Minnesota Legal Compliance Audit Guide for Local Government - Section 5
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LEGAL COMPLIANCE MANUALCLAIMS AND DISBURSEMENTSIntroductionMunicipal transactions involving an account, claim, or demand made for any propertyor service w hich can be it emized in the ordinary course of business and disbursementsof municipal funds are covered in this section.“Municipality” for the purposes of this section means a county; local social servicesagency; county board of education for unorganized territory; school district; charterschool; town or home rule charter city of the second, third, or fourth class; or parkdistrict. This section also applies to statutory cities.In addition, Minn. Stat. § 471.425 (Prompt Payment of Local Government Bills), appliesto any home rule charter or statutory city, county, town, school district, politicalsubdivision, or agency of local government . It also applies to the Metropolitan Counciland any board or agency created under Minn. Stat. ch. 473.11/03 5-1Minn. Stat. Yes No W ork paperSection CLAIMS AND DISBURSEMENTS ReferencePart I. General Provisions - For Municipalities§ 471.38, A. Has every person or the person’s agent claiming payment putsubd. 1 such claim in writing (which includes an electronic transactionrecord) by items? B. Has each declaration for payment (described below ) been signedto the effect that such account, claim, or demand is just andcorrect and that no part of it has been paid? § 471.38, NOTE: The provisions of ...
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Introduct ion
LEGAL COMPLIANCE MANUAL
CLAIMS AND DISBURSEMENTS
Municipal t ransactions involving an account , claim, or demand made f or any propert y or service w hich can be it emized in t he ordinary course of business and disbursements of municipal f unds are covered in t his sect ion.
“ Municipalit y” f or t he purposes of t his sect ion means a count y; local social services agency; count y board of educat ion for unorganized t erritory; school dist rict ; chart er school; t ow n or home rule chart er cit y of t he second, t hird, or f ourth class; or park dist rict . This sect ion also applies t o st atut ory cit ies.
In addit ion, M inn. St at. §471.4 25 (Prompt Payment of Local Government Bills), applies t o any home rule chart er or st at ut ory cit y, count y, t ow n, school dist rict , polit ical subdivision, or agency of local government . It also applies t o t he Met ropolitan Council and any board or agency creat ed under Minn. St at. ch. 473.
11/03
51
M inn . St at . S ec t i o n
§ 4 7 1 .3 8 , s ub d . 1
§ 4 7 1 .3 8 , s ub d . 2
§ 4 7 1 . 3 9 1 , s ub d . 1
§ 4 7 1 . 3 9 1 , s ub d . 2
§ 4 7 1 . 3 9 2
§ 4 7 1 . 4 2 5 , s ub d . 2
1 1 / 0 3
A .
B.
C.
D .
C LA I M S A N D D I SBU RS EM EN T S
Part I. General Provisions For M unicipalities
H a s e v er y p er so n o r t h e p er so n ’ s ag e n t c l ai m i n g pa y m e n t p u t s u c h c la im i n w r it i n g ( w h i c h in c l u d es an e le c t r o n ic t r an s ac t i o n rec ord ) by it em s?
Has eac h d eclarat ion f or p ay m ent (desc ribed belo w ) been sign ed t o t h e ef f e c t t h a t s u c h ac c o u n t , c l ai m , o r d em a n d i s j u st a n d c o r r ec t a n d t h a t n o p a r t o f i t h a s b ee n p ai d ?
N O T E: T h e pr o v i si o n s o f t h i s s ec t i o n d o n o t a p p ly t o a n y c la im o r dem and f or an ann ual salary or f ees of juro rs or w it nesses, f ix ed by law , no r t o t he salary o r w ages of any emp loy ee w hose salary or w ages h av e been f ix ed o n an ho urly , d aily , w eekly , o r m on t hly basis, by t he g ov ernin g b oard of t he m un icip alit y , an d w hic h is no w aut ho rized b y law t o b e paid on a pay roll b asis.
D e c la ra t i o n Fo r m T he d ec l ar at i o n i s s u f f i c i en t i f i n t h e f o l l o w i n g f o r m : “ I d e c la re u n d er t h e p en a lt i e s o f l a w t h a t t h i s a c c o u n t , claim or d em and is just and co rrec t and t hat no part of it has b e en p a id .
