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1991 Financial Statement , REPORT OF EXAMINATION CITY OF FAIRlA WN 20977-04-0427-00 REGION 3, DISTRICT 8, SUMMIT COUNTY REGULAR AUDIT JANUARY 1, 1990 THROUGH DECEMBER 31,1991 FISCAL YEAR AUDITED UNDER GAGAS: 1991 THOMAS E. FERGUSON Auditor of State . ¡ \. AUD-4754 (Revised 12/88) TO WHOM IT MAY CONCERN: Any person or persons examining this report for the purpose of obtaining information for the general public, as to the results of this examination, should: Always remember that it takes years for a per- son to build a reputation; Always remember that one of the purposes of these examinations is to safeguard the honest, well-meaning official who might have made a mistake, even as you and I; Always remember that any findings, or cit- ations, if any, in this report contain only the bare cold facts. Please read carefully the explanatory material contained in this report for the precise description of the situations covered in the audit. Always remember that if this course is fol- lowed, the general public, which is served by the official, will receive an unprejudiced, unbiased report. Respectfully submitted, DEPARTMENT OF AUDIT ¿7) ç:>~ 'i~ C- /~~ THOMAS E. FERGUSON Auditor of State c CITY OJ¡' FAIRLAWN SUMMIT COUNTY TABLE OF CONTENTS I TITLE Elected Officials Administrative Personnel Index of Funds Independent Auditor's Report Combined Statement of Cash, Investments and Fund Cash Balances - All Fund Types Combined Statement of Cash Receipts, Disbursements and Changes in Fund Cash Balances - All Governmental and Similar Fiduciary Funds Combined Statement of Cash Receipts, Disbursements and Changes in Fund Cash Balances - All Proprietary Fund and Similar Fiduciary Funds Combined Statement of Receipts - Budget and Actual Combined Statement of Disbursements and Encumbrances Compared with Expenditure Authority Notes to Financial Statements Reports on Legal Compliance Compliance at Financial Statement Ohio Compliance Supplement Report Level Status of Prior Audit's Citations and Recommendations Report on Internal Control Structure General Comments Conclusion Statement Assistant Auditor Certification -"",.-"".'~,..,..,.....',"_...,,e- -"-~.'~"-"~- PAGE (i) (H) (iii) 1 Fund Types 2 Types 3 4 5 6-17 18 19-20 21 22-24 25 26 27 'I , t f i ¡ ~ ! ~ ~ t :t æ , ! p .~ t, ::' :i I ;t i , ELECTED OFFICIAL Peter M. Kostoff 161 Grayling Dr. Fairlawn, OH 44313 William Stalker 434 Marviel Dr. Fairlawn, OH 44313 Ginnie Singleton James Swartz Richard Steichen David Effler Stanley Bielewicz Frank Martucci Lawrence W. Pelland 469 Cartwright Dr. Fairlawn, OH 44313 CITY OF FAIRLAWN SUMHITCOUNTY 3487 South Smith Road Fairlawn. Ohio 44333 ELECTED OFFICIALS AS OF DECEMBER 31. 1991 TITLE Mayor Council President TERM OF OFFICE 1/1/88-12/31/91 1/1/90-12/31/91 Council 1/1/90-12/31/91 Vice President Council Member Council Member Council Member Counc il Member Council Member Director of Finance 1/1/90-12/31/91 1/1/90-12/31/91 1/1/90-12/31/91 1/1/90-12/31/91 1/1/90-12/31/91 1/1/88-12/31/91 Statutory Legal Counsel: (Director of Law) Richard E Dobbins 3882 Bywood Rd. Akron, OH 44313 (A) - Allstate Insurance Company (i) SURETY (A) (A) (A) (A) (A) (A) (A) (A) (A) AMOUNT $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $50,000 PERIOD 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 I I ~ .~: ìj 1 j ¡ , ~ ~ 't % ¡ ¥ t ¡ ~ J §; -?j ~" t , , ~- ~ ø ~ ¡ 1; '" ..... TITLE Tax Administrator Patricia Bertsch Director of Law Richard Dobbins 3882 Bywood Rd. Akron, OH 44313 James Graves 34 Morz Blvd. Fairlawn, OH 44313 CITY OF FAIRLA1lN SUMMIT COUNTY ADMINISTRATIVE PERSONNEL AS OF DECEMBER 31. 1991 TERM OF OFFICE OR CONTRACT PERIOD 4/23/90 - Continuous 10/28/89 - Continuous Part time as needed (A) Allstate Insurance Company (ii) j;¡;""W!':",i"'~"~,,,"",[7,~~!:: ','<:í'~"""Ii"\"!."'":;,,,";!~,,j«.,.,~;~\ffl~?Vl'f:~~""';Ph"'t'~J,t' ,. ,,~v~,-:,q. i". " ,""".""'''7'''''''''"'',"",:-,~",''''''.''''''''~~;'':~'' SURETY AMOUNT (A) $50,000 (A) $10,000 (A) $10,000 PERIOD 5/1/90- 5/1/93 5/1/90- 5/1/93 5/1/90- 5/1/93 , .~. !iI: I ~ i .1ì *"1: ~ ~ t ~' l~ ~ $ :~ f t ~, ~" ~ W %, {, .~ ¡ @ " If t' " t CITY OF FAIRLAVN SUMMIT COUNTY INDEX OF FUNDS GOVERNMENTAL FUND TYPES: General Fund Tvpe: General Fund Special Revenue Fund Types: Street Construction, Maintenance, State Highway Improvement Fund Special Events Fund Parks and Recreation Fund Income Tax Fund Children/Adolescent Fund Drug Enforcement Fund DUI Fund Motor Vehicle License ~aw Enforcement Trust Vater Maintenance and F~re Equipment Fund and Repair Fund Tax Fund Fund Repair Fund Capital Proiects Fund Tvpes: Capital Improvements Fund Sewer Improvements Fund Capital Reserve Fund Park Improvements Fund Vater and Sewer Extension Fund Fort Island Park Fund Sidewalks Fund S'pecial Special Special Special Fund Types: Bond Retirement Fund Sewer Improvement Fund Mowing Fund Assessment Assessment Assessment Assessment PROPRIETARY FUND TYPES: Internal Service Fund Types: Sewer Self-Insurance Fund Police Rotary Fund FIDUCIARY FUND TYPES: Trust and Agencv Fund Tvpes: Expendable Trusts: Police Pension Fund Fire Pension Fund Furtherance of Justice Fund Nonexpendable Trusts: Street Opening Fund Performance/Landscape Fund Agency: Mayor's Court Fund Rosemont Escrow Fund ( iii) ".""1'!1~'''''''.::''''''''''.'''('''''-=''','''''''~,"",,~'''''''''''''''''":^'"'"'-'':'''''''-''''''.''.~",--:-,..,.-. . ./~~, /. '\ / ., THOMAS E. FERGUSON 'AUDITOR OF STATE; \~.. .' . ~ I P. O. Box 1140 . Columbus, Ohio 43266.0040 . (614) 466-4514 \-.- I '''.. ..- '--............. Independent Auditor's Report Members of Council City of Fairlawn Fairlawn, Ohio 44333 Ve have audited the accompanying financial statements of the City of Fairlawn as of December 31, 1991 and for the year then ended. