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City auditor reports low fraud-risk score but urges continued controls and training
Summary
City auditor Gary presented an internal fraud risk assessment, described separation-of-duties, credit-card and payroll controls, and reported a score of 355 (assessed by state auditors) placing the city in a very-low risk category while recommending written policies, annual ethics training and use of a fraud hotline.
Gary, the city's auditor/CPA, presented the city’s internal fraud risk assessment to the council and staff, explaining the state’s 12-question evaluation and the control steps the city uses to limit fraud. He said the assessment looks at separation of duties, bank reconciliations, credit-card controls, payroll review and other policies.
Gary said the city received a score of 355 under the state auditors’ framework and described that as a very-low risk rating. "The score we have is 355, which according to the state auditors is ... very low," he said. He emphasized that a strong system still depends on council and staff following policy: "We can have a perfect system ... but if you don't do what you're supposed to do, if you don't really review the checks when you sign them ... you're failing the system."
He reviewed recommended policies — procurement, ethical behavior, fraud reporting and travel — and urged enforcement of receipt submission for credit-card purchases and proper reconciliation of bank accounts. He also described a fraud hotline on the city website for citizen reporting and noted the state takes such complaints seriously.
Council asked questions about whether the city needed a formal internal-audit function (a measure the presenter said was appropriate for larger municipalities) and about required continuing education for staff and officials. Gary recommended annual training and said management credentials helped (he noted his CPA status and that certain management staff hold relevant degrees). The council did not take immediate policy votes on the assessment; it received the report and asked staff to continue implementing controls.
