City of Rensselaer

Financial Accounting and Reporting - Executive Summary

Background

The City of Rensselaer (City) has approximately 7,800 residents. The Mayor is the executive officer, and the City Treasurer (Treasurer), the chief fiscal officer. The Common Council (Council), as the City’s legislative branch, consists of 10 members. Services the City provides include general governmental support, police and fire protection, garbage collection, water service, a public library, and recreation.

Scope and Objective

The objective of our audit was to review the financial accounting and reporting of the City for the period of August 1, 2003 through December 31, 2004. Our audit addressed the following related questions:

• Have the Mayor, Council and Treasurer developed and implemented a financial management system that accurately accounts for and reports the City’s financial activity?
• Could the fiscal health and self sufficiency of the City be improved through operational changes in the City’s General and Water funds?

Audit Results

In May 1996 we issued an audit report that addressed the financial affairs of the City for the fiscal year ended July 31, 1995 . That report found that the Council’s oversight of City operations was lacking and that the Treasurer’s accounting records were generally deficient. The report also concluded that the accounting records for the City’s 1993-94 and 1994-95 fiscal years were erroneous, deficient and incomplete. Finally, it found that staffing levels and accounting expertise in the Treasurer’s office did not sufficiently provide the Mayor and Council with needed and accurate information on a timely basis, or allow City officials to efficiently and effectively manage City assets.

Despite our 1996 recommendations, the deficiencies continued to exist through to the end of 2004. Our current examination disclosed that the Treasurer’s office did not have sufficient internal controls in place to ensure that the City’s financial activity was properly supported, and accurately recorded and reported on a timely basis. Important financial information was not reconciled in a timely fashion. A separation of duties among those who handled financial transactions was almost non-existent; it was very difficult at best to determine who handled any particular transaction. Computer security was so poor that virtually anyone had access to the system server, program software, and data. Finally, accounting records and supporting documentation were in such a deficient condition that the City’s independent auditor could not render an opinion on the City’s statement of general fund revenues and expenditures. Those charged with overseeing the Treasurer’s office failed to ensure internal controls were in place. As a result, officials could not rely on the Treasurer’s office for information to help them manage City operations and monitor City finances in an effective manner.

Comments of Local Officials

The results of our audit and recommendations have been discussed with City officials and their comments, which appear in Appendix A, have been considered in preparing this report. City officials generally agreed with our recommendations and indicated they planned to initiate corrective action.