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion on these financial statements based on our audit, Ve conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates, if any, made by management, as well as evaluating the overall financial statement presentation, We believe that our audit provides a reasonable basis for our opinion. As discussed in note 1 to the basic financial statements, the City prepares its financial statements on the basis of cash receipts and disbursements, with modifications designed to demonstrate the City's compliance with the budget laws of the State of Ohio. This basis of accounting is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the aforementioned financial statements present fairly, in all material respects, the cash assets arising from transactions of the City as of December 31, 1991, and the related cash receipts and disbursements, and budgeted receipts, appropriations, and encumbrances for the year then ended, on the basis of accounting described in note 1. ~t~'" . THOMAS E. ~ Auditor of State September 17, 1992 Information Line toll free 1.800-282-0370 COMBINED CITY OF FAIRLAWN SUMMIT COUNTY STATEMENT OF CASH. INVESTMENTS. CASH BALANCES - ALL FUND TYPES AS OF DECEMBER 31. 1991 See Note 8 Cash Investments: Other Investments (Cost) Total CASH BALANCES BY FUND TYPE Governmental Funds: General Fund Special Revenue Funds Capital Projects Funds Special Assessment Funds Proprietary Funds: Internal Service Funds Fiduciary Funds: Trust and Agency Funds Total AND FUND $ (740,169) 4,830,551 --------- $4,090,382 ========= $ 563,375 869,256 2,173,549 121,029 298,951 64,222 --------- $4,090,382 ========= The notes to the financial statements are an integral part of this statement. -1- , ":."~,,,,,,,¿.,:,..,,;..' ,;< .:;..;.£;~'~<!;';~"'{;\d''i:~;'id:JÇ-:~'ð~¡'¡¡~''f;çi:'¡:<;";-(>, ';j;,:;"i.f~~j¡fj~;'¡;;>i;'\4\~;idi ,',i(,-~Ùd.if;:i'<Jf~Ji.'ï:.:",'~" ..,.,,, CITY OF FAIRLAV1N SUMMIT COUNTY COMBINED STATEMENT OF CASH RECEIPTS. DISBURSEMENTS. AND CHANGES IN FUND CASH BALANCES - ALL GOVERNMENTAL FUND TYPES AND SIMILAR FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 1991 Governmental Fund Tvpes Special Revenue General REVENUE RECEIPTS Local Taxes Intergovernmental Receipts Special Assessments Charges for Services' Fines, Licenses and Permits Miscellaneous $ 337,666 $4,211,038 548,793 132,706 0 0 67,328 75,198 122,735 73,905 310,737 29,492 --------- --------- 1,387,259 4,522,339 Total Revenue Receipts EXPENDITURE DISBURSEMENTS: Current: Security of Persons and Property Public Health Services Leisure Time Activities Community Environment Basic Utility Services Transportation General Government Debt Service 1,503,030 28,682 56,717 0 22,030 92,281 14,029 0 200,750 0 359,421 182,272 1,104,262 101,930 0 0 --------- ------.--- 3,260,239 405,165 (1,872,980) 4,117,174 --------- ------.--- Total Expenditure Disbursements Total Revenue Receipts Over (Under) Expenditure Disbursements Other Financing Sources (Uses): Proceeds from Sale of.Public Debt Sale of Bonds Sale of Notes Transfers In Transfers Out Other Uses 0 0 2,051,666 (75,000) (30,000) 0 0 0 (3,400,,000) (110,,139) --------- -----..--- Total Financing Sources '(Uses) 1,946,666 (3,510,,139) Excess of Receipts and Other Financing Sources Over (Under) Expenditure Disbursements and Other Uses Fund Cash Balance - December 31, 1991 73,686 607,035 --------- -----...--- 489,689 262,221 --------- -----..--- $ 563,375 $ 869,256 --------- _____1_._- Fund Cash Balance - January 1, 1991 S'Pec ial Assessments Fiduciary Fund Type Expendable Trust Totals (Memorandum Only) Fund Capital Proiects Types $ 2,720 $ 0 $ 94,108 $4,645,532 250,000 0 0 931,499 97,400 6,632 0 104,032 25,519 103,042 0 271,087 24,824 0 0 221,464 455,681 1,509 0 797,419 --------- ------- ------- --------- 856,144 111,183 94,108 6,971,033 53,238 0 170,210 1,755,160 0 0 0 56,717 367,105 0 0 481,416 0 0 0 14,029 1,538,576 76,867 0 1,816,193 587,129 0 0 1,128,822 201,425 1,981 0 1,409,598 6,846,245 0 0 6,846,245 --------- ------- ------- --------- 9,593,718 78,848 170,210 13,508,180 (8,737,574) 32,335 (76,102) (6,537,147) --------- ------- ------- --------- 2,125,000 0 0 2,125,000 4,425,000 0 0 4,425,000 1,993,334 0 75,000 4,120,000 (938,334) 0 0 (4,413,334) 0 0 0 (140,139) --------- ------- ------- --------- 7,605,000 0 75,000 6,116,527 (1,132,574) 32,335 (1,102) (420,620) --------- ------- ------- --------- 3,306,123 88,694 19,147 4,165,874 --------- ------- ------- --------- $2,173,549 $121,029 $ 18,045 $3,745,254 ========= =;::===== ======= ========= -2- U-, . ;...:.<,' "-.""','i- ~...,\,," ,.¥."...'" ' ,~. ' ',' '.."7i"."-~"~"""'-'-'~'"'~""--- -- ,. , .~ .,..~~--~~...~, ~ ,". ~'".,},..~'''''.'"''~ CITY OF FAIRLAVN SUMMIT COUNTY COMBINED STATEMENT OF CASH RECEIPTS. DISBURSEMENTS. AND CHANGES IN FUND CASH BALANCES - ALL PROPRIETARY FUND TYPES AND SIMILAR FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31. 1991 Proprietarv Fund Tvpes Internal Services OPERATING RECEIPTS: Charges for Services $530 ------- Total Operating Receipts 530 OPERATING DISBURSEMENTS: Contractual Services Supplies and Materials 26,874 421 ------- Total Operating Disbursements 27,295 Excess of Cash Operating Receipts Over (Under) Operating Disbursements (26,765) ------- Nonoperating Receipts (Disbursements): Other Nonoperating Receipts 0 ------- Total Nonoperating Receipts 0 Nonoperating Disbursements Other Nonoperating Expenses 0 ------- Total Nonoperating Disbursements 0 ------- Excess of Receipts Over (Under) Disbursements Before Interfund and Advances Transfers (26,765) Transfers - In Transfers - Out: 560,000 (266,666) ------- Net Receipts Over (Under) Disbursements 266,569 Fund Cash Balance-January 1, 1991 32,382 ------- Fund Cash Balance-December 31, 1991 $298,951 ------- The notes to the financial statements are an integral part of this statement. Fiduciary Fund Ty?es Totals Nonexpendable (Memorandum Trust Agency 9.!lW. $0 $0 $530 ------ ------- ------- 0 0 530 0 0 26,874 0 0 421 ------ ------- ------- 0 0 27,295 0 0 (26,765) ------ ------- ------- 3,400 172,292 175,692 ------ ------- ------- 3,400 172,292 175,692 12,900 161,471 174,371 ------ ------- ------- 12,900 161,471 174,371 ------ ------- ------- (9,500) 10,821 (25,444) 0 0 560,000 0 0 (266,666) ------ ------ ------- (9,500) 10,821 267,890 36,491 8,365 77,238 ------ ------ ------- $26,991 $19,186 $345,128 ------ ====== ======= ------ -3- CITY O~ FAIRLAWN SUMMIT COUNT'! COMBINED STATEMENT OF RECEIPTS - BUDGET AND ACTUAL FOR THE YEAR ENDED DECEMBER 31. 1991 Fund Tvpes/Funds Budget Actual Varii:ince Favo:l:"able CUnfa'irorable) Government.al General Special Capital Special Revenue Projects Assessments $ 3,305,353 4,349,026 2,524,550 104,800 $ 3,438,925 4,522,339 9,399,478 111,183 $ 13:3,572 17:3,313 6,87-4,928 15,383 'Proprietary Internal Service 562,000 560,530 (1,470) Fiduciary Trust and Agency 242,958 344,800 101,842 ---------- ---------- -----...