposal.
The contract for services will be awarded by
Further information may be obtained from
, 201_.
at (_)-_-
NOTE: This form is available on the Auditor of State's website at:
http: //auditor.iowa.gov /municipal/index.html
At the Municipal Oversight page, navigate to Annual Examination Agreed Upon
Procedures (AUP) Engagement Request for Proposals (RFP) to access a Word version and
download a copy of the RFP.
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
I. SPECIFIC REQUIREMENTS
1. The City reserves the right to reject any and all proposals received.
2. Only proposals received at the location described and in the time frame given will
be considered.
3. The original and one copy of the enclosed contract should be completed and
manually signed by a partner of the frrm submitting the proposal.
4. The annual examination agreed upon procedures (AUP) engagement shall be
performed in accordance with the following:
a) Attestation Standards for agreed upon procedures engagements
issued by the American Institute of Certified Public Accountants,
b) The Standards for
Attestation
Govemment Auditing Standards
General of the United States and
Engagements contained m
issued by the Comptroller
c) The agreed upon procedures program guide prepared by the Office
of Auditor of State (AOS).
d) Other procedures, if any, requested by the City.
5. The fees quoted in the proposal and included in the contract will be the maximum
paid per hour and in total, unless an amendment to the contract is completed by
both parties.
6. The AUP engagement report should conform to:
a) Reporting formats specified by the AOS,
b) Attestation Standards reporting requirements and
c) Government Auditing Standards reporting requirements.
7. The AUP engagement report should report all findings from the AUP engagement
since materiality does not apply to the findings to be reported in accordance
with, and as described in, Attestation Standards, AT 201.25.
8. Bound copies of the report, in a quantity sufficient to meet the needs of the City,
are required to be provided by the firm awarded the contract. In addition, the
frrm awarded the contract shall prepare an electronic (PDF) copy of the report for
submission to the AOS at submitreports@auditor.state.ia.us.
9. Two bound copies of the report, a detailed per diem AUP engagement invoice and a
copy of the news release shall be provided to AOS upon release of the report to
the City.
10.Working papers shall be retained by the firm performing the AUP engagement and
shall be made available to the AOS in accordance with Chapter 11 of the Code of
Iowa.
2
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
II. DATA TO BE INCLUDED IN PROPOSAL
In order to simplify the review process and to obtain the maximum degree of
comparability, the proposal should include the following items and be organized in
the manner specified below.
A. Letter of Transmittal - optional
A letter of transmittal may be included briefly outlining the proposer's understanding
of the work and general information regarding the firm and individuals to be
involved, including the local address of the office of the firm which will perform the
work, the telephone number and the name of the contact person.
B. Profile of Firm Proposing - recommended
1. Provide a brief description of the size of the firm.
2. State whether the firm is in compliance with the registration requirements to
engage in the practice of public accounting within Iowa.
3. State whether the firm is independent of the City
Govemment Auditing Standards.
m
accordance with
4. Describe the local office from which the work will be performed.
a. Location of the office.
b. Current size of the office.
c. Size of professional staff by level, such as partner, manager,
supervisor, senior and other professional staff.
d. Number of CPA's in the office.
5. Submit any other pertinent information required to describe the office which will
perform the work.
C. Qualifications - required
1. Describe the recent local office experience in similar types of City or
govemmental engagements to which the proposal relates. If appropriate, include
regional experience regarding similar types of entities and/ or engagements.
2. Include brief resumes of all key professional members who will be assigned to
the AUP engagement. The resumes should include:
a. The amount of experience the individual has in the profession.
b. A summary of similar govemmental audits
engagements on which the individual has worked.
andjor
AUP
c. A summary of the continuing professional education the
individual has had in govemmental accounting and auditing
during the last two years.
d. A statement as to whether the individual is independent, as
defined by Govemment Auditing Standards.
3
RFP FORM AOS 87-05 (04/13}
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
II. DATA TO BE INCLUDED IN PROPOSAL
(Continued)
C. Qualifications - required (continued)
3. Describe the firm's policy on notification of changes in key personnel to be
assigned to the engagement.
4. Provide a listing of or the number of professionals in the office who
experienced in govemmental audits and/ or AUP engagements.
are
5. Describe the availability of individuals within the firm who are primarily involved
in govemmental audits and/ or AUP engagements and reporting and with whom
the AUP engagement team may consult.
6. Describe briefly the firm's system of quality control to ensure
engagement is adequately performed.
the AUP
D. Scope of Services and Proposed Project Schedule - required
Briefly describe your understanding of the scope of services to be provided. Indicate a
proposed time schedule for completing the work, assuming the contract will be
issued on the date given in the cover letter. Include the approximate dates you
would perform fieldwork, office review and report preparation and the latest delivery
date of the fmal report.
E. Fees and Compensation- required
Provide the following information:
1. Estimated total hours.
2. Estimated out-of-pocket expenses.
3. Hourly rate by staff classification.
4. All-inclusive maximum fee and out-of-pocket expenses, which will not
exceeded.
5. Frequency and timing of your billing process.
4
be
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
III. RECOMMENDED EVALUATION CRITERIA
It is important the proposal is responsive to the data requested.
1. Cost
Overall cost, including out-of-pocket expenses, for performance of the AUP
engagement.
2. Qualifications
a.
Organizational structure and size of the firm.
b.
Organizational structure and size of the office performing
the AUP engagement.
c.
Recent experience in AUP engagements.
d.
Qualifications of the AUP engagement team.
e.
Individuals with whom the AUP engagement team can
consult.
f.
Level of effort, understanding of work and timetable to complete the
AUP engagement.
5
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
IV. CITY PROFILE
SUGGESTED information to include:
( 1) Administrative Information:
• Background information on the City,
• Fiscal year(s)covered by AUP engagement,
• List of the City's funds,
• Description and magnitude of the City's accounting records,
• Description of the City's computer system(s), if applicable, and
• Availability of prior reports and/ or working papers.
(2) Work and Reporting Requirements:
• Extent to which the City would assist the firm,
• Specific scope of the AUP engagement work to be performed,
• Number of copies of reports required,
• List of restrictions, such as copy services or work space and
• Exit conference requirements.
