Portland financial audit shows no major areas of concern
PORTLAND — An audit of city finances found no significant deficiencies or material weaknesses in financial controls used by city and school officials.
Results of an audit of the year that ended June 30, 2011, were presented to city and school officials during a Feb. 9 joint meeting of the city and school finance committees.
Kathy Tyson of Runyon Kersteen Ouellette, the South Portland-based firm hired to perform the audit, presented the findings to officials during the meeting at City Hall. A letter provided to committee members contained 10 comments about areas the firm identified as opportunities to strengthen internal controls and operating efficiency.
Tyson said city and school officials have made "a real concentrated" effort to address weaknesses noted in previous audits.
Tyson said testing of controls over payroll for the city noted there is not always an indication of secondary review and approval of time reporting records for department heads and supervisors.
In a written management response included in the report, city officials said the city does have a policy that requires approval of employee time. All departments have been reminded of the policy, according to the management response.
Tyson said the audit included testing of procedures and valuation methods related to inventory at various locations. The audit found physical counts of inventory at Riverside Golf Course did not always agree with recorded amounts and that inventory for the school nutrition program was not always valued consistently based on cost.
Tyson said her firm recommended the city review current policies and update procedures to ensure inventory is reconciled to physical counts on a routine basis and that costs of individual items are also regularly reconciled to vendor invoices.
The clubhouse manager at Riverside Golf Course recently implemented a plan to conduct a complete inventory monthly, according to the management response. The city also installed four video cameras in the pro shop to prevent theft, and the clubhouse manager will make sure employees are properly trained.
In response to the comment about school nutrition program inventory, school management said employees will make sure up-to-date prices are used for inventory and food service will do a cost update prior to year-end inventory counts.
Tyson said significant progress has been made to reconcile the School Department and city accounting systems. She said all funds were fully reconciled, with minor exceptions in capital project-related activities.
The audit included an examination of activity funds at six schools in the city. It showed out of 187 transactions there were 26 instances in which no invoice was available. In the case of cash received, pre-numbered receipt books were not maintained at all locations, Tyson said.
Tyson said her firm recommended the School Department's business office periodically check funds and that a system-wide policy for internal controls and record keeping be created.
Michael Wilson, chief financial officer for the schools, said the School Department will audit activity funds to make sure people are trained to properly deal with them.
City Finance Director Ellen Sanborn said officials make sure controls are followed and she doesn't have any "huge" concerns about the report.
"We have very good internal controls as far as I'm concerned," she said.
Also during the meeting, Sanborn and Wilson provided committee members with second-quarter budget status reports.
Sanborn said all expenditure budgets are on track and she does not have any areas of concern. While there is a high expenditure percentage for overtime in the Fire Department and social services, total wages are within budget.
Sanborn said city officials expect to have a net additional cost for General Assistance of about $300,000 for the year. She attributed the change to increased volume of rent assistance payments.
City revenue also appears to be on track and lack of snow may help increase parking meter revenue, Sanborn said.
Wilson told committee members school revenue and expenditures are on track and he does not anticipate any significant issues.