Purpose of Audit

The purpose of our audit was to review the City’s internal controls over procurement and cash receipts for the period January 1, 2011, through January 31, 2013.

Background

The City of Jamestown is located in Chautauqua County and has a population of approximately 31,000. The City is governed by the City Charter, general laws of the State of New York, and local laws and ordinances. The City has an elected Mayor and a nine-member City Council, an appointed City Comptroller and a Director of Financial Services. The City's 2012 general fund budget totaled $33 million.

Key Findings

• The Board of Public Utilities (BPU) did not seek bids for purchases from six vendors who were paid $387,763 and the City did not seek bids for purchases from one vendor who was paid $65,864. BPU officials did not seek competition, such as using requests for proposals (RFPs), when procuring $596,763 in professional services from five vendors, and could not provide written agreements with two of those vendors. We also found that purchases totaling approximately $83,569 were made without requesting quotes, as required by the City and BPU purchasing policies.
• The City has also failed to segregate duties or provide adequate oversight of the cash receipt process. Users of the six electronic collection systems can collect, record, prepare deposits and make adjustments in the system with minimal or no oversight. City and BPU officials could not provide a reasonable explanation for 47 missing receipts.
• Utility customer accounts and payments were adjusted and parking fines were dismissed without supervisory approval and had no supporting documentation.
• Cash collections were substituted with personal checks.

Key Recommendations

• Seek bids and quotes as required by City policy and State statute. Obtain written contracts with vendors to ensure that they are receiving the proper prices and that there is a defined contract period listed. Consider seeking requests for proposals for professional services.
• Properly segregate duties, including computer access. Establish system access levels to promote adequate segregation of duties. Review receipt logs and investigate any gaps in the receipt sequence and document the results.
• Ensure that all adjustments are approved and have supporting documentation prior to being made.
• Ensure that all moneys are deposited intact.