(Signat ure o f Claim ant )”
T he c h ec k or o rd erc h ec k by w h ic h t h e c laim is p aid m ay h av e p r in t e d o n it s r ev e r se si d e, a b o v e t h e s p ac e f o r en d o r se m e n t t hereo f , t he f ollo w ing st at em ent : “ Th e un dersig ned pay ee, in end orsin g t his c hec k (o r ord erch eck ) dec lares t hat t he sam e is r ec e iv e d in p a y m e n t o f a ju s t a n d c o rr ec t c l ai m a g ai n st t h e co unt y (c oun t y b oard of educ at ion f or un organized t erritory , scho ol dist rict , t ow n or c it y), and t hat no p art o f it h as heretof ore b e en p a id . ” W h e n en d o r se d b y t h e p ay e e n a m e d i n t h e c h ec k o r ord erch eck , su ch st at em ent shall o perat e and shall b e deem ed suf f icien t as t he req uired dec larat ion of t he c laim .
A n y p e rs o n w h o w i ll f u l ly a n d f a ls el y m a k e s t h e d e c la ra t i o n p ro v id ed f o r is g uilt y o f a f e lo ny .
Prom pt Pay m ent of Loc al Gov ernm ent Bills
St and ard p ay m ent perio d is:
3 5 day s f rom receip t f or g ov ernin g b oard s t hat m eet at l ea st o n c e a m o n t h ;
4 5 day s f rom receip t of go od s or serv ices o r inv oic e, w h i c h ev e r is la t e r, f o r g o v e r n in g b o ar d s t h a t d o n o t m e e t a t l ea st o n c e p e r m o n t h ; a n d
4 5 day s f rom receip t f or jo int po w ers ent it ies.
5 2
Yes
N o
W ork pap er Ref e ren c e
W e re al l b i ll s p a id w i t h i n t h e t i m e p er io d s et b y t h e t e r m s o f t h e c o n t r a c t o r w i t h i n t h e st a n d a rd p a y m e n t p e ri o d ?
5 3
W ork pap er Ref e ren c e
§ 4 7 1 . 4 2 5 , s ub d . 4
§ 4 7 1 . 4 2 5 , su bd . 4 a
H a v e a ll d is b u rs em e n t s b e en m a d e o n o r d er s d r aw n b y t h e m a y o r and c lerk upo n t he t reasurer?
Hav e all claim s been aud it ed an d allo w ed b y t he c it y co un cil, e x c e p t w h e n is su e d f o r p ay m e n t o f j u d g m e n t s , s al ar ie s a n d w a g es p re v io u s ly f i x ed b y t h e c o u n c il o r b y s t a t u t e , p ri n c ip a l a n d i nt e res t o n o b li gat i o n s, ren t a nd o t h er f ix e d c h ar ges , t h e ex a c t am o u n t o f w h ic h h as b een p rev i ou sl y det e rm i n ed b y c o nt r ac t aut ho rized b y t he c ou nc il or as p rov ided in E and F below , o r if t h e c i t y h a s d el eg a t e d au t h o r i t y t o a p p ro v e c l ai m s u n d er M i n n . S t at . § 4 1 2 . 2 7 1 , su b d . 8 ?
c .
b .
Pay roll
a.
1 .
D i d e ac h c o n t r ac t b e t w e en t h e g o v e rn m e n t e n t i t y a n d a prim e co nt rac t or req uire t he p rim e co nt rac t or t o p ay s u b c o n t r ac t o r s w i t h i n t e n d ay s o f r e c ei p t o f p a y m e n t f r o m t h e g o v e rn m e n t e n t i t y o r p ay i n t e r es t a t t h e r at e o f 1 ½ p e rc e n t p e r m o n t h o r an y p a rt o f a m o n t h ?
2 .
Have t he claim s f or pay roll been signed in pro per f orm o r d ec l ar at i o n u n d er M i n n. St a t . § 4 1 2 . 2 7 1 , su b d . 2 ?
N OT E: Th e in t erest p en alt i es in t h ese q uest i on s d o n ot a pp ly t o go od f ait h d ispu t es.
§ 4 1 2 . 2 7 1 , s ub d . 2
B.
3 .
Part II. Claims and Disbursements Statutory Cities
C.
A .
§ 4 1 2 . 2 7 1 , s ub d . 1
1 1 / 0 3
C la im s a n d Pa y m e n t
Yes
Part I. General Provisions For M unicipalities (Continued)
§ 4 7 1 . 4 2 5 , s ub d . 4
Th e go v ernm ent ent it y m ust pay int erest on bills n ot paid in a t i m e ly m a n n er . T h e i n t e re st r a t e is 1 ½ p e rc e n t p e r m o n t h or p art of a m on t h. Th e m inim um m on t hly int erest on a bill o f $ 1 0 0 or m ore is $ 1 0 .