---- $11,088,687 $18,377,255 $7,2813,568 -=:1======== =========:r:a =====:=====s Tota~ (Memorandum Only) The notes to the financial statements are an integral part of this statement. -4- ''''"'''''~~':~:''',""~¡:=:,::=:~~~(i/:':;''.LË'.;~~<~40£JI~~~i$"'i.'d':~j'<è&;¡j)'~,,' CITY OF FAIRLAWN SUMMIT COUNTY COMBINED STATEMENT OF DISBURSEMENTS AND ENCUMBRANCES COMPARED WITH EXPENDITURE AUTHORITY FOR THE YEAR ENDED DECEMBER 31. 1991 Fund Types/Funds Governmental General Special Capital Special Revenue Proj ects Assessments Proprietary Internal Service Fiduciary Trust and Agency Total (Memorandum Only) See Note III Prior Year Carryover Appropriations 1991 Appropriations Total $ 3,4/~3, 730 4,3n,150 4,984,096 103,000 294,627 0 240,800 2¿fO,800 ---------- ---------- -----.----- $ 0 $13,439,403 $13,4~i9,403 C=-=-==CIZ-=_- ---------- ----=-=-====== The notes to the financial statements are an integral part of this state,ment. $ 0 0 0 0 $ 3,443,730 4,373,150 4,984,096 103,000 0 294,627 ;i! iJi ¡ i ~ $ t .1\ ~ :;¡! ~: t ¡ Jt. I J I ~ .~ Encumbrances Variance Actual 1991 Outstanding Favorable Disbursements At 12-31-91 Total (Unfavorablel $ 3,365,239 $ 38,763 $ 3,404,002 $ 39,728 3,915,304 12,515 3,927,819 445,331 10,532,052 236,322 10,768,374 (5,784,278) 78,848 1,509 80,357 22,643 293,961 647 294,608 19 344,581 0 344,581 (103,781) ---------- ------- ---------- ---------- $18,529,985 $289,756 $18,819,741 ($5,380,338) ========== ======= =======*===- ========1:8= J í I ¡ ~ ",,",,,,,,_.,,,,,,!ß"".'~."'''''' ,~~-~: ,."""?v_.,-,,,~"~ ".'_'."~''';~"",'''r'''''.'''"'''' ." ' -5- """""""",'~'ë"::""'''':''''''''~''''":.'~~f''''''~'~ ~ ',4~ -c-.' , ; I j 1 "?".,'''~,, 1. CITY OF FAIRLAVN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (As Required by Various Statutes) D. ''''''''''''~'''''''' ,~"""-,,,,~,,",";"~ .r A. B. C. DESCRIPTION OF THE ENTITY The City of Fairlawn is a the purpose of exercising the constitution and laws body politic and corporate established for the rights and privileges conveyed to it by of the State of Ohio. The City operates under a council-mayor provides the following services: public and general public services. form of government and safety, parks and re,creation, Management believes the financial statements included in this report represent all of the funds of the City over which the City officials have the ability to exercise direct operating control. BASIS OF ACCOUNTING The City of Fairlawn prepares its financial statements on a basis of cash receipts and disbursements. Consequently, certain revenues and the related assets are recognized when received rather than 'WI'hen earned, and certain expenditures are recognized when paid rather than when the obligation is incurred. A general fixed asset group and long-term debt group of accounts are not recorded on the fimmcial statements by the City under the basis of accounting used. :By virtue of Ohio law, the City is required to maintain the encumbrancl~ method of accounting and to make appropriations. INVESTMENTS AND INACTIVE FUNDS Investment procedures are restricted by the provisions of th,~ Revised Code. Purchased investments are valued at cost and are neither charged when purchased nor credited at the time of redemption to their respective fund balances. Interest earned is recognizl~d and recorded when received. FUND ACCOUNTING The City maintains its accounting records in accordance with the principles of "fund" accounting. Fund accounting is a concept developed to meet the needs of governmental entities in whicl1 legal or other restraints require the recording of specific receipts and disbursements. The transactions of each fund are reflected in a self-balancing group of accounts, an accounting entity which stands separate from the activities reported in other funds. The restrictions associated with each type of funds are as foll01Js: -6- CITY OF FAIRLAIIN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (As Required by Various Statutes) (Continued) D. FUND ACCOUNTING (Continued) GOVERNMENTAL FUNDS General Fund The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required by law or contract to be accounted for in another fund. S~ecial Revenue Funds To account expendable restricted for the proceeds trusts, or major to disbursements of specific revenue sources (othE!r than capital projects) that are legally for specified purposes. Capital Proiects Funds To account for financial resources to be construction of major capital facilities by Proprietary Funds and Trust Funds). used for the acquisition or (other than those financed Special Assessment Funds To account for the financing of public improvements or needed to benefit the properties against which special are levied. services asseS!lments PROPRIETARY FUNDS Internal Service Funds To account for the financing of goods or services provided by one department or agency to other departments or agencies of the governmental unit, or to other governmental units, on a cost-reimbursement basis. -7- ."',v,.,).~.<t',:;::., .I""":^ ....L. CITY OF FAIRLAVN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (As Required by Various Statutes) (Continued) D. FUND ACCOUNTING (Continued) FIDUCIARY FUNDS Trust and Agencv Funds To account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include (a) Expendable Trust Funds, (b) Nonexpendable Trust Funds, and (c) Agency Funds. E. BUDGETARY PROCESS 1. Budget A budget of estimated cash receipts and disbursements is submitted to the county auditor, as secretary of the county budget commission, by July 20 of each year, for the period January 1 to December 31 of the following year. 2. Estimated Resources The county budget commission certifies its actions to the City by September 1. As part of this certification, the City receives the official certificate of estimated resourclas which states the projected receipts of each fund. On or abo1~t January 1, this certificate is amended to include any unencumbered .balances from the preceding year. Prior to December 31, the City must revise its budget so that the total contemplated expenditures from a fund during the ensuing fiscal year will not exceed the amount stated in the certificate of estimated resources. The revised budget then serves a:; the basis for the annual appropriation measure. Budgeted receipts as shown on the accompanyiJlg financial statements do n()t include January 1, 1991 unencumbered fund balances. H()wever, those fund balances are available for appropriations. -8- . ,.