Comments & Recommendations-2016 I
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I SALINA BICENTENNIAL CENTER
I COMMENTS AND RECOMMENDATIONS
I December 31, 2016
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SALINA BICENTENNIAL CENTER
December 31, 2016
CONTENTS
Page
Introduction 1 - 2
Comments and Recommendations:
Disposition of Prior Year Comments and Recommendations 3
Material Weaknesses 4
Significant Deficiency 5
IControl Deficiencies 6
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1\e Keller & Owens, LLC
Certified Public Accountants
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To Management
Salina Bicentennial Center
In planning and performing our audit of the financial statements of Salina Bicentennial Center
(the "Center") as of December 31, 2016 and for the year then ended, in accordance with auditing
standards generally accepted in the United States of America, we considered the Center's internal
control over financial reporting (internal control) as a basis for designing audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinion on the financial
statements, but not for the purpose of providing an opinion on the effectiveness of the Center's
internal control. Accordingly, we do not express such an opinion on the effectiveness of the
Center's internal control.
Our consideration of internal control was for the limited purpose described in the preceding
paragraph and was not designed to identify all deficiencies in internal control that might be
material weaknesses or significant deficiencies, and therefore, material weaknesses or significant
deficiencies may exist that were not identified. However, as discussed below, we identified
certain deficiencies in internal control that we considered to be material weaknesses and another
deficiency that we consider to be a significant deficiency.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect misstatements on a timely basis. A material weakness is a deficiency or a
combination of deficiencies in internal control, such that there is a reasonable possibility that a
material misstatement of the financial statements will not be prevented, or detected and corrected
on a timely basis. We consider the following deficiencies, described further on page 4, in the
Center's internal control to be material weaknesses:
• Material audit adjustments
• Other personnel sending invoices
A significant deficiency is a deficiency or combination of deficiencies in internal control that is
less severe than a material weakness, yet important enough to merit attention by those charged
with governance. We consider the following deficiency in the Center's internal control, described
on page 5, to be a significant deficiency:
• Schedules not tying to the general ledger
The Center's written response to the material weaknesses and significant deficiency identified in
our audit has not been subjected to the audit procedures applied in the audit of the financial
statements, and accordingly, we express no opinion on it.
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10955 Lowell Avenue,Suite S00 • Overland Park,Kansas 66210
(913)338-3500 • FAX(913)338-0416 • e-mail ko@kellerowens.com • www.kellerowens.com
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To Management
Salina Bicentennial Center
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Our audit was not intended to report on general operating practices and procedures. However,
during our audit, we noted certain matters involving operational areas that are presented for your
consideration.
Our comments and recommendations are intended to improve the internal control structure,
strengthen operating practices, safeguard assets, or result in other operating efficiencies.
Additional matters of interest may exist and would have been reported to you had they come to
our attention. This letter does not affect our report dated April 25, 2017 on the financial
statements of the Center.
We will review the status of these comments during our next audit engagement. We will be
pleased to discuss these comments in further detail at your convenience, to perform any additional
study of these matters, or to assist you in implementing the recommendations.
This letter, by its nature, contains only our suggestions for improvement. It does not comment on
1 the many positive features of the Center's operations. We wish to express our appreciation for the
cooperation and helpful attitude of your staff during our engagement.
This communication is intended solely for the information and use of management, the City of
Salina, Kansas and other authorized parties of the Center and is not intended to be, and should not
be, used by anyone other than these specified parties.
azetk ELe.1
Overland Park, Kansas
April 25, 2017
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COMMENTS AND RECOMMENDATIONS
Disposition of Prior Year Comments and Recommendations
In connection with the examination of the financial statements of Salina Bicentennial Center for
the year ended December 31, 2015, we issued a letter of Comments and Recommendations. Some
matters discussed in that letter remain relevant to the Center, but may be only alluded to here. The
complete text of the following recommendations can be found in the 2015 letter and we direct
management's attention to them:
0 Recommendation Disposition
1. Perform a fraud risk assessment Implemented.
during the year and document it.
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COMMENTS AND RECOMMENDATIONS
Material Weaknesses
Material Audit Adjustments
Criteria: Based on professional standards, identification by an auditor of a material misstatement
in the financial statements under audit that was not initially identified by an organization's internal
controls is at least a significant deficiency and a potential indicator of a material weakness.
1 Condition: During the audit, we identified numerous material adjustments. The material
adjustments were due to correcting the recording of the event settlement agreements, which
involved multiple accounts on the balance sheet and income statement.
Effects/Potential Effects: The financial statements were materially misstated before the audit
began. Multiple material adjustments were proposed and recorded during the course of the audit.
Recommendation: We recommend that the Center develop policies and procedures to record the
necessary adjustments prior to submission for audit. We will always be available to provide
technical assistance throughout the year and would welcome questions regarding the proper
treatment of complex accounting issues.
Response: Recognized and implemented.
Other Personnel Sending Invoices
Criteria: All accounting transactions should be processed by the accounting department and
recorded when the activity occurs.
Condition: During the audit, we were informed that there were other personnel outside of
accounting who were sending out invoices. These invoices were not recorded by the accounting
department when they were sent.
Effects/Potential Effects: There are multiple things that could adversely affect the financial
reporting of the Center when personnel outside of the accounting department send invoices
without it being recorded in the accounting records. First, it is likely that the financial statements
could be materially misstated as a result. Second, a customer could potentially be billed twice for
the same service. Third, there is a fraud risk of other personnel overbilling, or creating fictitious
invoices for personal gain.
Recommendation: We recommend that the Center only send out invoices through the accounting
department in order to reduce the risk of fraud and double billing for the same service.
Response: Recognized prior to the audit and implemented.
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CON MEENTS AND RECOMMENDATIONS
Significant Deficiency
Schedules Not Tying to the General Ledger
Criteria: Prior to the start of the audit, all accounting records should be reconciled to supporting
documentation.
Condition: During the audit, we noted that multiple schedules we obtained did not tie to the
1 general ledger.
1 Effects: Accounting records that have not been reconciled properly to the ledger activity make it
likely that a material misstatement will exist on the financial statements.
Recommendation: We recommend that accounting personnel reconcile all balance sheet ending
balances to supporting documentation prior to the start of the audit.
Response: Recognized and implemented.
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1 COMMENTS AND RECOMMENDATIONS
Control Deficiencies
1 Manual Checks not in Numerical Order
During fieldwork, we noted that the manual checks were not in numerical order based on the dates
they were written. The manual check numbers are created based on the date they were given or
1 the invoice number. We recommend having the manual checks in numerical order, so it will be
easier to track the manual checks that have been written.
1 Recounting of the Safe
During fieldwork, we noted that the cash in the safe had been increased, but it had not been
recounted in order to verify the new total that was on the trial balance. We recommend counting
the safe when the amount in it increases or decreases.
Incorrect Excel Formulas
During fieldwork, we noted that the inventory schedule we received was not totaled correctly.
Even though it did not create a material adjustment, we suggest double checking the formulas in
1 excel to verify the spreadsheet is correct.
Manual Check Stewardship
1 Manual checks are not locked in the safe at night. They are locked in the director of accounting's
office, but there are multiple people with a key to this office. We suggest that all manual checks
1 be locked in the safe when they are not being used.
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