Establishing Internal Control Standards and Establishing a Materiality Threshold

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CITY OF SOUTH BEND, INDIANA of relevant policies, procedures, and practices. Internal control can provide reasonable assurance, but no system of control can provide absolute assurance to the Common Council and other users of financial information. The Finance Department shall be charged with: • Conveying periodic messages of the City's internal control philosophy and expectations to all employees; • Evaluating the City's internal control system for weaknesses on a periodic (but no less frequently than annual) basis, providing solutions to any discovered weaknesses, and inform employees of necessary changes in procedures; • Working with the Human Resources Department to establish a confidential reporting system for individuals to report suspected fraud and abuse of internal control policies; and • Working with the Human Resources Department to institute procedures to address violations of policies and consequences for violations. Principle 2: The oversight body oversees the entity's internal control system As the fiscal body for the City, the Common Council is responsible for setting the institutional expectations for internal control, ensuring management is aware of the those expectations, requiring the upward communications channels are open through all levels of management, and evaluating management's effectiveness toward monitoring the control environment and implementing sound control policies and procedures. As the City's Chief Fiscal Officer, the City Controller will be the Common Council's chief agent in implementing and managing the internal control policies and procedures. Principle 3: Management establishes an organizational structure, assigns responsibility, and delegates authority to achieve the entity's objectives. Individuals with delegated approval authority, e.g. Elected Officials and Department Heads are responsible for establishing, maintaining, and supporting a system of internal controls within their areas of responsibility and for creating the control environment that encourages compliance with City policies and procedures. Adequate supervision is necessary to monitor that internal controls are operating as intended, and to help ensure the reliability of accounting and operational controls by pointing out errors, omissions, exceptions, and inconsistencies in procedures. Staff in leadership roles are responsible for the application of this policy and the design, development, implementation, and maintenance of systems of internal controls focusing on the effectiveness of operations and the safeguarding of assets within their respective areas of responsibility. All levels of management and supervision are responsible for strengthening internal controls when weaknesses are detected. Department managers should periodically review departmental procedures to ensure that the general principles of internal control are being followed. The Finance Department has the primary responsibility for internal control over financial reporting and compliance with applicable laws, rules, and regulations. The City Controller is the City's chief Internal Controls Policy Pursuant to I.C. 5- 11 -1 -27 2