(3) Time Requirements:
• Date of contract award,
• Date records would be ready for the AUP engagement and
• Date final report is due (9 months following the end of the reporting period).
6
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
SAMPLE AGREEMENT BETWEEN
AND
THIS AGREEMENT made and entered into this
and between the
City
,
of
day of
Iowa
, 20_, by
hereinafter called "City," and
, hereinafter called "CPA."
WHEREAS, the City wishes to obtain the services of the CPA to perform an agreed upon
procedures (AUP) engagement to satisfy the annual examination requirements of Section 11.6 of
the Code of Iowa, for the
year(s) ending June 30, 20
; and
WHEREAS, the CPA is equipped and staffed to perform the above AUP engagement; and
WHEREAS, this agreement is in the public interest in fulfilling the requirements of
Chapter 11 of the Code of Iowa.
NOW, THEREFORE, BE IT UNDERSTOOD AND AGREED:
1. The CPA will:
A. Perform the AUP engagement for the estimated hours as noted in this
agreement.
B. Begin work on the AUP engagement as specifically agreed upon with
the City.
C. Perform all work in accordance with Attestation Standards issued by
the American Institute of Certified Public Accountants and those
contained in Govemment Auditing Standards issued by the
Comptroller General of the United States and the agreed upon
procedures program guide prepared by the Office of Auditor of State.
D. Immediately inform the City, the Auditor of State and the County
Attorney if the AUP engagement discloses any irregularity in the
collection or disbursement of public funds or other fmdings the CPA
believes represent significant noncompliance as required by Chapter 11
of the Code of Iowa.
E. Provide access to its working papers to the Auditor of State m
accordance with Chapter 11 of the Code of Iowa.
7
3\
RFP FORM AOS 87-05 (04/13)
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
Agreement - Page 2
2. Conditions of Payment:
A. It is understood the fees for the services set forth above
shall be reimbursed at the following hourly rates:
Classification
Estimated
Hours
Hourly
Rate
B. The CPA shall present an invoice for services in the following
manner:
_
C. Payment shall be made within_ days of receipt of the invoice.
D. The total reimbursement shall not be for more than$
except as specifically agreed by the City and the CPA.
_
3. Termination of Agreement:
A. The City may terminate this contract without notice if the CPA
fails to perform the covenants or agreements contained herein.
B. The CPA shall be paid for all work satisfactorily performed to
the date of termination.
IT WITNESS THEREOF, the City and CPA have executed this AGREEMENT as of
the date indicated below:
CPA
By
_
_
City of
_
By
Title
_
Title
Date
_
Date
8
_
CITY ANNUAL EXAMINATION
AGREED UPON PROCEDURES ENGAGEMENT RFP
RECOMMENDED EVALUATION CRITERIA AND TECHNIQUES
FOR RESPONSES TO REQUESTS FOR PROPOSALS
Evaluation of responses to a request for proposal is based upon a 100-point rating
system. A maximum of 25 points is assigned to the cost of the bid proposal, and a
maximum of 75 points is assigned to the qualifications of the bidding firm or individual.
The techniques used to evaluate these two components are described below.
Criteria:
COST
Evaluation Value:
25 points
Evaluation Technique:
For each firm evaluated
Cost Score= [Lowest cost of all proposals received]
Proposal cost for this firm
X
25
Criteria:
QUALIFICATIONS
Evaluation Value:
75 points
Evaluation Technique:
Subjective scoring for the following factors:
Qualification Factor
1. Organizational structure and size of the entire firm (resources
available - personnel and research, existence of areas of
specialization, commitment to govemmental auditing and AUP
engagements, etc.)
2. Organizational structure and size of office performing the AUP
engagement (resources available - personnel and research,
existence of area of specialization, commitment to govemmental
auditing and AUP engagements, etc.)
3. Recent experience in similar engagements (involvement in local
govemmental audits and/ or AUP engagements, extensiveness,
variety, length of time performing govemmental examinations,
etc.)
4. Qualifications of the AUP engagement team (level of experience
as accountants, auditors or govemmental auditors, variety of
experience, % of time devoted to govemmental engagements,
number of CPA's involved, training, etc.)
5. Individuals with whom the AUP engagement team can consult
(level and variety of experience, number of CPA's, training, etc.)
6. Level of effort, understanding of work and timetable to complete
the AUP engagement (number of hours, projected timetable,
commentary showing understanding of the City and general
knowledge of what is required, etc.)
Total points - Qualifications
Each firm's total evaluation score is the sum of its cost score plus its
qualification score. The maximum score is 100 points.
Possible
Points
0-5
0-5
0-15
0-25
0-5
0-20
0-75
CITY ANNUAL
XAMI ATION
AGREED UPON P OCEDURES
PROGRAM GUIDE
For the year ended June 30, 2013
DAVID A. VAUDT, CPA
AUDITOR OF STATE
AOS 83-14 (4/13)
CITY ANNUAL EXAMINATION AUP PROGRAM GUIDE
CITY
FILE INDEX
June 30, 2013
N/A
Incl.
GF-1
Planning
GF-2
Planning Conferences
GF-3
Internal Control Checklist
GF-4
Review of Minutes
GF-5
City's Year End Financial Statements/Reports
GF-9
Agreed Upon Procedures Program Guide
GF-10 Accounting Problems
GF-11 Conferences (including exit)
GF-12 Items for Comment
GF-13 Items for Next Year
GF-14
Engagement Letter/ Representation Letter
GF-17 Routing Sheet
GF-19 W /P Copies Given to City and Outside Parties
GF-20
Pending Matters
GF-21 Review Notes - deleted by
Date
GF-22 Incharge Review Questionnaire
GF-23 Manager Review Questionnaire
GF-25 Prior Year Report/Status of Prior Year Comments
AOS 83-14 (4/13)
CITY
June 30, 2013
TABLE OF CONTENTS
Work Papers
B.
Cash and Investments
M.
Long-Term Debt
N.
Tax Increment Financing
P.
Fund Balance and Transfers
R.
Receipts
S.
Disbursements and Payroll
GF-1.1
AOS 83-14 (4/13)
CITY ---------------------June 30, 2013
PLANNING
DONE
BY
PROCEDURE
Objectives:
To plan and document planning the examination pursuant to
Chapter 11 of the Code of Iowa and as required by AICPA
Attestation Standards
(AT), Section 201,
"Agreed Upon
Procedures Engagements."
