NOTICE OF AUDIT OF THE FISCAL AFFAIRS OF THE CITY OF BIG STONE CITY

NOTICE OF AUDIT OF THE
FISCAL AFFAIRS OF THE
CITY OF BIG STONE CITY
Notice is hereby given that the records and books of account of othe City of Big Stone City, South Dakota, have been audited by Eide Bailly, LLP, Certified Public Accountants of aberdeen, South Dakota for the year ended December 31, 2018. A detailed report thereon, containing additional information, is filed with the City of Big Stone City and the Department of Legislative Audit in Pierre, South Dakota for public inspection.
The following findings and recommendations referred to in the report are hereby listed in accordance with the provision of SDCL 4-11-12.
CURRENT AUDIT FINDINGS AND RECOMMENDATIONS
Finding:
City of Big Stone requested the external auditors to prepare the financial statements and related notes for the year ended December 31, 2018. As part of the financial statement preparation process, we proposed audit adjustments that were not identified as a result of the City’s existing internal controls and, therefore, could result in a material misstatement of the City’s financial statements if not recorded.
Recommendation:
This circumstance is not unusual in an organization of this size. It is the responsibility of management and those charged with governance to make the decision whether to accept the degree of rick associated with this condition because of cost or other considerations. Also, a thorough review of the transactions in each fund should take place prior to the beginning of the audit, to ensure that the modified cash basis of accounting has been followed for each fund type, especially for transaction types infrequent in occurence.
Views of Responsible Officials:
Management agrees with the finding.
Finding:
City of Big Stone City has a limited number of office personnel and accordingly, does not have adequate internal accounting controls in revenue, expenditures, and payroll functions because of a lack of segregation of duties.
Recommendation:
Although it is recognized that number of office staff may not be large enough to permit adequate segregation of duties in all respects, it is important that management and those charged with governance be aware of this condition. We recommend that the City Council exercise adequate oversight of the accounting function. In doing so, they should review financial data monthly including reports of monthly financial statements, budget-to-actual reports, monthly cash balances, monthly gross profit margins of the liquor store, and monthly bank statements or cancelled checks.
Views of Responsible Officials:
Management agrees with the finding.
Finding:
In 2018 the City did not retain evidence to support possible subsequent collection of uncollectibles under that law. Also, in 2018, the City did not report outstanding checks required under that law. lastly, in 2018, the City passed a budget that has excess expenditures over resources expected and on hand. With this, the City is continuing to report a deficit fund balance in the General Fund.
Recommendation:
We recommend the City officials review the applicable SDCL’s applicable to municipalities to become familiar with the statutory requirements and implement necessary controls and processes to ensure the compliance with those such laws. We also recommend that the City review the budget process to ensure they are in compliance with SDCL’s and have a balance budget.
Views of Responsible Officials:
Management agrees with the finding.
MARTIN L. GUINDON, CPA,
AUDITOR GENERAL
DEPARTMENT OF
LEGISLATIVE AUDIT
January 15                                  January 22

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Grant County Review

Grant County Review
P.O. Box 390
Milbank, SD 57252
(605) 432-4516

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