Establishing Internal Control Standards and Establishing a Materiality Threshold

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CITY OF SOUTH BEND, INDIANA nor should controls be allowed to stifle mission effectiveness and timely action. All levels of management must assess the costs, benefits, and risks when designing controls to develop a positive control environment and compensate for the risks of non - compliance, loss of assets, or unreliable reporting while accomplishing the City mission. The following specific internal control policies are adopted for use by City Departments: Payroll Activities • Salaries and wage rates are verified by the Human Resources Department. • The responsibilities for hiring, terminating, and approving promotions are segregated from those preparing payroll transactions or inputting data. • The responsibilities for approving time sheets are segregated from those for preparing payroll transactions or inputting data. • Employees' time and attendance records are approved by their supervisors. • Corrections to recorded time and attendance records are approved by the employee and employee's supervisor. • Procedures are in place to ensure that changes in employment status are promptly reported to the payroll processing unit. • Payroll disbursements are reviewed and approved by an authorized individual mior to payment. • Access to payroll applications is appropriately controlled by user logins and passwords. • Changes to a payroll disbursement are approved by an individual other than the ones authorized to process the changes. • Access to the electronic signature used to sign payroll checks is adequately controlled. • Check stock for printed checks is stored in a secure location. • Unclaimed payroll checks are returned to Finance Department. • Employees are cross - trained on the payroll process; those assigned to payroll take regular vacations. • The City uses a "positive pay" program with 1st Source Bank to preauthorize payroll checks to be honored by the bank and identify fraudulent checks issued by other parties attempting to use City information. Disbursement Activities • The responsibility for approving claims is segregated from those preparing the claims wherever possible. • Checks are written by an individual other than the one approving the claim. • Claims for payment (including trustee escrow payments) are reviewed and approved by the Board of Public Works, Redevelopment Commission, or other appropriate public body prior to payment. • A reconcilement is completed between the claims for payment approved by the board and the actual disbursements posted to the ledger. • The responsibility for acknowledging the receipt of goods or services is segregated from those preparing claims and writing checks. • Vendor checks are accounted for in numerical order and reconciled to the disbursement ledger. • Invoices or other receipts are attached to each claim to support the disbursement. Internal Controls Policy Pursuant to I.C. 5- 11 -1 -27 7