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Q1. What reports are due when?
Q2. Why is it important to assign accounting functions to separate employees?
Q3. What if my city staff is too small to segregate duties?
Q6. Where can I learn about the budgeting process and requirements?
Q7. How can the city avoid fraudulent payments to employees or vendors?
Q1: What reports are due when?
A1: It’s smart to sit down with the Calendar of Important Dates and your own calendar and make sure you know what’s on the horizon! This calendar is updated by League staff each year to reflect state and federal deadlines for elections, finance, and more.
View the Calendar of Important Dates for reporting deadlines
Q2: Why is it important to assign accounting functions to separate employees?
A2: When employee responsibilities are arranged so that the work of one employee is checked by another, it is called “segregation of duties.” Ideally, no single official or employee should be able to:
- Authorize a transaction;
- Record the transaction in the entity’s books; and
- Obtain custody of the item resulting from the transaction.
Examples of incompatible duties that should be performed by separate individuals include:
- Receipting collections, posting collections to registers, and making bank deposits.
- Signing checks and reconciling the bank accounts.
Q3: What if my city staff is too small to segregate duties?
A3: When the segregation of accounting functions is not possible due to staff size, city administration should constantly be aware of this condition. The concentration of duties and responsibilities in a single individual is not desirable from an accounting point of view. Additional internal control policies and procedures should be used to compensate for the lack of segregated duties.
Additional policies and procedures could include:
- A formal, numbered receipt book should be used for all receipts.
- Minutes should include the claim number of bills approved for payment.
- Invoices should be canceled to ensure they are not paid twice.
- Town supervisors or city council members should determine that reports are submitted promptly, and are in agreement with cash balances and grant expenditures.
- The city council should adopt a formal conflicts of interest policy.
Q4: What is a bond?
A4: There are two types of bonds. When you are borrowing money, the city issues a bond. This is the collateral for the loan. When you are investing city funds you may purchase a bond. This is an investment.
Q5: What is a fund?
A5: A fund is a sum of money set aside for a specific purpose. Cities have many funds. Think of the fund as a way to separate the money coming in and going out for any service the city provides. Although all of the money coming into the city can be kept in one bank account and invoices may all be paid from one bank account, segregating the transactions by fund helps the city keep track of the financial performance of particular activities. To dig deeper into the different kinds of funds, see the League’s Handbook for Minnesota Cities, Chapter 25 Financial Reports, Accounting and Auditing.
Q6: Where can I learn about the budgeting process and requirements?
A6: We’ve got a MemberLearn online learning course for that! This free course for LMC members is specifically designed for small cities and will give you an overview of the budgeting process including publication requirements and dates, deliverables for county and state officials, and best practices for communicating the budget to the council and the public. Access the MemberLearn course “Finance: The Budgeting Process”
Q7: How can the city avoid fraudulent payments to employees and vendors?
A7: There are a few action steps to keep electronic transfers and payments safe:
- Increase awareness of the risk of phishing emails. Occasionally remind your vendors and staff that your Finance and HR departments will never ask for any financial or personal information via email.
- Requests for electronic payment. If you receive an email request to change or set up an electronic payment you should get verbal confirmation of the request. Call the requestor using the contact information on file. You may need to work with other city staff to get the contact information. It is important to not use the contact information provided in the request.
- Direct deposit changes. When changing banking information for an employee’s direct deposit of payroll always verbally confirm the change with the employee. A a signed form alone is not sufficient documentation to make the changes.
The League offers a model policy that cities can adopt. This policy includes several actions that can reduce the city’s chances of becoming a victim of fraud.