Internal controls are techniques used by management to achieve
its objectives and to meet its responsibilities. It is the objective
of the Board of Selectmen to safeguard Town funds and have administrative
procedures in place that will enable them to meet this objective and
thereby fulfill their responsibility.
In most Maine municipalities, motor vehicle excise tax poses
the greatest risk for fraud. The high risk comes from the potential
loss, to the Town of Madison, of over $600,000 in excise taxes per
year. The potential loss is due in part to the fact that many people
pay their excise tax in cash. The second risk comes from not issuing
a receipt for the transaction. Many towns have used the registration
form as the receipt. The state registration forms are sequentially
numbered, and all forms are accounted for. In Madison, however, the
policy is that any time money is received a receipt is issued. Having
a printed receipt is a method of insuring that money goes in the right
place.
In order to have general oversight over revenues collected,
the Town of Madison will:
A. Issue a receipt for all money received.
B. Separate the duties of the bookkeeper from collecting money.
C. Reconcile cash receipts daily.
D. Deposit funds in a timely manner (daily).
E. Reconcile to general ledger daily.
F. Reconcile bank statements monthly.
G. Maintain cash drawers individually.
H. Randomly audit cash drawers on a monthly basis.
I. Make an effort to ensure that there is always more than one person
on duty.
J. Overpayments shall not be accepted when the intention is to provide
a cash refund back to the customer.
K. Upon any suspicion of fraud, appropriate personnel will be notified.
L. Checks returned for nonsufficient funds are taken to the bank that
issued the check and a bank check is received. If the transaction
is on real-estate, payment is reversed until full payment is received,
if it is motor vehicle, registration is suspended.
M. Management reviews all bank statements and reconciliation of bank
accounts.
Financial accountability is a top priority for the Town of Madison.
This policy formalizes the expectations of personal honesty and integrity
required of Town officials and employees. The Town of Madison is committed
to protecting its revenue, property, information and other assets
from any attempt, either by members of the public, contractors, subcontractors,
agents, intermediaries or its own employees, to gain by deceit, financial
or other benefits. This policy prohibits fraud or misuse of the Town
of Madison's assets and sets forth specific guidelines and responsibilities
regarding appropriate actions that must be followed for the investigation
of fraud and other similar irregularities.
As used in this chapter, the terms listed below shall have the
following definitions:
ASSETS
Refers to the entire property of the Town, association, corporation,
or estate applicable or subject to the payment of debts. "Assets"
include, but are not limited to, all Town vehicles and building properties,
computers and software and cash receivables.
EMBEZZLEMENT
Any loss resulting from the misappropriation of Town of Madison
assets.
EMPLOYEE(S)
Refers to all Town of Madison employees, independent contractors,
consultants, and temporary workers.
EQUIPMENT
A fixed asset that is not consumable or expandable; it is
movable, even though sometimes attached to other objects or buildings;
and its removal does not create a readily observable physical impairment
or deterioration. Examples include, but are not limited to: office
equipment including computers, desk cabinets, printers and scanners,
any electronic data processing equipment, training/educational equipment,
medical supplies, and furnishings, audio-visual, cameras and recording
devices. Equipment also includes, but is not limited to, all construction
and maintenance equipment, air conditioners, firefighting equipment,
and tools, rescue equipment and tools.
FRAUD
The intentional misrepresentation or omission of facts for
personal gain.
LOSS
The Town of Madison losing possession or control of any type
of asset through fraudulent activities.
MISAPPROPRIATE
To take or make use of any item without authority or right.
The Town of Madison has adopted a zero tolerance policy regarding
fraud. No employee of the Town, Town of Madison resident, or Town
of Madison property owner who resides outside the Town limits shall
remove any Town of Madison asset from the property, misuse any Town
asset for one's personal gain, or willfully misappropriate any
Town of Madison asset. Any evidence supporting fraud, theft or embezzlement
of Town of Madison assets and equipment may be subject to the following
actions, including but not limited to, suspension, termination, restitution,
and criminal charges. Any utility fraud by the public will be subject
to restitution and possible criminal charges.
Fraud and misuse of Town of Madison assets are prohibited. Examples
of fraud and misuse of Town assets include but are not limited to:
B. Misappropriation, misapplication, destruction, removal, or concealment
of Town of Madison property.
C. Alteration or falsification of documents.
D. Theft of any asset (money, tangible property, etc.).
E. Authorizing or receiving compensation for goods not received or services
not performed.
F. Authorizing or receiving compensation for hours not worked.
G. Misrepresentation of fact.
Each department will maintain an internal control environment
to protect the department and the Town from loss or other damages
as a result of a fraudulent act.
False allegations of suspected fraud with the intent to disrupt
or cause harm to another may be subject to disciplinary action up
to and including termination of employment.
Appropriate and timely action will be taken against those proven
to have committed a fraudulent act. These remedial actions may include,
but are not limited to:
A. Disciplinary action (up to and including immediate termination of
employment).
B. Restitution for all losses, including investigation and legal expenses,
to the fullest extent of the law.
C. Forwarding information to the appropriate authorities for criminal
prosecution.
D. Institution of civil action to recover losses.
E. Where the Town of Madison elects to take corrective or disciplinary
action, it will proceed under the procedures in place under policy
or under any collective bargaining agreement for the respective employment
classification.
F. The Town of Madison may take corrective or disciplinary action without
awaiting the resolution of criminal or civil proceedings arising from
the fraudulent conduct.
All investigations will be conducted in confidence insofar as
reasonably possible. The name or names of those communicating information
about a fraudulent act and the name or names of those suspected of
a fraudulent act will only be revealed when required by law in conjunction
with the investigation or legal action.