~z":,,,?~/!!?;;:?,:ir\' ,f" .:...;:. .~, >\"",~""",,,,,.,,,,,"""""'""---""'~,,,",'-"". '--:~ ~.. ,~".",.IIIÌ.. CITY OF FAIRLAllN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (As Required by Various Statutes) (Continued) E. BUDGETARY PROCESS (Continued) 3. Appropriations A temporary appropriation measure to control cash disbursements may be passed on or about January 1 of each year for the period January 1 to March 31. An annual appropriation measut'e must be passed by April 1 of each year for the period January 1 to December 31. The appropriation measure may be amended. or supplemented during the year as new information becomes available. Appropriations may not exceed estimated resources. 4. Encumbrances The City is required to use the encumbrance method of accounting by virtue of Ohio law. Under this system, purchase orders, contracts, and other commitments for the expenditure of funds are recorded in order to reserve the portion of the applicable appropriation. At the close of each fiscal year, the unencumbered balance of each appropriation reverts to the respective fund from which it was appropriated and becomes subject to future appropriations. The encumbered appropriation balance is carried forward to the succeeding fiscal year and need not be reappropriated. F. PROPERTY. PLANT AND EOUIPMENT Fixed assets acquired or constructed for general governmental service are recorded as expenditures. Depreciation is not recorded for these fixed assets. G. ACCUMULATED UNPAID VACATION. PERSONAL LEAVE. AND SICK PAY Accumulated unpaid vacation, personal leave, and sick pay arl3 not accrued under the cash basis of accounting described in Note 1. At December 31, 1991, management estimates that $39,400 in perslJnal leave, $445,258 in sick leave, and $39,587 in vacation leave has been accumulated by the employees of the City. All leave will either be absorbed by time off from work, or within certain limitation:3, be paid to the employees. It is not practicable to determine the actuarial value of these benefits as of December 31, 1991. -9- ~""~-,~,"",,..~,."!?-t'.~,~~~ ',,:'"~'~":.''' ' .. CITY OF FAIRLAVN SOMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (As Required by Various Statutes) (Continued) H. TOTAL COLUMNS ON FINANCIAL STATEMENTS Total columns on the financial statements are captioned "Memorandum Only" to indicate that they are presented only to facilitate financial analysis. This data is not comparable to a consolidation. Interfund-type eliminations have not been made in the aggreg¡;Ltion of this data. 2. POOLED CASH AND INVESTMENTS The City maintains a cash and investment pool used by all funds. 1~he amounts of this pooled investment are reflected on the Combined StaLtement of Cash, Investments, and Fund Cash Balances as Cash, Cash Equivale!nts and/or Other Investments. Legal Reauirements. Statutes require the classification of monies held by the City into three categories. Category A consists of "active" monies, those monies required to be, kept in a "cash" or "near cash" status for immediate use by the City. Such. monies must be maintained either as cash in the City treasury or negotiable order of withdrawal (NOV) accounts. Category B consists of "inactive" monies, those monies not required. for use within the current two year period of designation of depositories. Inactive monies may be deposited or invested only as certificates of deposit maturing not later than the end of the current period of designation of depositories. Category C consists of "interim" for immediate use but which will period of depositories. Interim following securities: monies, those monies which are not needed be needed before the end of the current monies may be invested or deposited in the 1. Bonds, notes, or other obligations of or guaranteed by the United States, or those for which the faith of the United States is pledged for the payment of principal and interest; 2. Bonds, notes, debentures, or other obligations or securities issued by any federal government agency, or the Export-Import Bank of Washington; 3. Repurchase agreements in the securities enumerated above; 4. Interim deposits in the eligible institutions applying for interim monies; -10- ..,'.\" ;"~i ,> .. ",'" .,>,' ,.~"'..\','.b:.'''"'S "'/' """"'''--~.'~.-,' . ~~,,,,,,,,,,,,,.-..,,, 2. CITY OF.FAIRLAIlN SUMMIT COUNTY NOTES . TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) POOLED CASH AND INVESTMENTS 5. Bonds and other obligations of the State of Ohio; and (Continued) 6. The State Treasurer's investment pool. Notwithstanding not required to of investments: the foregoing requirements, the City may invest any' monies be used for a period of six months in the following classes 1. Bonds or other obligations of which the faith of the United of principal and interest; the United States, or those for States is pledged for the payment 2. Discount notes of the federal national mortgage association; 3. Bonds issued by the home owners' loan corporation; 4. Bonds of the State of Ohio; and 5. Bonds of any municipal corporation, village, county, township, or other political subdivision of this state, as to which there is no default of principal, interest, or coupons. Deposits. At year-end, the carrying amount of the City's deposits was $2,053,773 and the bank balance was $92,820. Of the bank balance: 1. $92,820 was covered 'by federal depository insurance, by collateral held by the City or by collateral held by a qualified third party trustee in the name of the City; 2. $1,960,953 was covered by collateral held by third party trustees pursuant to Section 135.181, Revised Code, in collateral pools securing all public funds on deposit with specific depository institutions; Statutory provisions require that collateral pledged for deposits be held in trust by an institution other than the pledging bank. During the year the City routinely permitted collateral on deposits to be held in the City's name by the pledging bank's trust department. J ~..