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another threshold of $10,000 for variances for things like a journal entry posted incorrectly that <br />is off by $10,000. Those will be investigated internally for up to $10,000. <br />Citizen Committeemember Will Smith asked whether or not the variance is in line with what <br />many other places are doing. <br />Mr. Murphy responded, It is. It's a little bit higher. Some chose $2,500 across the board. We <br />talked to Todd Caldwell, third in line in the State Board of Accounts, and we talked it through. <br />He liked the idea of the zero (0) tolerance for theft. Mr. Murphy explained that Mr. Caldwell was <br />fine with South Bend setting the threshold at $10,000, given its size. <br />Citizen Member Smith asked, So, he didn't think that that would lead to higher cost because of <br />that? Not spending more time on those variances, investigating those? <br />Mr. Murphy responded, We'll investigate them internally, if we get audited. Our capitalization <br />threshold is also $10,000, so we don't capitalize anything less than that. <br />Ken Glowacki, Director of Financial Services, South Bend Police Department, continued the <br />presentation. He explained that the State of Indiana has set internal controls standards, such as <br />thresholds. He stated, When we're talking about that threshold, it has a very specific meaning in <br />the definition of material statements. That is, at that level, if we have a mistake or we have an <br />error that we can't resolve in some timely fashion, we have to report that to the State Board of <br />Accounts. He explained that reports would not be done for just any amount of money, but <br />specifically at or above the threshold of $10,000. He stated, One final point on internal controls: <br />it's a very subjective judgment. It's like life insurance: how much is enough? You can have so <br />many internal controls and, running an organization, you can't do anything. So, that's typically a <br />decision that's got to be made between the Controller and top management. At what point are <br />there too many controls? That will be an ongoing discussion that John will have —and we will <br />have —as fiscal officers. <br />Citizen Member Smith asked what the difference was between what was done last year and what <br />was done this year. <br />Mr. Glowacki responded, The difference between last year and this year is that the State is <br />setting certain requirements that must be met. In the past, part of what the State Board of <br />Accounts did was evaluate our internal controls, decide what they needed to do to complete the <br />audit, and then they would have a discussion with John. What is happening now, by State law, is <br />that there are reports that have to be made. We find an error over our threshold, we must now, by <br />law, report that to the State Board of Accounts. <br />Councilmember Dr. David Varner asked Mr. Murphy, Would you have an objection if, in <br />addition to this, there were a requirement that any reports to the Auditor's Office be made <br />available to the Council, too? <br />Mr. Murphy asked, For any reports to the State Board of Accounts? <br />2 <br />