Procedures:
A.
City's population
Date of Incorporation
B.
Job number
C.
Assigned staff:
Manager
Incharge
Staff
D.
Timing:
Independent?
Planned
Date
Actual
Date
Begin fieldwork
Complete fieldwork
To Manager
E.
Obtain and file the engagement letter. (AT Section 201.10)
F.
Inquire as
to
the
existence
of
findings and
recommendations from any previous audits, attestation
engagements or other studies that have been performed
and determine the
current status of any fmdings or
recommendations. (GAS Chapter 4.09 and AU 801.16)
G.
Review
permanent file
information, including:
1.
2.
3.
4.
5.
(if
available)
for
applicable
Administrative and accounting personnel.
Organization chart.
Chart of accounts and accounting manual.
Long-term leases, contracts and commitments.
List of officials and terms.
W/P
REF
NI A
REMARKS
GF-1.2
AOS 83-14 (4/13)
CITY ---------------------June 30, 2013
PLANNING
DONE W/P
REF N/ A REMARKS
BY
PROCEDURE
H.
Conduct entrance conference.
pertinent information.
Discuss and document
I.
Request the City assemble all
records and documents.
necessary information,
J.
Minutes:
1. Scan minutes for significant or unusual items.
2. Select four (4) meetings during the year being
examined to review whether:
a. Minutes were properly signed as required by
Chapter 380.7 of the Code oflowa.
b.
Meetings were
preceded by proper
(Chapter 21.4 ofthe Code of Iowa).
notice.
c.
The minutes show information sufficient to
indicate the vote of each member present as
required by Chapter 21.3 of the Code of Iowa.
d.
The
passage of ordinances, amendments or
resolutions were by a majority vote of all the
members of the City Council rather than a
majority vote of a quorum of the City Council as
required by Chapter 380.4 of the Code of Iowa.
e.
Minutes document the City Council followed
proper proceedings for any closed sessions.
(Chapter 21.5 ofthe Code of Iowa)
i. The session was closed by affirmative roll
call vote of the
_
The specific exemption under Chapter
21.5 of the Code of Iowa.
iii. Final action was taken in open session.
11.
f.
K.
Minutes were published (or posted) within 15
days of the meeting as required by Chapter
372.13(6) of the Code of Iowa and included:
i. Total disbursements from each fund.
11. A list of all claims allowed (including the
reason for the claim).
iii. A summary of all receipts.
1v. A summary of ordinances or amendments
adopted.
Obtain copy of City's June 30 financial statement(s) and/or
reports.
GF-1.3
AOS 83-14 (4/13)
CITY
June 30, 2013
PLANNING
DONE
BY
PROCEDURE
L.
Verify and review surety bond coverage for reasonableness
and compliance with statutory requirements for all
officials and employees as required by Chapters 64.13 and
64.15 of the Code oflowa.
M.
Request the
checklist.
N.
Modify/expand on the AUP program guide, as necessary. If
the City requests expanded procedures, at additional cost
to the City, arrange for increased fees.
0.
Immediately contact the Manager if fraud or embezzlement
is suspected. Ensure the appropriate officials are notified
after contacting the Manager. Chapter 11.6 of the Code of
Iowa requires a CPA firm and the City to notify the Auditor
of
State
immediately
regarding
any
suspected
embezzlement, theft or
other
significant financial
irregularities.
If federal funds are involved, the
appropriate U.S. Regional Inspector General should be
notified.
P.
Prepare engagement time budget.
Q.
Discuss planning phase with the Manager and document
conclusions.
City
Clerk complete an intemal
control
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for planning and the results of these
procedures are adequately documented in the accompanying
workpapers.
Incharge
Date
Manager
Date
W/P
REF
N/A
REMARKS
GF-2.1
AOS 83-14 (4/13)
CITY ---------------------PLANNING CONFERENCE
June 30, 2013
IN ATTENDANCE:
Auditor
Name
Title
Name
Items
A. Scope of AUP examination:
1. Period of examination.
2.
Review engagement letter with City officials, including
applicable
responsibilities
and
sufficiency
of
procedures.
3.
Objectives of examination.
4.
Inquire whether the City's accounting system
accommodates, and the City uses, fund accounting.
5. All funds under fiduciary custody and/ or control of the
City pursuant to Chapter 384.20 of the Code of Iowa.
6.
Additional procedures, if any, at additional cost to City.
7.
Report to be issued, including all AUP findings.
8.
The AUP engagement will be conducted as required by
AICPA Attestation Standards, Chapter 11 of the Code of
Iowa and Government Auditing Standards, issued by
the Comptroller General of the United States.
B. Timing of:
1. Fieldwork.
2.
Release of report.
C. Availability of records.
D. Working space arrangements, if applicable.
E. Extent of City assistance.
Title
Discussion
GF-2.2
AOS 83-14 (4/13)
CITY ---------------------PLANNING CONFERENCE
June 30, 2013
Items
F.
Discussion
Status of prior findings, if any.
G. Personnel changes.
H. Accounting problems during the year.
I.
Related party /business transactions.
J.
Understanding of fee and billing arrangements.
K. Other discussion items.
Acknowledgement:
Mayor or City Administrator
Date
Audit Committee or City Council Member
Date
City Clerk/Finance Director
Date
GF-2.3
AOS 83-14 (4/13)
CITY
June 30, 2013
PLANNING CONFERENCE
MANAGER
Date:
Time:
Discussion
A. Last year's items for this year's AUP engagement.
B. Significant findings from planning.
C. Results of obtaining an understanding of intemal controls.
D. Significant AUP program modifications.
E.
Time budget:
1. Timing of fieldwork.
F.
2.
Staff scheduling.
3.
Budget variances.
Other.
GF-4
AOS 83-14 (4/13)
CITY
June 30, 2013
Date
REVIEW OF MINUTES
Significant Action (S/ A)
W/PREF
GF-9.1
AOS 83-14 (4/13)
CITY
CASH AND INVESTMENTS
June 30, 2013
DONE W/P
BY
PROCEDURE
Objectives and Related Assertions:
A.
The City Clerk's financial reports to the City
accurately reflect the City's cash and investments.
