2/16/1988 - Laserfiche WebLink

Home Browse Search

3. Capitalization Policy Many entities find it useful to establish a policy whereby only items costing in excess of a specified dollar amount (for example, $200) are considered fixed assets and recorded on the balance sheet. Expenditures for items under this level are classified as expenses in the year of purchase. Such a policy allows efficient handling of items for which detail recordkeeping would be impractical. 4. Inventory of Fixed Assets A physical inventory of property and equipment is needed to properly identify those assets in use. Such a physical inventory should be controlled by the use of prenumbered tags and reconciled to existing detail records. If management deems it beneficial, we are willing to assist in the recon- ciliation process. Controls over property and equipment are necessary to ensure the accuracy of financial statement balances and to safeguard against improper dispositions. We therefore suggest that a formal written policy regarding fixed asset purchases and dispositions be adopted and vigorously enforced. 5. Accounting Records Our review of the Authority's accounting system indicated a need for improvement in several areas. Presently, the Authority maintains a cash disbursements ledger as its basic source of accounting information. We encountered some delays in our audit due to mathematical errors and misclassified postings in this ledger. The projected growth of the Authority in the near future in substantial and will require a more sophisticated accounting system to accurately record and report the Authority's finan- cial condition on a timely and responsive basis. We recom- mend that consideration be given to 'bhe-.immediate retention of a part-time accountant for the dual purpose of helping to install a properly functioning accounting system in addition to periodic review for maintenance purposes. We would be happy to meet with the Authority officials to discuss various means available to upgrade its accounting system. 6. Petty Cash Fund For minor expenditures during the month (less than $20) some organizations find the use of a petty cash fund. more effi- cient than preparation of checks for very minor amounts. Such a fund should be in the custody of a responsible indi- vidual and. reimbursed periodically after the bookkeeper has reviewed the support for expenditures from the fund. 7. Bank Listing of Authorized Signatures During our review of authorized signatures for the Housing Authority's bank accounts, we noted individuals were included which are either no longer employed by the Housing Authority or are no longer involved in day-to-day management of the Housing Authority. We recommend the Director review all authorized signature lists to determine that only the appropriate individuals are included. In addition, we recommend that authorized indi- viduals be restricted to those with limited access to the accounting records. 27 FEB 16 1988 BOOK 70 rr.irL 845