~... -11- -"-~~'~'--'<>""""~TIt-"><~~",,-;,,~J'j!,,,~~,'i;:~?<,~-' ,. ,~~~,...,~.-.~..,,..._,,,-,,.....,,._.-,.- ',"e." NOTES CITY OF FAIRLAIIN SUMMIT COUNTY TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 2. (Continued) POOLED CASH AND INVESTMENTS Investments. The City's investments are categorized below to give an indication of the level of risk assumed by the entity at year-end. 1. Securities held by the entity or its agent in the enti1:y' s name (Category 1) 2. Securities held by the counterparty's trust department or agent in the entity's name (Category 2) 3. Securities held by the counterparty, or by its trust de!partment or agent but not in the entity's name (Category 3). [Statutory provisions require that all securities acquired by the C:itybe held by the City treasurer or deposited with a qualified trustee unless the counterparty is a designated depository of the City for the current: period of designation of depositories in which case the securities may be held in trust by the depository. Securities acquired under a repurchase agreement must be deposited with such a trustee. The City frequently allowed securities to be retained by the broker or dealer other than an eligible depository institution rather than securing custody or requiring that they be deposited with a qualified trustee.] Category Carrying Value 1 2 3 Market VéLlue Federal Government Securities $2,793,942 $2,793,942 $<~, 793,942 Investment in State Treasurer's Investment Pool 2.036.609 ~~.036.609 Total Investments $4,830,551 $~f,830,551 ========= ::========= 3. DEBT OBLIGATIONS Debt outstanding at December 31, 1991 consisted of the following: General Obligation Notes Principal Outstanding Interest Rate $4,425,000 4.85-6.60% -12- ~--' ~- . -,"~'~''''~~'')l"'''i'!'q"~",,,,,,,;y'''''I'':'1<';q'':''''Mr "'.,.',.,..".,. " '''..-.''-- ,."".,. NOTES CITY OF FAIRLAIlN SUMMIT COUNTY TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 3. DEBT OBLIGATIONS (Continued) General Obligation Bonds Principal Outstanding Interest Rate $2,125,000 4.80-8.50% Special Assessment Bonds Principal Outstanding Interest Rate $ 24,000 7.50% All outstanding notes at December 31 had been issued for one year or less. These notes were of the General Obligation type and had been renewed. Proceeds from the notes were used for water and sewer improvements and sidewalk construction. Outstanding general obligation bonds consist of one issue. General obligation bonds are direct obligations of the City for which its full faith, credit and resources are pledged and are payable from taxes levied on all taxable property in the City. New debt was issued in 1991. Outstanding special assessment bonds consist of obligations which are payable from the proceeds individual property owners. general long term of tax assessments against The annual requirements to amortize all bonded debt outstanding as of December 31, 1991, including interest payments of $1,840,663 for General Obligation Bonds and $6,300 for Special Assessment Bonds are as follows: General Special Year Ending Obligation Assessment December 31 Bonds Bonds 1992 $ 197,500 $ 5,800 1993 199,860 5,500 1994 196,740 5,200 1995 198,500 4,900 1996 199,860 4,600 1997-2001 992,100 4,300 2002-2006 992,953 0 2007-2011 988.150 0 Total $3,965,663 $30,300 ========= ====== -13- ,~' 'c,' , ',.'~'" .,' < A~',~,,~ñ1';':<',;':~/{' ~'" ,--' ~",-'~-"".- CITY OF FAIRLAVN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 3. DEBT OBLIGATIONS (Continued) The annual requirements to amortize all note debt outstanding as of December 31, 1991, including interest payments of $192,914 are as follows: Year Ending December 31 General Obligation Notes 1992 $4,617,914 4. PROPERTY TAX Real property taxes are levied on assessed values which equal 35% of appraised value. The county auditor reappraises all real property every six years with a triennial update. The last update was completed for tax year 1990. Real property taxes become a lien on all non-exempt real property l'Dcated in the county on January 1. Real property taxes are payable annually or semiannually. If paid annually, payment is due December 31; if paid semiannually, the first payment is due December 31 with the remaind,er payable by June 20 of the following year. Under certain circumstanees, state statute permits later payment dates to be established. The full tax rate applied to real property for the fiscal year ended December 31, 1991 was $2.10 per $1000 of assessed valuation. After adjustment of the rate for inflationary increases in property values, the effective tax rate was $2.10 per $1000 of assessed valuation for real property classified as residential/agricultural and $2.10 per $1000 of assessed valuation for all other real property. Real property owners' tax bills are further reduced by homestead and rollback deductions, when applicable. The amount of these homestead and rollback reductions is reimbursed to the City by the State of Ohio. Owners of tangible personal property are required to file a list of such property, including costs, by April 30 of each year. The property is assessed for tax purposes at varying statutory percentages of cost. The tax rate applied to tangible personal property for the fiscal year ,ended December 31, 1991 was $2.10 per $1000 of assessed valuation. Real Property - 1990 Valuation Residential/Agricultural Commercial/Industrial Minerals $ 72,199,620 64,695,800 10,410 Tangible Personal Property - 1991 Valuation General Public Utilities Total Valuation 17,031,980 4.121. 930 $158,059,740 =========== -14- ~:?':.?,~.Y"'!~.~"'~,., '.',~~, "" ~~.r~~ ,-,j, ,...,,,;:~f,,~S~""fi\..,~'.t":~:""'~''''R ,.. ~ ,,"'~'I~)."""P'"'" "-'-'~""'-' CITY OF FAIRLAWN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 4. PROPERTY TAX (Continued) The Summit County Treasurer collects property tax on behalf of all taxing districts within the county. The Summit County Auditor periodically' remits to the taxing districts their portions of the taxes collected. 5. LOCAL INCOME TAX This locally levied tax of 2.0% applied to gross salaries, wages and other personal service compensation earned by residents both in and out of the City of Fairlawn and to earnings of nonresidents (except certain transients) earned in the government. It also applies to net incom,e to business organizations conducted within the City of Fairlawn. Tax receipts are credited to the City and amounted to $4,041,397 in 1991. 