Council
B.
Investments comply with the Code of Iowa and the City's
adopted investment policy.
Procedures:
A.
Observe cash on hand, if any.
B.
Obtain one ( 1) monthly Clerk's report and determine the
report foots and trace ending fund balances to the general
ledger.
C.
Cash In Bank and Investments:
1.
Determine whether bank reconciliations are performed
monthly.
2.
Determine whether bank reconciliations are reviewed by
an independent person.
3.
Obtain bank reconciliations for two (2) months and
perform the following:
a. Verify reconciling items to support.
b. Foot the bank reconciliation(s).
c.
Consider confirming bank account and investment
balances.
d.
Obtain a list of outstanding checks at the end of
the selected month(s).
Ensure the list of
outstanding checks includes check number,
amount and date written for each listed check and
verify listed outstanding checks cleared the bank
after the selected month(s).
e.
Trace reconciled balance for selected months to
general ledger account balances and to monthly
reports provided to the City Council.
4.
Determine unclaimed property per Chapter 556.1(12) of
the Code of Iowa has been reported to the State
Treasurer annually before November 1 as required by
Chapter 556.11 of the Code of Iowa.
5.
Determine a depository resolution which includes all
depositories used by the City has been approved as
required by Chapter 12C.2 of the Code of Iowa.
REF N/ A REMARKS
GF-9.2
AOS 83-14 (4/13)
CITY
CITY
CASH AND INVESTMENTS
June 30, 2013
DONE W/P
PROCEDURE
6.
Determine if the City has adopted a written investment
policy
which complies with the provisions of
Chapter 12B.lOB of the Code of Iowa.
7.
Obtain a schedule of investment transactions for the
same two (2) months (selected in procedure 3 above)
and trace
investment balances to
the
bank
reconciliations.
8.
Determine investments held at the end of the selected
months complied with the City's adopted investment
policy and statutory provisions of Chapter 12B.l0 of
the Code of Iowa, as applicable.
NOTE: Chapter 12B.l0(5) of the Code of Iowa provides a
definitive list of allowable investments for cities.
ALTERNATE/ADDITIONAL PROCEDURES:
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for cash and investments and the results
of these procedures are adequately documented m the
accompanying workpapers.
Incharge
Date
-------------------------
Manager
Date
-------------------------
BY
REF N/ A REMARKS
GF-9.3
AOS 83-14 (4/13)
CITY
LONG-TERM DEBT
June 30, 2013
DONE W/P
BY
PROCEDURE
Objectives and Related Assertions:
A.
Debt and related transactions are authorized, allowable
and accounted for accurately.
Procedures:
A.
For general obligation, special assessment and revenue
bonds or notes:
1. Determine general obligation debt payments were
recorded in the Debt Service Fund as required by
Chapter 384.4 of the Code of Iowa.
2.
B.
C.
Determine and document procedures for bonds or notes
sold during the current year were in compliance with
Chapters 75, 384 and 403.9 of the Code oflowa.
Determine whether other long-term debt exists (leasepurchase agreements, deferred payment contracts, real
estate contracts, loans, TIF development agreements, local
option sales tax debt) and whether the debt is accounted
for accurately.
Issuance of Debt:
1.
Review authorization for any issuances during the year
being examined.
2.
Determine debt proceeds were properly recorded and
trace proceeds to cash receipts record and bank
statement.
ALTERNATE/ADDITIONAL PROCEDURES:
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for long-term debt and the results of these
procedures are adequately documented in the accompanying
workpapers.
Incharge
Date
Manager
Date
REF N/A REMARKS
GF-9.4
AOS 83-14 (4/13)
CITY
TAX INCREMENT FINANCING
June 30, 2013
DONE W/P
PROCEDURE
Tax Increment Financing (TIF)
Objectives and Related Assertions:
A.
TIF and related transactions are authorized, allowable and
accounted for accurately. Annual TIF report has been
prepared as required by the requirements of Chapter
384.22 of the Code of Iowa.
TIF Obligations (indebtedness) are defined m Chapter
403.19(6)(d) as including but not limited to "written
agreements whereby the municipality agrees to exempt,
rebate, refund or reimburse property taxes, provide a grant
for property taxes paid, or make a direct payment of taxes,
with moneys in the special fund..., and bonds, notes or
other obligations that are secured by or subject to
payment from moneys appropriated by the municipality
from moneys in the special fund..."
Procedures:
A.
Determine tax increment fmancing (TIF) collections were
properly recorded in a separate Special Revenue Fund (TIF
fund) as required by Chapter 403.19 of the Code of Iowa.
B.
Determine the TIF collections in the TIF fund were
disbursed or transferred to pay TIF obligations that qualify
for payment (within the urban renewal plan) from TIF
collections and such obligations were previously certified
to the County Auditor as TIF debt and/ or LMI.
C.
Determine the following regarding the Tax Increment Debt
Certificate:
1. The amounts certified (Form 1 and Form 1.1 for TIF
debt not previously certified - or equivalent document)
are supported and represent loans, advances, or other
qualified indebtedness or bonds which qualify for
payment from the TIF revenues for each urban renewal
area in the City as required by Chapter 403.19(5)(a) of
the Code of Iowa and the certificate was filed by
December 1.
For annual appropriated debt, the
amount certified should be limited to the amount
appropriated to be paid in the next fiscal year.
NOTE: In general, qualified TIF indebtedness must be
(1) for a program in the urban renewal area, (2) for an
activity covered by the allowable list in the Code of Iowa
(Chapter 403(6) and 403(12)), (3) for a project covered
by the plan and (4) must further the goals of the plan.
BY
REF
N/ A REMARKS
GF-9.5
AOS 83-14 (4/13)
CITY
TAX INCREMENT FINANCING
June 30, 2013
DONE W/P
PROCEDURE
2.
The City used (Form 2 or an equivalent document) to
properly reduce TIF request if/when the total amount of
the legally available TIF increment tax was not wanted.
3.
The City certified (Form 3 or an equivalent document) a
reduction to the amount previously certified by
December 1 in the year action was taken which
resulted in the reduction, as required by Chapter
403.19(5)(b) of the Code oflowa.
