Reconciliations


​One of the duties of the city council is to make decisions about how to best use city resources and safeguard the assets of the city. The council needs reliable, truthful and timely reports to meet these objectives. There are several ways the council can provide oversight and make informed decisions, including being involved in the reconciliation of the city’s financial statements.

Review Monthly Reports

At a minimum the council should receive a monthly report of:

  • All cash, bank accounts and investments. Some cities do this by fund, others do it by account; both are valuable.
  • A comparison of actual revenues and expenditures for the month and year-to-date totals to the approved budget.

Code of Iowa Section 372.13(6) also requires a monthly summary of revenues and expenditures by fund be published.

Review Financial Statements, Transactions and Records

To monitor the use of and safeguard city assets, thoroughly review original invoices, bank statements, credit card receipts, deposits and billings. The city clerk is usually the first to see these documents to ensure that policies are followed and irregularities are resolved. When possible, procedures should be designed to separate duties to prevent and timely detect errors, abuses or theft.

When sufficient staff is not practical, procedures should include elected officials in the process. For example, have the bank statement mailed directly to the mayor or other council member before the person responsible for writing checks and making deposits. Some communities have a finance committee to review and initial original documents on a regular basis. Or the mayor should review and initial the original invoices when the checks are presented for a required second signature. Rather than allowing blank checks signed in advance when the mayor will not be available, some communities have the mayor pro-tem as a backup signer so the scrutiny can be maintained.

Reconciling Utility Accounts

The absence of reconciliation for utility billing, collection and delinquent accounts may lead to the loss of revenues. Many communities have accounting systems to separate utility billings from the general ledger accounting system. These systems should be balanced on a monthly basis.

Outstanding or delinquent accounts should be listed for collection in accordance with city ordinance on a monthly basis. The longer an amount is outstanding, the harder it is to collect. Electric and gas utilities must also work within the Iowa Utility Board guidelines for collection during winter moratoriums, but the key is to keep on top of delinquencies. Large amounts of water or electricity loss should also be detected by reconciling the amount pumped or generated verse the amount billed. Are there leaks that need to be found, meters needing replacement or customers that need to be billed? Protecting these assets is critical and involves more than just the city clerk.

Reconciling Timesheets, Hours Worked and Wages

Another piece of internal control often overlooked is the verification (reconciliation) of hours worked. It is recommended that all employees, including those considered salaried, fill out a timesheet indicating date and time worked, vacation, sick leave, etc. Those timesheets should be verified by their respective supervisors before going to the clerk or bookkeeper for processing.

Policies approved by the council should clearly set out allowed compensated time, discipline and benefits. Salary resolutions should be adopted by council to clearly define wages to be paid and for what period (beginning date of new rate). Properly documenting these items will make execution, verification and reconciliation much easier.

For Internal Revenue Service, Social Security and other deductions associated with payroll it is critical that accurate, timely remittances of these taxes and withholdings be done and reconciled with the general ledger accounting system and bank accounts. This is another instance where different systems are used to accomplish the various steps to these tasks, requiring timely error detection and resolution.

After the end of each fiscal year, the city is required to compile multiple summary reports to inform the council, citizens, state and federal agencies what happened during the past year. Monthly reconciliations can make this task much more manageable. When these reconciliations are verified by another person on a monthly basis, problems should not compound, and the report reliability will be greatly enhanced.​




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