6. INSURANCE The City maintains comprehensive insurance coverage with private carriers for real property, building contents, and vehicles. Vehicle polici,es include liability coverage for bodily injury and property damage. :Real property and contents are 90% coinsured. 7. RETIREMENT COMMITMENTS The employees of the City were covered by the Public Employees Retirement System of Ohio. The State of Ohio accounts for the activities of the retirement system, and the amount of that fund is not reflected in the accompanying financial statements. As of December 31, 1991, the City employees contributed 8.5% of their gross wages. The City matches 'this with a contribution equal to 13.55% of employees' gross wages. The firemen and policemen of the City are covered by the Police and Firemen's Disability Pension Fund, also accounted for by the State of Ohio and also not reflected in the accompanying financial statements. Policemen ,and firemen contribute 10% of their gross wages to the plan and the City. matches this with a contribution equal to 24% of firemen's and 19.5% of policemen's gross wages. 8. NEGATIVE CASH BALANCE The City utilized a cash management program offered by a local banking institution to maximize their investment income. Under this agreem,ent, allowable funds on deposit are invested on a daily basis including ,amounts required to cover warrants issued but not presented for payment. This procedure may results in the net cash-in-bank figures reflecting a negative figure on the Combined Statement of Cash, Investments and Fund Cash Balance - All Fund Types when in actuality a deficit situation did not occur. -15- r,," ..,',< ,.:ov~.,~,.,:,;.4~JJ,,,.,,,.,, :'<>"'-.''".~'' .., . , ..,.,.....~~.~~-,..._,-.,..-..", CITY OF FAIRLAWN SUMMIT COUNTY NOTES TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 9. CONTRACTUAL COMMITMENTS As of December 31, 1991, the City of Fairlawn owed $13,613,149 in contractual commitments: $1,616,530, Perram Electric; $7,942,364, Cavanaugh; $1,783,700, Creative Microsystems; $2,270,555, Kenmore Construction. 10. DEFERRED COMPENSATION PLANS City of Fairlawn employees and elected officials participate in a d,eferred compensation plan created in accordance with Internal Revenue Code Section 457. Participation is on a voluntary payroll deduction basis. The plan permits deferral of compensation until future years. According to the plan, the deferred compensation is not available to employees until termination, retirement, death or unforeseeable emergency. The deflerred wages and any earned income are not subject to taxes until actually received by the employees. All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of thl2 City (without being restricted to the provision of benefits under the pl.!n), subject only to the claims of the City's general creditors. Participants' rights under the plan are equal to those of general creditors of th'2 City in amounts equal to the fair market value of the deferred account fQr each participant. The plan agreement states that the City and the plan administrators have no liability for losses under the plan with the exception of fraud or wrongful taking. The City offers the following plans: Compensation Plan Amounts on Deposit at December. 31, 1991 (Market ValueL- Aetna Deferred Compensation Plan $455,501 11. MAYOR'S COURT The City classified the Mayor's Court as an Agency Fund at the end ()f the year for reporting purposes only. The appropriations for the Mayor's Court remained in the General Fund. This caused the disbursements to excE~ed appropriations in the Trust and Agency Fund on the Combined Statement of Disbursements and Encumbrances Compared with the Expenditure Authority. -16- . '"..,.~;¡-,~)~;",,!... '~""~"'''''''''',.'~. ".", NOTES CITY OF FAI~AVN SUMMIT COUNTY TO FINANCIAL STATEMENTS DECEMBER 31. 1991 (Continued) 12. LEGAL COMPLIANCE Pursuant to Section 117.11 Revised Code, the Auditor of State perfol:med tests of compliance with various provisions of local, state, and/or federal laws, as appropriate. The Auditor's findings and citations are included in a separate part of this presentation. -17- ''''''''~, '- ""","W~U ,H"_',_.,,,, :' ",O','?-..,.o ..' ,."..:..:..~.:...., ,. .."~,~",.o;'"~~!!!.",;""."t1~.,.~~ÆW0}~J':II!~r:.~?.<.,,,,.:~"":"'"ii',>'1"","" ',,:. ..,'.<. 'c"",' ,..' ~~. "",""""V" ,,~.:. ,,;~. . /:7~ ;' '<''''77-:;.; ~',- \ - ",.._,,:.',.-:~:->;~~,-,., \ THOMAS E.FERGUSON AUDITOR OF STATE! ,-,' - <", ~ I P. O. Box 1140 . Columbus. Ohio 43266-0040 . (614) 466-4514 \ , " ;, ./:,;- / '----- Members of Council City of Fairlawn Fairlawn, Ohio 44333 Re: Compliance at Financial Statement Level We have audited the basic financial December 31, 1991, and for the year thereon dated September 17, 1992. statements of the City of Fairlawn as of then ended, and have issued our report~ We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements éLre free of material misstatement. Compliance with laws, regulations, contracts, and grants applicable to the City is the City management's responsibility. As part of obtaining reasonable assurance about whether the basic financial statements are free of material misstatement, we performed tests of the City's compliance with certain prc)visions of laws, regulations, contracts, and grants. However, our objective was not to provide an opinion on overall compliance with such provisions. The results of our tests indicate that, with respect to the items tested, the City complied, in all material respects, with the provisions referred to in the preceding paragraph. With respect to items not tested, nothing came to our attention that caused us to believe that the City had not complied, in all material respects, with those provisions. ~t~~ THOMAS E. ~ Auditor o/~~h:U!'i September 17, 1992 -18- Information Line toll free 1-800-282-0370 -""f:Z;0"~1r~~1-~,"Y."", --,i'i"::,'~,<'''''9-:¡<,!Ç~~'~e''-''':-.?'~r"-!',:,'.^-1<;iJ~;1:W";'C-',~:,:"s'~;\">I',-:"""'!:1:'J;-':-_',,l'--' ,,_..,.,....~ ,-:-,.-q., -."::".- ,,"'-' " m, ~.-c.,._",. /~ / ", \ , \ I " THOMAS E. FERGUSON AUDITOR OF STATE' -,.