NOTE: Required reductions include payments from
sources other than TIF
revenue, interest
on
investments, site proceeds of TIF property, reduction of
required principal and interest payments due to
refunding or refinancing of the obligation or for any
other reason (i.e. interest earned or property sales
proceeds are required to be credited to the TIF fund).
D.
Annual Urban Renewal Report
1.
Obtain the urban renewal report due December 1st of
the fiscal year under examination and determine the:
a. Report was approved by the City Council and
completed/filed on or before December 1st.
b. Amounts reported on the Levy Authority Summary
agree with City records.
2.
Obtain and review the City's detailed TIF obligations
(debt) listings and determine "TIF Debt Outstanding" on
the Levy Authority Summary includes the following:
a. Certified Debt
- TIF obligations outstanding,
including principal and interest, certified to the
County Auditor as of July 1st of the period covered by
the urban renewal report and,
b. Certifiable Debt - Outstanding TIF obligations
incurred during the fiscal year covered by the urban
renewal report, including annual appropriation debt
not yet certified.
3.
Determine rebate agreements, if any, have been
properly reported as project(s), including total debt and
expense.
4.
TIF collections remaining after an urban renewal area is
no longer active, if any, were retumed to the County
Treasurer as required by Chapter 24.21 of the Code of
Iowa.
BY
REF
N/ A REMARKS
GF-9.6
AOS 83-14 (4/13)
CITY
TAX INCREMENT FINANCING
June 30, 2013
DONE W/P
BY
PROCEDURE
E.
For urban renewal areas with public improvements related
to housing and residential development, determine if
assistance for low and moderate income (LMI) housing was
provided in accordance with Chapter 403.22 of the Code of
Iowa.
ALTERNATE/ADDITIONAL PROCEDURES:
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for tax increment financing and the
results of these procedures are adequately documented in the
accompanying workpapers.
Incharge
Manager
Date
------------------------Date
-------------------------
REF
N/ A REMARKS
GF-9.7
AOS 83-14 (4/13)
CITY
June 30, 2013
FUND BALANCE
DONE W/P
PROCEDURE
BY
REF N/A REMARKS
Objectives and Related Assertions:
A.
Funds are established in accordance with the City Finance
Committee's recommended chart of accounts.
B.
All required funds and fund balances are maintained and
accounted for accurately.
C.
Transfers between funds are allowable, approved and
accounted for.
D.
City's AFR is completed and accurately reflects the City's
financial information.
Procedures:
A.
Determine the City is using fund accounting and each fund
is properly classified in accordance with the Uniform Chart
of Accounts.
B.
For enterprise funds with deficit balances, determine if
there is a net earnings violation (book transfers are made
to sinking accounts per the bond/note resolution, but if
the operating accounts are in a deficit position, the sinking
accounts are not backed by cash) and comment if
appropriate.
C.
Determine projects are appropriately accounted for
separate capital projects accounts.
D.
Examine journal entries and other adjustments
directly to the general ledger.
in
made
1. Select specific joumal entries and determine whether:
a. The joumal
supported.
entries are reasonable and
are
b. The
journal entries are approved by
an
independent person and there 1s documented
evidence of the approval.
E.
Annual Financial Report (AFR):
1. Compare AFR to City's general ledger to determine if
amounts agree.
a.
Beginning and ending
reported accurately.
b.
RUT transactions were reported accurately in the
Special Revenue fund.
Total receipts and disbursements agreed with City
records.
c.
fund
balances
were
Sl
GF-9.8
AOS 83-14 (4/13)
CITY
June 30, 2013
FUND BALANCE
DONE W/P
BY
PROCEDURE
F.
Transfers:
1. Obtain a list of all fund transfers during the year.
2. Review transfers for propriety and document findings.
3. Determine transfers were recorded in the proper fund.
4. Trace transfers to approval in the minutes or budget, as
applicable.
ALTERNATE/ADDITIONAL PROCEDURES:
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for fund balances and the results of these
procedures are adequately documented in the accompanying
workpapers.
Incharge
Date
Manager
Date
REF N/A REMARKS
GF-9.9
AOS 83-14 (4/13)
CITY
RECEIPTS
June 30, 2013
DONE W/P
PROCEDURE
BY
REF NI A REMARKS
Objectives and Related Assertions:
A.
Receipts are accounted for accurately and in accordance
with the City Finance Committee's recommended chart of
accounts.
Procedures:
A.
Verify the City is using the Uniform Chart of Accounts to
classify receipts in the general ledger.
B.
Perform a receipts to deposit test for one month (reconciling
deposits per the bank statement to general ledger receipts)
and consider the possibility of undeposited receipts.
C.
Property Tax:
1. Verify electronic deposit
payments during the year.
D.
of
twelve property
tax
2.
Trace one month's property tax collections to general
ledger posting.
3.
Total and trace to budget for reasonableness.
Governmental Revenue:
1. Obtain copy of State confirmation from the Auditor of
State's Office and reconcile amounts per confirmation
with the general ledger.
E.
Enterprise Revenues (Water, Sewer, Electric, etc.):
1.
Determine if a monthly and/ or year-end list of
delinquent accounts is maintained and obtain a copy of
the listing. If not available, comment accordingly.
2.
Determine if monthly reconciliations of billings and
collections are prepared.
a. If not available, perform analytical procedures to
compare amounts billed to amounts collected and
deposited.
b.
If available:
1) Apply
procedures to
determine the
accuracy and
completeness
of
the
reconciliation for one month and/ or at
year-end.
2)
Comment accordingly if variances have not
been adequately resolved.
53
GF-9.10
AOS 83-14 (4/13)
CITY
RECEIPTS
June 30, 2013
DONE W/P
BY REF N/ A REMARKS
PROCEDURE
3.
F.
Review City officials' accounts (including the Utility
Clerk's account). Trace selected month(s) billing(s) to
collection/ deposit.
General:
1. Scan ledgers or receipts detail for unusual receipts.
Investigate accordingly.
2.
G.
Scan deposit tickets and evaluate the reasonableness of
amounts of currency deposited, considering the types of
receipts expected to be received in currency.
Determine local option sales tax receipts were expended as
required by local ballot provisions. Review a copy of the
ballot authorizing the local option tax.
ALTERNATE/ADDITIONAL PROCEDURES
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for receipts and the results of these
procedures are adequately documented in the accompanying
workpapers.
