01081973 Regular Meeting - Laserfiche WebLink

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I I I City of San Marcos -5- December 27, 1972 2. Each new subdivider contract should be recorded as executed. Control and subsidiary accounts should be balanced after each transaction. During the past years these contracts have not been reflected on the books and records of the City on a timely basis. We prepared correcting entries for this deficiency during our examination. Accrual Accountin~ The City should use the accrual basis of accounting throughout the fiscal year. Under this basis, revenues are recorded as earned rather than when received, and expenditures are recorded as liabilities when incurred rather than when paid. Numerous adjustments are required at year end during the audit to reflect accrual basis accounting; therefore, we recommend the following procedures: 1. Liabilities should be recorded as expenditures when incurred in the General and Utility Fund, thereby giving the City a more accurate picture of budgetary performance. Presently the City records expenditures as liabilities are paid. Further budgetary control would result from use of encumbrance accounting common to good governmental accounting. Using encumbrance accounting results in recording purchase orders as charges against appropriations. 2. An accounts payable control should be established to provide a record of all amounts owing to vendors. 3. Interest expense on bonded debt is being recorded when paid. We recommend that interest expense be accrued monthly for all enterprise funds of the City. Interfund Transfers Since it is necessary to periodically make transfers between funds to meet current operating requirements, it is recommended that an authoriza- tion form be developed which presents the following information: 1. Date of transfer 2. Transfer from fund to 3. Reason for transfer 4. Signature of person preparing transfer request 5. Signature of authorized City officer fund