Agenda - 11-16-2010 - 3a - Laserfiche WebLink

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Management's Response. Management concurs with the recommendation. We recognize this as a weakness and have started the process of documenting the current internal control policies we use on a daily, monthly, and annual basis to document the safeguards over assets. Capital Assets. While working with the Finance Office to complete the 2010 fiscal year audit, County staff had difficulty producing reports from the capital asset module that reconciled to their capital asset audit schedule. This could have been prevented with timely reconciliations to the audit balances. Subledgers for capital assets were not adequately examined and reconciled to the general ledger on a regular basis. Errors are more likely to occur since records are not being updated on a timely basis as assets are purchased and or disposed of. We also found that personnel had difficulty producing proper reports, which are necessary to audit the capital asset balances. Recommendation. Capital asset additions, capital contributions, transfers, and disposals should be entered monthly as part of month-end close. Capital outlay expenditures should be examined and properly identified to ensure all items meeting the capitalization threshold are added to the capital asset listing properly. Personnel reconciling assets should be able to identify where capital outlay was expensed in the various funds. Monthly subledger reports should be compared to capital outlay expense accounts, as well as disposals, transfers, and contributed assets documentation. All monthly reconciliations and subledger reports should be compared to the general ledger and should be turned in to the Finance Director for review. At year end, the Finance Department should prepare the year-end capital asset footnote and compare to the general ledger and Munis capital asset reports before the auditors arrive for final fieldwork. We also recommend additional staff training on the capital asset module and its various functions and reports. Management's Response. Management concurs with the recommendation. This has been the result of the process of recording and recognizing capital assets being a decentralized process with two separate departments handling the process. This has been resolved by centralizing the processing, recording, reconciling of capital assets in the Financial Services Department. We will review the status of these comments .during our next audit engagement. We have already discussed these items with various members of Orange County management. We will be pleased to discuss them in further detail at your convenience to perform any additional study of these matters or to assist you in implementing the recommendations. Sincerely, Martin Starnes & Associates, CPAs, P.A. Hickory, NC 2