Incharge
Date
Manager
Date
GF-9.11
AOS 83-14 (4/13)
CITY
DISBURSEMENTS
June 30, 2013
DONE W/P
BY
PROCEDURE
Objectives and Related Assertions:
A.
Disbursements are approved, supported and accounted for
accurately and comply with Article III, Section 31 of the
Constitution of the State of Iowa (public purpose criteria).
B.
The annual budget is authorized, certified and amended, if
needed, in a timely manner.
Procedures:
A.
Obtain a schedule of all related party transactions with
officials or employees and review for compliance with
Chapter 362.5 of the Code of Iowa.
B.
Scan disbursement joumal for unusual disbursements.
Investigate accordingly.
C.
Scan all cancelled checks/images looking for checks to City
personnel, unusual vendors and "cash."
1. Examine checks payable to the City Clerk and other
personnel authorized to issue/ sign checks.
a. Review amount and frequency of checks.
b. Determine if checks are appropriate.
2.
Select five (5) consecutive checks from altemating
months and verify:
a. The disbursement is adequately supported.
b.
The amount and payee on the check match the
general ledger posting.
c.
Disbursement was authorized by the City Council.
d.
Credit card transactions
properly supported.
e.
The disbursement appears to meet the test of
public purpose.
For those items which are
questionable, the City
should have adequate
documentation as to how the expenditure(s) meet
the test of public purpose.
are
approved and
D.
Review all bank statements for erasures/alterations and
scan for unusual withdrawals and/ or checks.
E.
If canceled checks are not received, determine whether both
the front and back of electronic check images are received
as required by Chapter 554D.l14(5) of the Code oflowa.
REF N/ A REMARKS
GF-9.12
AOS 83-14 (4/13)
CITY
DISBURSEMENTS
June 30, 2013
DONE W/P
BY
PROCEDURE
F.
Determine the City applied for and received sales tax
refunds on completed projects unless an exemption
certificate was issued by the City for the contractor as
required by Chapter 423.3(80)(b) of the Code of Iowa.
G. Determine if disbursements by function are within the
budget or amended budget.
ALTERNATE/ADDITIONAL PROCEDURES:
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for disbursements and the results of these
procedures are adequately documented in the accompanying
workpapers.
Incharge
Manager
Date
------------------------Date
-------------------------
REF N/ A REMARKS
GF-9.13
AOS 83-14 (4/13)
CITY ---------------------PAYROLL
June 30, 2013
DONE W/P
PROCEDURE
Objectives and Related Assertions:
A.
Payroll and related transactions are authorized, allowable
and accounted for accurately.
Procedures:
A.
Select five (5) payroll transactions from throughout the
year to test:
1. Authorization for gross pay or hourly rate.
B.
2.
Approval of hours worked.
3.
Accuracy of the number of hours paid per the payroll
journal to hours worked per approved timesheets (for
hourly employees).
City Clerk and/ or Payroll Clerk Pay:
1. If salaried, reconcile the approved salary for the City
Clerk and payroll clerk to the City Council approved
salary.
2.
If hourly, test selected paychecks for the City Clerk and
payroll clerk to determine if the hourly rate paid agrees
to the approved hourly rate.
C.
Ensure wage increases are approved by the City Council as
an hourly rate or salary and not just a percentage increase.
D.
Determine if Forms 941, W-2 and 1099 were filed with the
IRS, as appropriate.
ALTERNATE/ADDITIONAL PROCEDURES:
CONCLUSION:
We have performed procedures sufficient to achieve the
engagement objectives for payroll and the results of these
procedures are adequately documented in the accompanying
workpapers.
Incharge
Date
Manager
Date
BY
REF N/ A REMARKS
GF-9.14
AOS 83-14 (4/13)
CITY ---------------------June 30, 2013
COMPLETION OF AUP ENGAGEMENT
DONE W/P
BY REF N /A REMARKS
PROCEDURE
Objectives and Related Assertions:
A.
Written representations
responsible officials.
have
been
obtained
B.
The AUP report has been drafted, including all
findings, and discussed with the City.
from
AUP
Procedures:
A.
Summarize AUP findings.
B.
Draft agreed upon procedures report, including all findings
noted during the AUP engagement.
C.
Conduct an exit
City Clerk and
andjor a City
communication
conference with the City. In addition to the
the City Administrator, request the Mayor
Council Member(s) to attend.
Document
of:
1. AUP findings.
2.
Accounting problems that may affect the bill.
D.
Determine the appropriate date of the agreed upon
procedures report. As required by AT 201.34, the report
should be the date of completion' of the agreed upon
procedures.
E.
Obtain appropriate written representations signed by the
Finance Director, Mayor, City Clerk andjor other
appropriate personnel.
1. Prepared on City's letterhead.
2.
F.
Dated same date as the agreed upon procedures report
as required by AT 201.34.
Complete the budget and time summary, including an
explanation of significant variances from budget and
recommendations for next year (if applicable). Note billing
instructions if applicable.
CONCLUSION:
We have performed procedures sufficient to achieve the AUP
engagement objectives for the completion of the AUP engagement
and the results of these procedures are adequately documented
in the accompanying workpapers.
Incharge
Date
-------------------------
Manager
-------------------------
Date
GF-10
AOS 83-14 (4/13)
CITY ---------------------ACCOUNTING PROBLEMS
June 30, 2013
Description of Problem
Disposition
Additional
Time
Required
GF-11
AOS 83-14 (4/13)
CITY -------------------CONFERENCES
June 30, 2013
Time
Date
Attendees/Topic
Charged to
Amount
&0
GF-12
AOS 83-14 (4/13)
CITY
ITEMS FOR COMMENT
June 30, 2013
Prior
Period
W/P
Ref.
Item Description
y
N
Comment
Number
GF-13
AOS 83-14 (4/13)
CITY --------------------ITEMS FOR NEXT EXAMINATION
June 30, 2013
No.
W/P Ref.
Item
Disposition
Approved
GF-19
AOS 83-14 (4/13)
CITY ---------------------June 30, 2013
Workpaper
Reference
WORKPAPER COPIES
GIVEN TO CITY AND
OUTSIDE PARTIES
Approved
To Whom given
Date
By
GF-20
AOS 83-14 (4/13)
CITY ---------------------June 30, 2013
No.
