Guide to Local Government, Internal Conrol and Audit Services LOCAL GOVERNMENT GUIDE TO INTERNAL CONTROL AND AUDITING SERVICES Local Government Internal Control Checklist  Are all invoices approved by two levels, usually the department head and chief administrator? Are the inputs of payroll (time cards or time sheets, benefits and wages) approved before payroll is prepared? Is the completed payroll, e.g. payroll registers or checks, reviewed and approved prior to distribution? Are bank reconciliations for all bank accounts completed timely each month, compared to the financial statements for agreement and reviewed by a supervisor? Are accounting and treasury functions separated?  This means the employees who record the transactions should not handle the cash receipts or be able to make cash disbursements. Conversely, those who handle the money and are authorized to sign checks should not have the capability to enter or alter accounting records. Are financial statements prepared timely and reviewed by management and the board on a monthly basis?  For local governments the primary comparison should be the budget, however, presentation of the prior year's amounts in the financial statements is also useful.  In addition, the organization needs to monitor its cash position by fund.  The above are only a few general principles and procedures; however they should be a good starting point for an excellent internal control system. Local Government Audit Services Checklist  Your auditors should be selected at least two months prior to year end to provide them time to plan the audit and to give you time to prepare for the audit.  Their latest peer review report should be obtained to determine that a passing grade was achieved. Prior to year end your auditor should give you a list of schedules and information they will need, including confirmations. Ideally the auditor will come out prior to year end for preliminary work and perform the main audit fieldwork two to three months after year end with a report within four months after your fiscal year has ended. The auditor should provide you with a draft of the financial statements, along with the journal entries they made and request you sign a representation letter. The auditor's output should contain the audited financial statements, a letter describing various aspects of the audit and a report on any internal control deficiencies and recommendations.   McClure, Inserra & Company, Chartered 1650 N. Arlington Heights Road Arlington Heights IL 60004  847-870-0380