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<br />I <br /> <br />I <br /> <br />I <br /> <br />(p:u <br /> <br />ERNST & ERNST <br /> <br />2100 TOWER LIFE BUILDING <br /> <br />SAN ANTONIO. TEXAS 76205 <br /> <br />December 27, 1972 <br /> <br />Honorable Mayor, City Councilmen, and City Manager <br />City of San Marcos <br />P.O. Box 72S <br />San Marcos, Texas 78666 <br /> <br />Gentlemen: <br /> <br />As a result of the tests we made during our recent examination of <br />the financial statements of the City of San Marcos, we were able to develop <br />recommendations for improved procedures and controls in certain areas of the <br />City's operations. We are pleased to submit for your consideration the most <br />significant findings and our general recommendations. Certain of these matters <br />we have discussed in previous letters, but we feel that it is important to <br />resubmit them, with more current data in some cases, so that this letter can <br />be used as a checklist of matters requiring attention. Implementation of these <br />recommendations should result in improvements to controls ovar the City's assets, <br />in greater accuracy and usefulness of monthly financial reports, in compliance <br />with requirements set forth in the City charter and bond ordinances, and in <br />providing financial data needed to support grant re<J.uirements. <br /> <br />Other suggestions concerning computer conversion and utilization <br />are offered for your consideration and we hope that you would find these useful. <br /> <br />Property, Plant, and Equipment <br /> <br />Inadequate records <br />and additions difficult, and <br />as we noted in prior years. <br />qualification of our opinion <br /> <br />for fixed assets make planning for replacements <br />can result in loss of grant funds in some cases, <br />The City's inadequate records also resulted in <br />on certain of the City's financial statements. <br /> <br />We recommend the following procedures be established for proper <br />accounting of fixed assets; <br /> <br />1. Take a complete physical inventory of City-owned assets, identify <br />custodians of the assets, determine remaining lives of assets, and <br />determine original cost where possible or estimated cost if cost <br />is: not known. <br /> <br />2. A work-order system should be established to control the purchase <br />and sale of assets. Source documentation should provide support <br />for the following information in the fixed asset records: <br /> <br />A. Amounts of additions and retirements of assets <br /> <br />B. Description of assets <br />