W/P Ref.
PENDING MATTERS
Description
Disposition
GF-21
AOS 83-14 (4/13)
CITY ---------------------REVIEW NOTES
June 30, 2013
No.
W/P Ref.
Item
Disposition
Approved
GF-22.1
AOS 83-14 (4/13)
CITY
INCHARGE REVIEW QUESTIONNAIRE
June 30, 2013
QUESTION
YES
1.
Was the scope of the engagement in accordance with the plan?
2.
Have you informed the Manager of all identified problems that resulted in
significant modification to the AUP program and have you obtained the
Manager's concurrence with the modifications?
3.
Have you gathered enough evidence to satisfy the AUP program objectives?
4.
Are you satisfied the evidence gathered does not disclose suspicions of abuse,
fraud, violations of statutory, regulatory and contractual provisions or other
illegal acts other than those noted in the comments of the report?
5.
Have all applicable items in the AUP planning, questionnaires and program
been completed and workpapers properly indexed and signed or initialed by
those doing the work?
6.
Have all significant unusual or unexpected balances or relationships noted
during planning or the course of the engagement been adequately
documented?
7.
Has the work of all assistants been thoroughly reviewed?
8.
Have review notes been adequately resolved?
9.
Have you discussed all agreed upon procedures findings with City officials
and prepared draft comments for all agreed upon procedures findings,
including memoranda regarding this communication?
10. Has the report routing sheet:
11.
a.
Been completed and signed off?
b.
Been completed for the report distribution section, including
addresses for non-City report recipients?
Has a list been prepared of all significant pending matters which must be
cleared before issuing the report?
12. Has the Manager been informed of all pending matters?
13.
Have required engagement evaluation
appropriate person(s)?
reports
been completed by
the
14. Are you satisfied all agreed upon procedures complied with professional
standards and office policies?
15. Have all electronic workpapers been properly stored on the network?
COMMENTS (required for "No" answers):
Incharge
Date
Manager
Date
NO
N/A
GF-23.1
AOS 83-14 (4/ 13)
CITY
MANAGER REVIEW QUESTIONNAIRE
June 30, 2013
QUESTION
YES
1.
Have you reviewed the workpapers and do you concur with the conclusions of
the incharge?
2.
Have exceptions noted on the Incharge Review Questionnaire been resolved?
3.
Are you satisfied:
a. The AUP program was properly modified for identified problems?
b. The judgments and conclusions reached are supported by
documented evidence?
c. All AUP work conformed to the engagement plan, scope and
objectives?
4.
Do the workpapers include adequate documentation as to:
a.
Conformity with attestation standards for AUP engagements?
b.
Compliance with office policies?
5.
Have all applicable procedures been performed and signed off?
6.
Have all electronic workpapers been properly stored on the network?
7.
Is there adequate documentation in the workpapers to support the findings?
8.
Is our AUP report addressed to the proper party?
9.
Is the report dated as required by AT 201.34?
10. Are you satisfied the AUP engagement did not disclose any susp1c10ns of
fraud, violations of statutory, regulatory and contractual provisions or other
illegal acts other than those noted in the report fmdings.
11. Have the report findings been discussed with appropriate City officials?
12. Have all findings from the AUP engagement been reported as required by AT
201.25?
13. Has the report routing sheet been completed?
14. Does the draft AUP report comply with professional and office reporting
standards?
15. Has a copy of the completed routing sheet, including the report release date,
been filed in the GF-17's?
COMMENTS (required for "No" answers):
Manager
Date
NO
N/A
AOS 85-1.1 (4 / 13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
June 30, 2013
INTERNAL CONTROL ACTIVITIES
QUESTION
YES
PETTY CASH/ CASH/ CHANGE FUNDS
1. Is the custodian of the petty cash and/ or change fund
prohibited from handling more than one fund or other
cash receipts?
2.
Does an independent person approve bank wire transfers
for cash?
3. Are controls maintained over
and/ or voided checks?
the
supply of unused
INVESTMENTS
1.
Do employees having no responsibility for
investments or record keeping:
custody
of
a.
Confirm those held by outsiders?
b.
Reconcile documents to the investment records?
c.
Verify recorded investment earnings to determine
accuracy?
2.
Is an accounting record/register maintained for each
investment, including cost, description, date purchased,
interest rate, maturity date and identifying number?
3.
Is a record of investment income maintained?
4.
Are all investment documents under the control of a
responsible official as custodian?
5.
Are investment documents kept in a safe deposit box or
vault?
LONG-TERM DEBT
1. Are detailed records periodically reconciled to general
ledger controls?
2.
If paying agents are used for the payment of principal and
interest, does the City receive periodic reports of principal
outstanding and unclaimed interest?
RECEIPTS
1. Are there procedures established for the
recording
of
receipts on bank wire transfers?
2. Are receipts deposited intact and timely?
3. Are all checks payable to the City deposited?
4.
Is a restrictive endorsement placed on each mcommg
check upon receipt?
NO
N/A
REMARKS
AOS 85-1.1 (4/13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
INTERNAL CONTROL ACTIVITIES
June 30, 2013
YES
QUESTION
5. Are receipts controlled by
numbered receipts?
use of pre-printed,
pre-
6. Are the numerical sequences monitored?
7. Are voided receipts properly mutilated and retained?
8.
Is effective control
unusual receipts?
provided
over
miscellaneous
or
9.
Do procedures exist to reconcile amounts collected to
records of billings/ remittances?
10. Is an aging of receivables prepared and periodically
reviewed for delinquent amounts?
DISBURSEMENTS
1.
Is there adequate segregation of duties in connection
with the following:
a.
Controlling blank purchase orders?
b.
Placing orders with vendors (including preparation
of purchase order)?
2.
Are all disbursements required to
invoices or other documentation?
3.
Is approval of travel vouchers for all City officials and
employees required?
4.
Are invoices and supporting documents fumished to the
check signer prior to approving the payment?
5.
Is there evidence of the payment approvals?
6.
Are credit
individuals?
card
purchases
be
made
supported
by
by
authorized
a. Are credit card receipts required and reviewed and
approved for propriety?
b.
Are controls maintained over credit cards?
7.