M inn . St at . S ec t i o n
1 .
§ 4 7 1 . 4 2 5 , s ub d . 2
C LA I M S A N D D I SBU RS EM EN T S
Fo r b il ls p ai d af t e r t h e t i m e p e ri o d se t b y t h e c o n t r ac t o r t h e st and ard p ay m ent perio d, did t he g ov ernm ent ent it y calc ulat e and pay int erest as requ est ed b y law ?
H a s t h e c l er k m a in t a i n ed a pa y r o ll re c o rd g i v in g t h e n a m e o f e ac h e m p l o y ee an d t h e n u m b e r o f h o u r s o r d a y s w o r k ed b y e ac h ?
H a s t h e t i m e k e ep e r, s u p er v i so r , o r o t h e r o f f i c e r s o r e m p l o y ee s h a v in g k n o w l ed g e o f t h e f a c t s , s ig n e d a declarat ion ind icat ing t he f act s recit ed on t he pay roll are c o r r ec t t o t h e b es t o f t h e d ec l ar an t ’ s in f o r m a t i o n an d b eli ef ?
N o
H a v e a ll c la im s b e en a p p ro v e d in f u l l an d / o r h as t h e cu st od ian rep laced t he d if f erenc e f or w hic h h e or sh e is perso nally respo nsib le?
1 1 / 0 3
Part III.
F.
§ 4 1 2 . 2 7 1 , s ub d . 5
§ 4 1 2 . 2 7 1 , s ub d . 3
D .
E.
§ 4 1 2 . 2 7 1 , s ub d . 4
M inn . St at . S ec t i o n
Ot her c laim s f or p ay m ent f or g oo ds o r serv ices.
§ 4 1 2 . 2 7 1 , s ub d . 6
A .
H a s e ac h o r d er b ee n d ra w n s o t h a t w h e n si g n ed b y t h e t r eas ur er it b e c am e a c h ec k ?
H a s e ac h o r d er p re se n t e d t o t h e t r e as u re r a n d n o t p a i d f o r w ant of f un ds b een so m ark ed an d p aid in ord er of it s p r es en t a t i o n w i t h i n t e re st f r o m t h e d a t e o f p r es en t a t i o n ?
Hav e all claim s based on co nt rac t paid prio r t o a c ou nc il m e e t i n g b ee n si g n ed b y a m a jo r it y o f t h e c o u n c il an d f o r m a l ly a p p ro v e d at t h e n ex t c o u n c i l m e e t i n g ?
W as t he c laim prep ared in w rit t en it em s (w here p ossib le in t he o rdin ary co urse o f bu siness)?
End orsem ent of Claim s
H a s t h e c l er k en d o r se d ea c h c la im w i t h e it h e r “ d i sa ll o w e d ” o r “ a ll o w e d in t h e s u m o f $ ,” if app rov ed in w ho le o r in part a nd sp ec if y i ng t h e it e m s rejec t ed , if a ny ?
H a s m o n e y f o r t h e im p r e st f u n d b ee n t r an s f e rr ed f r o m t h e g e n er al f u n d ?
1 .
3 .
2 .
1 .
2 .
1 .
3 .
4 .
5 .
2 .
5 4
Independent Board Pow ersS t at ut ory Cit ies (U t ility & Park Boards)
C LA I M S A N D D I SBU RS EM EN T S
Has t he c ou nc il issued ord ers co v ering im prest f un d c laim s?
H a s a n y in d e p en d e n t b o a rd , w h i c h is au t h o r i ze d t o d i sb u r se f u n d s w i t h o u t t h e ap p r o v al o f t h e c o u n c i l, m e t t h e re q u ir em e n t s o f M in n . St at . § 4 1 2 . 2 7 1 , su b d s. 4 an d 5 (f o u n d as Part II. E. a n d F. abo v e)?
Im m ediat e Pay m ent of Claim s
Part II. Claims and Disburseme nts St at utory Cities (Continued)
W ork pap er Ref e ren c e
N o
H a s a d ec l ar at i o n f o r p a y m e n t b e en s ig n e d t h a t t h e c l ai m i s j u st a n d c o r re c t a n d n o p ar t o f i t h a s b e en p a id , o r w as t he d eclarat ion m ade b y end orsem ent as p ro v id ed in M i n n . St a t . § 4 1 2 . 2 7 1 , su b d . 3 ?
