A primer on park district finance

Part 3 — The audit and comptroller's report.

Editor's Note: The following article is the third in a series of four articles dealing with park district finances. The final article will appear in the July/ August issue.

By Robert A. Porter

The audit is the process of examining documents, records, reports, systems of internal control, and accounting and financial procedures. State law requires every park district to have an audit by a licensed public accountant. (The exception is any park district which appropriates less than $200,000 for its fiscal year. However, every park district must file a report with the State Comptroller regardless of size. Those forms are provided by the Comptroller's office, and they can be completed by the auditor.)

The audit must be made annually at the close of the fiscal year, and it must cover the immediate preceding fiscal year. The auditor must complete his (or her) work within six months of the close of the fiscal year, and also furnish the park district at least three copies of the audit report. The park district, in turn, gives the State Comptroller a copy of both the audit report and the Comptroller's supplementary report.

Types of audits

It is recommended that every park district have a certified external audit regardless of legal requirements. Audits based upon organizational application are called internal and external, and both should be done annually. In temal audits are examinations performed by in-house staff; external audits are made by independent licensed auditors.

Internal audits

The park district treasurer should check the agency's receipts and deposits on a regular basis, making all required adjustments to records before year end and verifying that the minutes of the board are accurate and complete. Bank reconciliations should be made for all funds, and trial balances for all funds should be prepared. Old outstanding checks should be written off the books.

External audits

Park districts can facilitate the preparation of the external audit by making readily available files on insurance policies, leases, contracts and board minutes. In addition, an investment document should be prepared to segregate fund ownership. Copies of the levy, budget and appropriation, and all other ordinances, should also be available.

A schedule of all unpaid bills and unbilled obligations needs to be ready, and adjustments to fixed assets should be prepared. In addition, it is helpful to have all fiscal reporting procedures ready for inspection.

Audit components

A good audit will cover:

• an inspection and evaluation of internal controls.

Illinois Parks and Recreation 21 May/June 1987

• a sampling of fiscal transactions.

• the preparation of a management letter.

• the issuance of a financial report.

• a system to organize the upkeep of work papers.

The park district should not allow any original documents to leave the office, and the staff should be prepared to type routine confirmations for the county, and banks and attorneys. The auditor's management letter is valuable to both the park board and the administrator as an important fiscal management tod, as it provides methods to improve fiscal control and regulation.

Comptroller's report

The filing requirements for the Comptroller's report are the same as for the audit. Both documents must be filed with the County Clerk and the State Comptroller.

Final thoughts

The quality of the audit will depend on the auditing firm. Because the audit is an important fiscal management tool, park boards should obtain the best auditing firms available. They should also strive to follow recommendations in the management letter whenever possible.

ABOUT THE AUTHOR: Robert A. Porter is the director of the Lemont Township Park District.

Illinois Parks and Recreation 22 May/June 1987