- . ' P.O. Box 1140 . Columbus. Ohio 43266.0040 . [6141466-4514 '. J .,~-----/ Members of Council City of Fairlawn Fairlawn, Ohio 44333 Re: Ohio Compliance Supplement Report We have applied procedures to test the City of Fairlawn's compliance with provisions of laws and regulations that the Auditor of State has determine!d significant as a matter of public policy, public stewardship, or public accountability, as identified in the Auditor of State's Ohio Compliance Supplement, revised December 5, 1989, for the period January 1, 1991 thro~Lgh December 31, 1991. to be Compliance with laws and regulations applicable to the City is the responsibility of the City's management. Our responsibility is to examine, on a test bas;is, evidence about the City's compliance with these requirements. However, our procedures were substantially less in scope than an audit whose objective is to express an opinion on the City's compliance with these requirements. Accordingly, we do not express such an opinion. The results of our procedures indicate that, for the items tested, the City complied with provisions of laws and regulations that the Auditor of State! has determined to be significant as a matter of public policy, public steward~¡hip, or public accountability, as identified in the Auditor of State's Ohio Compliance Sup?lement, revised December 5, 1989, except as described below. Nothing came to our attention that caused us to believe that for the items; not tested, the City was not in compliance with provisions of laws and regulations that the Auditor of State has determined to be significant as a matter of public policy, public stewardship, or public accountability, as identified in the! Auditor of State's Ohio Compliance Supplement, revised December 5, 1989, e!xcept as described below. We performed the audit procedures described in Auditor of State Audit Bulletin 90-002 designed to identify those transactions subject to applicable compe!titive bidding requirements. These transactions were subjected to a detailed audit of compliance with such requirements. All instances of such noncompliance with such applicable competitive requirements are noted below. -19- Information Line toll free 1-800-282-0370 '~~;":"\~;':'~1i',~~~"~*,;¡.~;q"\,:'i¡\)'\,,,.,..':'~:~t:;."'!f"';i>-~:- ,.,:""-"~' -';~" . ",;.' "' ,...' .7, '''-.''-'''~',,,,,--,,,,''''''.'''<~-..,'''''~.:-.__..-*..'~' City of Fairlawn Summit County Page -2- Other Noncompliance 1. Section 5705.41(D), Revised Code, requires that encumbrances be charged against proper appropriations. Section 5705.41(B), Revised Code, prohibits a subdivision from making an expenditure unless it has beEm properly appropriated. The Water and Sewer Extension Fund appropriéLtions were exceeded by the sum of their respective expenditures and encumbrances, contrary to these Revised Code provisions. 2. Section 5705.09, Revised Code, states that each subdivision shall establish a special fund for each class of revenue derived from a source other than the general property tax. In addition, the case of State ex reI National City Bank v. Board of Education, 52 Ohio St. 2d 81 (1977), states that all debt must be retired through a Debt Service Fund. City debt was not~ retired through a Debt Service Fund. 3. Section 5719.042, Revised Code, requires that after the award by a taxing district of any contract let by competitive bid and prior to the time the contract is entered into, the person making the bid shall submit to the District's fiscal officer a statement affirmed under oath that the person with whom the contract is to be made was not charged at the time thE! bid was submitted with any delinquent personal property tax on the genez:al tax list of personal property of any county in which the taxing district has territory or that such person was charged with delinquent personal property taxes on any such list, in which case the statement shall also set forth the amount of such due and unpaid delinquent taxes and any due and unpaid penalties and interest thereon. If the taxe s , to the statement indicates that the taxpayer was charged with any such a copy of the statement shall be transmitted by the fiscal officer County Treasurer within thirty days of the date it is submitted. A copy of the statement shall no payment shall be made with applies unless such statement also be incorporated into the contract, and respect to any contract to which this section has been incorporated as part thereof There were no statements on file to show that the contractor was not charged with any delinquent taxes. ~t~~ THOMAS E. ~ Auditor of State September 17, 1992 -20- '""""""'"'~'N.'""1~~~;~'"!"f:!\e'1:'~"",,~::;i¡':',,;x:~w~,:,,-~"~,~-,,,,,,,,,~,.,,,.,,..,,-,_. CITY OF FAIRLAWN SUMMIT COUNTY STATUS OF PRIOR AUDIT'S CITATIONS AND RECOMMENDATIONS The prior audit report, as of December 31, 1989, included various citations and recommendations. Each of these has either been satisfied/corrected or is reflected again in the appropriate section of this report. Such citations/recommendations are indicated with an asterisk (*). -21- V""'_;-:,~,rG{1,:;)~;1ft.~::f¡;~':~i{"~,,,,-_"''Y';~r~'''''''t>;'':!<~~!'~~'rt?9'i'~>'~7~/)'f.~,~-'o:"'>:';':'~/'{;}~{::t~"(:-"-~'~'".'~"'~~:'-'''''''',''''~'''''-- ,C",,",' '.' ~'-'- ,. ¥ ~"' ,// ,,;,~;.:,....'~..:::t,','::';\.~:~>.,~~' '> '. THOMASE.FERGUSON t\UDITOR OF STATE} P. O. Box 1140 . Coiu;';bu5. ohio 43266-0040 . 