Are supporting documents for claims effectively canceled
at the time of approving the payment to prevent their
reuse?
8.
Is competitive bidding used?
9.
Does processing of invoices for payment include:
a. Comparison against purchase orders or
documents for term, prices and quantities?
other
b.
Comparison against rece1vmg reports or other
documents for items and quantities received?
c.
Mathematical check of footings, extensions and
discounts?
NO
N/A
REMARKS
AOS 85-1.1 (4/13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
INTERNAL CONTROL ACTIVITIES
June 30, 2013
QUESTION
YES
10. Are all disbursements made by check?
11. Are only pre-printed, pre-numbered checks used and
properly controlled?
12. Are voided checks properly mutilated and retained?
13. Are checks protected against alteration?
14. Are checks made payable to a specific payee?
15. Is the advance signing of checks prohibited?
16. Is there evidence of review of supporting documentation?
17. If a mechanical or facsimile check signer is used, are
facsimile signature stamps and/ or plates under proper
control?
18. Are controls maintained over the supply of unused and
voided checks?
PAYROLL
1. When a new employee is hired, is an independent person
approving the entry on the computer system?
2.
Are salaries approved by the governing body for full-time
and part-time employees?
3.
Are payrolls reviewed and
authority?
4.
Is written approval required for:
approved by
someone
a.
Employees added to or deleted from the payroll?
b.
Changes in rate of pay?
c.
Payroll deductions?
5. Are files that support
maintained properly?
and
document
the
m
above
6.
Do procedures exist to ensure all employees are bona
fide?
7.
Do procedures exist to ensure employees do not receive
more than the authorized salary payment?
8. Do procedures exist for properly documenting and
controlling vacation, sick leave and compensating time off
and related balances?
9.
Are controls maintained over the supply of unused and
voided checks?
10. Are payroll checks
distribution?
kept in
a secure place pnor to
NO
N/A
REMARKS
AOS 85-1.1 (4/13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
INTERNAL CONTROL ACTIVITIES
June 30, 2013
QUESTION
YES
TRANSFERS
1. Are all interfund transfers properly authorized and
approved by appropriate officials?
3.
Are transfers in and transfers out recorded in the proper
funds, in the same accounting period and on a timely
basis?
4.
Are interfund transfers balanced monthly?
5.
Are all interfund transfers adequately explained and
documented?
6. Are transfers appropriately classified as transfers rather
than receipts/ disbursements?
7.
Is supporting documentation
retained?
for
interfund transfers
FINANCIAL REPORTING
1. Is there general ledger control over all
transactions of all departments of the City?
2.
assets and
Are procedures and policies for closing the accounts for a
reporting period sufficient to ensure accounts are closed,
adjusted, and reviewed on a timely basis?
3. Do procedures exist to ensure all accounting systems
have included all transactions applicable to the reporting
period?
4.
Are all joumal entries reviewed, approved, and supported
by adequate descriptions or documentation?
5.
Do controls exist ensure only authorized individuals can
initiate entries?
6. Do procedures exist to ensure all financial reports
(extemal and internal; federal/ state grant financial
reports, etc.)
are supported by either underlying
accounting records or other documentation?
7.
Are there procedures to ensure all requirements for filing
financial reports are met?
NO
N/A
REMARKS
AOS 85-1.1 (4/13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
June 30, 2013
INTERNAL CONTROL ACTIVITIES
List of Key Duties
Period Covered
Not
Done
Key Duties:
_
A
B
C
D
E
F
G
H
Remarks/Weaknesses
Cash and Receipts:
Responsible for change fund
Opens mail
Lists money and checks received through
the mail
Compares list with recorded receipts
Reconciles daily deposits to receipts
Prepares deposits
Takes deposit to bank
Prepares reconciliation of bank to book
balances at month end
Reviews bank reconciliation
Investments:
Has custody of investments
Responsible for investment transactions
Approves bank wire transfers for
investments
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Long Term Debt:
Reconciles principal and interest
payments to debt records
Approves bank wire transfers for debt
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Receipts:
Collects receipts
Issues prenumberd receipts
Records receipts
Reviews coding of receipts to appropriate
fund and account (source code)
Enters utility rates on the system
Reviews/ approves utility rates entered on
the system
Tests utility rates to ensure proper utility
calculations
Disbursements:
Responsible for safeguarding of checks
Approves claims prior to submission for
payment
Approves disbursements
Prepares checks
Signs checks
Mails checks
Records disbursements
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AOS 85-1.1 (4/13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
June 30, 2013
INTERNAL CONTROL ACTIVITIES
List of Key Duties
Period Covered
Not
Done
Key Duties:
_
A
B
C
D
E
F
G
H
Remarks/Weaknesses
Disbursements (continued):
Reviews coding of disbursements to
appropriate fund and account
Approves bank wire transfers for
disbursements
Reviews bank reconciliation
Responsible for long/ short amounts
Payroll:
Prepares payroll accounting records
Prepares payroll checks
Signs payroll checks
Distributes payroll checks
Approves payroll input
Approves timesheets
Approves vacation and camp time
Compares time records to payroll
records
Maintains vacation, sick leave and camp
time records
Reviews vacation, sick leave and camp
time records
Enters payroll wage and withholding
rates into system
Reviews j approves wage and withholding
rates entered on the system
Tests wage and withholding rates to
ensure proper payroll calculations
Approves bank wire transfers for
payment of federal and state taxes and
FICA/IPERS
Reporting:
Prepares monthly Clerk's report
Reviews monthly Clerk's report
Prepares Annual Financial Report
Reviews Annual Financial Report
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111111111
A Mayor
B Council
c
City Clerk
D Utility Clerk
E Deputy Clerk
F
G
H
}
List others (i.e., department heads, etc.)
AOS 85-1.1 (4/13) SAMPLE INTERNAL CONTROL CHECKLIST
CITY
_
June 30, 2013
INTERNAL CONTROL ACTIVITIES
QUESTION
YES
NO
N/A
REMARKS
SUMMARY OF CONDITIONS:
CONCLUSION:
We obtained sufficient knowledge of the City's internal control
process in order to plan the examination.
Completed by:
Title:
Updated and reviewed by:
June 30,
20-
20-
20-
20-
Reviewer/ Date
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