2008-05-16 It should be noted that the issues in this audit that have been brought to the attention of the board have
been taken of at this time. Audit Information
To the Board of Trustees Village of Roscoe, Illinois:
In planning and performing our audit
of the financial statements of the Village of Roscoe, Illinois (Village) as of and for the year ended December 31, 2007, in
accordance with U.S generally accepted auditing standards, we considered the Village's internal control over financial
reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinions on
the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Village's internal
control. Accordingly, we do not express an opinion on the effectiveness of the Village's internal control.
Our consideration
of internal control was for the limited purpose described in the preceding paragraph and would not necessarily identify all
deficiencies in internal control that might be significant deficiencies or material weaknesses. However, as discussed below,
we identified a deficiency in internal control that we consider to be a significant deficiency.
A control deficiency
exists when the design or operation of a control does not allow management or employees, in the normal course of performing
their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency,
or combination of control deficiencies, that adversely affects the entity's ability to initiate, authorize, record, process,
or report financial data reliably in accordance with generally accepted accounting principles such that there is more than
a remote likelihood that a misstatement of the entity's financial statements that is more than inconsequential will not
be prevented or detected by the entity's internal control. We consider the following deficiency to be significant deficiencies
in internal control:
Segregation of duties
We noted a lack of segregation of duties with
respect to cash disbursements. The Treasurer issues and sign checks as well as reconciles the bank accounts.
In an environment
of few staff, proper segregation of duties is virtually impossible. We recommend the Finance Committee chairman or another
individual independent of the cash disbursement function review the bank statement and cancelled checks and compare the vendor
name and amount to the listing of checks approved by the Board to ensure no unauthorized payments were made after board approval.
Community Development Assistance Program (CDAP) Funds
During our
audit we noted the Village established an allowance for doubtful accounts of $250,000 for a loan which was determined to be
uncollectible as the borrower ceased operations shortly after the funds were disbursed. The loan was unsecured and the Village
is pursuing collections through the courts.
The Village has a policy for the revolving loan funds which requires the
creation of a Revolving Fund Advisory Committee. The committee members should consist of the Village President, a Village
Trustee, two local business managers, and two commercial lenders from area financial institutions. This committee was not
created or approved by the board until December 2007. We recommend the loan committee follow the guidelines established by
the revolving loan funds policy.
During our audit, we also became aware of certain matters which represent opportunities
for strengthening internal controls and operating procedures. Our comments are summarized as follows:
Cash
Disbursements
While obtaining an understanding of the Village's purchasing procedures, we noted the
Village has a policy which requires a purchase order to be issued for any contract $2,500 or more. However, this policy has
not been followed for several years. We recommend the Village review its existing policy and evaluate whether purchase orders
are necessary since all invoices are submitted for approval at each regularly scheduled Board meeting. Changes to the existing
policy should be presented to the Board for final approval.
We wish to thank the Village's management for
the cooperation and courtesy extended during the performance of our services. We are available, at your convenience, to discuss
any of these comments in detail.
Rockford, Illinois April 15, 2008 |
This report
is intended solely for the information and use of Board of Trustees, management, and others within the organization and is
not intended to be and should not be used by anyone other than the specified parties.