16141 466-4514 \ ,'/ '~'--~/ Members of Council City of Fairlawn Fairlawn. Ohio 44333 Re: Internal Control Structure Ve have audited the basic financial December 31, 1991, and for the year thereon dated September 17, 1992. statements of the City of Fairlawn as of then ended, and have issued our report: Ve conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements é~re free of material misstatement. In planning and performing our audit of the basic financial statements of the City for the year ended December 31, 1991, we considered its internal control structure in order to determine our auditing procedures for the purpose of expressing our opinion on the basic financial statements and not to provide assurance on the internal control structure. The City's management is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgnlents by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit. the preparation of financial statements in accordance with such accounting principles as are prescribed or permitted by the Auditor of State. Because of inherent limitations in any internal control structure, errors or irregularities may nevertheless occur and not be detected. Also, projection of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. -22- Information Line toll free 1-800-282-0370 ',--~~~~""",~--,,,,,,,,,,,_.,,,,,,,,,,,,,.",,,,",,,-o/., . . City of Fairlawn Summit County Page -2- For the purpose of this report, we have classified the significant intern¡Ü control structure policies and procedures in the following categories: Revenue Cycle Payments Cycle Time Cycle Budget Cycle Cash Investments Receipts Disbursements Debt Budgetary For all of the internal control structure categories listed above, we obtained an understanding of the design of relevant policies and procedures and whethE~r they have been placed in operation, and we assessed control risk. We noted certain matters involving the internal control structure and its operation that we consider to be reportable conditions under standards established by the American Institute of Certified Public Accountants. Reportable conditions involve matters coming to our attention relating to significant deficiencies in the design or operation of the internal contrc)l structure that, in our judgment. could adversely affect the City's abilit;, to record, process, summarize, and report financial data consistent with the assertions of management in the basic financial statements. Accounting Records - Ledgers Proceeds from the sale of bonds and notes in the Water Extension Fund were not properly reflected as receipts on the city's ledger, also the Water Extension Fund disbursements were understated by this same amount. These transactions appeared on other reports of the City. The ledger is considered the book of final entry and should contain all receipts .md expenditures of the city and be a source for compiling the annual rt~port. Greater care should be given to the verification of receipts and expenditures in the various funds. It is of the utmost importance that the ledgers fairly and accurately present the City's financial status. Expenditures In our testing we found nine out of sixty expenditures that were no:t supported by their original documents (purchase orders, invoices, etc.). Supporting documents should be attached to the voucher to help veri:Ey the validity of the expenditure. In the absence of such supporting documents it could not be determined what item was purchased or service rendered or if expenditures were made within Revised Code guidelines. Proper supporting documentation should always be attached to the voucher to provide evidence that the expenditure was valid. -23- . '~-""""~---"""'''''''"''"''''''''''''''''rl'''-'-''''''''''''- ctity of Fairlawn Summit County Page -3- * EDP Backup Storage and Rotation Backup copies of data, program, and system files are stored in the sume room as the computer systems. There is no rotation of these backup files to an off-site storage location. The storage of backup files in the same room as the computer increases the risk that a disaster or other advE!rse conditions such as fire or flooding could destroy all copies of data" program, and system files. In addition to the loss of all data, the loss of program files could prove to be very costly as the programs being processed have been customized by the software vendor according to the specifications of made by the City, therefore, these programs would need to be rewritten. Ve recommend that a regular off-site rotation schedule be established for all data, program, and system files. A material weakness is a reportable condition in which the design or operation of one or more of the specific internal control structure elements does not reduce to a relatively low level the risk that errors or irregularities in amounts that could be material to the basic financial statements being audited may occu]~ and not be detected within a timely period by employees (or officers) in the n()rmal course of performing their assigned or statutory functions. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions, and, accordingly, would not necessarily disclose all reportablE! conditions that are also considered to be material weaknesses. However, WE! believe none of the reportable conditions described above is a material weakness. ~r.r Auditor of State September 17, 1992 -24- ^'--."..,.",. '" , - ~.. ."'."" . "...,..~~~,..."..~--"""'~"'~"""-" , " . CITY OF FAIRLAVN SUMMIT COUNTY GENERAL COMMENTS The accompanying financial statements reflect activity and balances through December 31, 1991. City personnel were cooperative and available for questions and assistanCE! during regular working hours. -25- "~'''':~~''C;''''''Æ''~'''''Z'''''Y.~i>/~~"'1.l;.,...,,,v:>.>¡H'''''''/'«¡;'';" " "'''~T,",,''o>:', " ""-'>'''''', ,. ", .""""''''''""''''''"'''";';''''.~'.~,.",""",-- . " CITY OF FAIRLAWN SUMMIT COUNTY CONCLUSION STATEMENT The audit report, including citations and recommendations, was reviewed with and acknowledged by the following officials on September 17, 1992: Lawrence W. Pelland - Director of Finance Patricia Bertch - Tax Administrator These officials were informed that they had five working days from the date of the post audit conference to respond to, or contest, in writing, the contE!nts of this report. No such response was received. -26- ~ , ~ ASSISTANT AUDITOR CERTIFICATION ~ !;::et we, the undersigned hereby certify that i;::Qr we, have audited the c ,'ry 0/= FArrz.l-AuJ/v J ~u WI rn i,.. County, in accordance with generally accepted government auditing standards. DEPARTMENT OF AUDIT Auditor of State of Ohio 'úUz/Y1Lf'-'7 L¡/J/ jA!! Á: d ¿) Assistant Auditor of State ~ 6~r õ11. ()~ l..ssista Audior of State Assistant Auditor of State Date . /' /' tJ /? /J-'¡--¿ Signed: - , .. ¡ cC ,~ '--'. f(. ä I - 70/Zt.d 1. . Typist (till? 1 ." ./ CLERK'S CERTIFICATION A true and correct copy of this report is filed in the Office of the Auditor of State in Columbus, Ohio, By: Date: DEC 241992 )-4753 {Revised 2168) -27- ~"""'.'":~~~~~~~'''~;'£"::l\t~~~.r~){~~<:'7\'"~''''~''' '.'0 ~',<;;'i:'¡""~'.:~' J" " '~'"'~"""""'.-~",",":':-',<"~"""'. '""",.-' -