RUTLEDGE – The Rutledge Board of Mayor and Aldermen (BMA) reviewed its FY 2019-20 audit findings during its meeting Thursday, April 8.
The audit revealed three findings within the city.
The first finding was “adequate segregation of duties does not exist.” The audit states due to the limited number of available personnel, a lack of segregation of financial duties exists. The lack of segregation of duties affects the preparation of bank deposits, bank reconciliation preparation, account transaction postings, issuing cash receipts and making disbursements, according to the audit.
City leadership responded with agreement with the finding, but stated due to the size of the city, hiring additional personnel is not economically feasible. The city will review the information to determine how to strengthen internal controls.
The second finding addressed actual expenditures for FY 2019-20 exceeding budgeted amounts in the General and Community Development Funds. The audit states, “the State of Tennessee requires all expenditures of governmental funds to be appropriated.” The purchase of a capital asset led to expenditures exceeding the approved budget.
City Recorder Stacy Harbin said the purchase of new patrol vehicles for the police department contributed to the city exceeding budgeted expenditures. She said the city would likely have the issue again during the FY 2020-21 budget due to the paving of city streets. Harbin said city leaders did not know paving would be possible prior to the creation of the budget.
City leadership responded to the second finding by agreeing to monitor and amend the budget when necessary in all funds for the future.
The final finding was “the town is not providing for Sewer Retirement Obligations under GASB 83.”
The audit states the city should provide the ratable cost of closing the sewer system throughout its estimated remaining useful life under Governmental Accounting Standards Board (GASB) 83.
The city has not provided costs or estimated the sewer’s remaining useful life to determine the annual expense of closing the sewer system, causing a liability for the city. An engineering study was recommended to determine the estimated remaining useful life and the costs of closing the sewer when it is no longer of service to the city.
City leadership responded with agreement with the finding and will make arrangements to have proper engineering studies completed.
The next BMA meeting will be held Thursday, May 13 at 7 p.m. at Rutledge City Hall.