New Finance manual fixes audit ‘finding’

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COVINGTON, Ky. - Every outside auditor who has looked at Covington’s books since 2013 has formally scolded the City for the same omission: Lack of a formal, comprehensive manual spelling out accounting procedures.
 
That’s about to be fixed.
 
The City’s Finance Department presented a newly compiled 49-page “Accounting Policies and Procedures Manual” to the Covington City Commission at its caucus meeting this week, and the manual has been added to the Commission’s consent agenda for this coming Tuesday.
 
Leaders called it “a big deal.”
 
“This corrects a problem that our auditors have been writing about on an annual basis since 2013,” Mayor Joe Meyer said.
 
City Manager David Johnston had an even stronger reaction: “When I see a formal ‘finding’ in an audit, I consider that an ‘F’ grade,” he said. “When you get a notice of a deficiency like that, you shouldn’t rest until you address it. We’ve made getting rid of every ‘finding’ a priority, and Finance should be proud that they got this done.”
 
The problem wasn’t so much that the City wasn’t following formal procedures, said Finance Director Muhammed Owusu, who’s been with the City for less than a year. It’s that the previously understaffed department had not had the time to compile years of updates and policies into a single document for auditors and rating agencies to see.
 
“Now we have them all clearly spelled out and together in one place,” Owusu said. “This is an important accomplishment that will pay off.”
 
The manual addresses a range of topics, some of which are basic, and some which you need an accounting degree to understand. For example, it: 
  • Spells out the division of duties for Finance Department staff and City leaders.
  • Describes various funds used by the City.
  • Addresses the use of and procedures for an array of things like cash receipts, credit cards, purchase orders, bank account reconciliations, and depreciation.
  • Details when accrual entries can be made in the City’s general ledger. 
It also includes via reference separate policies that address investments, reserve funds, debt service, information technology, and purchasing. Some of those policies are still being drafted.
 
“In short, we want it to be evident and instantly clear to everyone that this is a professionally run department of the highest caliber that does things by the book to be good stewards of the taxpayers’ money,” Owusu said.
 
Or, as the manual states succinctly in its introduction: “The policies outlined herein will help ensure that the finances of the City are accurately, efficiently and transparently being managed and reported.”
 
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