MONROE — During its July 24 meeting, the city Finance and Taxation Committee spent nearly an hour evaluating its most recent audit to identify how to better strengthen its processes for preparing and reviewing financial items. 

Committee Chair Michael Boyce questioned Madison-based Baker Tilly Virchow Krause LLP Director John Rader over a phone conference about internal controls and the limitations of staff in handling reports. In its report following the audit of 2017 finances, Baker Tilly auditors pointed to a lack of staff which means “the city does not have proper internal controls.” Without them, there could be “errors, irregularities or fraud … as part of the accounting processes that may not discovered by someone in your organization.”

Rader said the financial firm would not recommend the city “hire a bunch of people” because it is not feasible. Instead, he said the city could be more “creative” in ensuring the process of review and preparation are separated between employees. 

Rader said there was a specific concern over the same city employee collecting taxes and reconciling bank funds for the city tax account, noting that reconciling “needs complete separation.” He said it should be the same with monthly and year-end accounting, which should be performed by someone independent of the person processing transactions. 

However, he added that it was “common” among the governments the company audits. 

“It’s hard thing for a lot of governments to accomplish unless you’re a large entity,” Rader said. 

However, he said the city still needs to attempt as much separation as possible. Baker Tilly recommended year-end payroll accrual be reviewed and approved by someone other than the preparer as well. Upon questioning, he said generally the segregation of duties would be determined by the city administration. 

City Comptroller Bridget Schuchart said because of training with Baker Tilly to change how things are done, which she noted was a “large undertaking” that “worked to help reset things for clarity,” has helped the city. She said there have been steps to change the functions of the city credit card and to balance funds. Schuchart added that the finance department plans to make additional recommended changes when the city changes banks in September. 

The report indicates that adjusting accounting entries “should be reviewed and approved by an appropriate person who is not the original preparer” on a monthly basis and that reconciliations throughout the year should be done by a staff member independent of making transactions within the account. 

Rader also pointed to the number of journal entries as problematic. Monroe had more than 40 last year, which is greater than the typical number. Rader said 10 or fewer would “be really good.” He said higher numbers are common among thousands of governmental bodies the firm serves. 

“It’s a rarity to see this not in our reports,” Rader said. 

Schuchart said the city has been able to maintain a continual reduction in the number of entries. In fact, she said the city has reduced them by 15 within the last few years. Alderwoman Brooke Bauman, a member of the committee, asked whether the city needed to rectify any major deficiencies immediately. Rader recommended that the journal entries could be more timely, but said the “main thing is to be more in tune with the account balances,” which he noted Schuchart is “already on top of those for this year.” 

He also advised to reduce the number of entries by “cleaning up payroll,” which Schuchart said was a problem in past years because the city switched to a new system that required some adjustment.