I-1 - Preliminary Official Statement - UR Loan Agreement

City of Tiffin Schedule of Findings Year ended June 30, 2019 (D) Journal Entries Criteria – An effective internal control system provides for internal controls related to preparation of journal entries by all employees. Supporting documentation for all journal entries supports the accuracy of the entries by the employees and an independent review helps prevent losses from employee error or dishonesty and maximizes the accuracy of the City’s financial statements. Condition – Supporting documentation was not maintained for journal entries made for corrections or balancing purposes. In addition, journal entries for recording utilities and other electronic transactions show no evidence of independent review. Cause – City policies do not require, and procedures have not been designed to provide supporting documentation for all journal entries and to document the review and approval of journal entries. Effect – Lack of supporting documents and independent approval of transactions could adversely affect the City’s ability to prevent or detect and correct misstatements, errors or misappropriation on a timely basis by employees in the normal course of performing their assigned functions. Recommendation – To strengthen controls, journal entries should be supported, and the support should be provided to the reviewer for approval by an independent person. Response – The City will provide the additional supporting documentation to an independent individual who will review and approve the journal entries. Conclusion – Response accepted. (E) Payroll Rates Criteria – An effective internal control system provides for controls relating to payroll, including proper approval of pay rates. Condition – Annual salary increase were approved based upon a percentage and the actual approved wages were not documented in the City Council minutes. Cause – The City has not implemented procedures to ensure payroll is approved and documented at an actual wage rate. Effect – Using a percentage rather than per hour rate makes the actual hourly rates less transparent and provides an opportunity for errors in the actual rate approved which could result in unauthorized, unapproved or incorrect increases in pay. Recommendation – Salaries and wages of employees should be stated in the City Council minutes as payroll rates. Response – Payroll increases will be documented in future City Council minutes. Conclusion – Response accepted. 56