H a s a c u st o d i a n b ee n ap p o i n t e d f o r ea c h im p r e st f u n d ?
Im p r e st F u n d s
Yes
a.
b .
Hav e all claim s been it em ized and presen t ed t o t he c ou nc il at t he n ex t co un cil m eet ing af t er pay m ent has b een m ade?
C LA I M S A N D D I SBU RS EM EN T S
1 .
1 1 / 0 3
D o e s t h e c o u n t y b o a rd h a v e i n t e rn a l a c c o u n t i n g an d adm inist rat iv e co nt rol p roc edu res t o en sure p rop er disb ursem ent of pu blic f un ds?
In t he c ase of a cit y , is t he c it y on e w hic h p repares ann ual au dit ed f inan cial st at em ent s w hic h h av e been at t est ed t o b y an in dep end ent cert if ied p ub lic ac c o u n t an t , p u b lic ac c o u n t an t , o r t h e st at e au d it o r? o r
In t he c ase of a co un t y , is t he c ou nt y no t a ho m e rule ch art er co un t y f or w hic h t he c ou nt y ch art er pro v ides an alt ernat iv e m et ho d o f pay ing claim s?
§§ 412.271, subd. 8, & 375.18, subd. 1b
Part V . ClientDirected Support Program For Counties
b .
M inn . St at . S ec t i o n
D id t h e c o un t y b oard or c it y c o u nc il d eleg at e it s au t h orit y t o p a y c e rt a i n c la im s m a d e a g ai n st t h e c o u n t y o r c i t y b y ado pt ing a resolu t ion aut ho rizing a spec if ied c ou nt y or c it y a d m i n is t r at i v e o f f i c ia l t o p a y t h e c la im s t h a t m e et t h e s t a n d ar d s a n d p r o c ed u r es es t a b li sh e d b y t h e b o ar d o r co un cil?
Part IV. Claims and Disbursements Counties and Statutory Cities
Yes
Do es t he c ou nt y bo ard o r c it y co un cil h av e adeq uat e int ernal acc oun t ing and adm inistrat ive c ont rol proc edures t o ensure t he p rop er disb ursem ent of pu blic f un ds, inc lud ing regu lar an d f r eq uen t rev iew o f t h e c o un t y o r c it y a dm i nist r at i v e of f icials’ act ion s by t he b oard or c ou nc il?
Deleg at ion of A ut ho rit y f or Payin g Cert ain Claim s
N O T E: In r ev i ew i n g t h e ab o v e su b d i v is io n s w i t h r eg a rd t o i n d ep e n d en t b o a r d s, t h e t e r m “ c o u n c i l” s h al l b e c o n si d er ed t o b e t h e “ bo ard o r c om m ission ” and t he m on ey f or t he f un d m ay be o bt ained f r o m a n y u n d e d ic a t e d f u n d u n d e r i t s ju r is d ic t i o n .
W a s t h e p r o g ra m i m p l em e n t e d b y t h e c o u n t y b o a r d u p o n app rov al by t he d epart m ent of hu m an serv ices?
W as a list of all claim s paid un der t he p roc edu res est ablish ed b y t h e c o u n t y b o a r d o r c it y c o u n c i l p r es en t e d t o t h e b o ar d o r co un cil at t he n ex t regu larly sch edu led m eet ing af t er p ay m en t o f t h e c lai m ? a n d
Do t hese p roc edu res inc lud e co un t y ow ned dem and dep osit a c c o u n t s an d p e ri o d ic r ev i ew o f t h e p ro g r am b y t h e c o u n t y b o a rd ?
5 5
3 .
2 .
a.
A .
If t he c ou nt y has im plem ent ed a c lient direc t ed su pp ort pro gram t h a t a u t h o r i ze s r es p o n si b le p ar t i es f o r c o u n t y h u m a n se rv i c e s a n d p u b l ic h e al t h c l ie n t s t o e x p en d p u b li c f u n d s f o r t h e b en e f i t o f t h e c l ie n t s w i t h o u t c o m p l y i n g w i t h M i n n . St a t . §§ 4 7 5 . 1 8 , s u b d . 1 b , 3 8 4 . 1 3 , 4 7 1 . 3 8 , o r 4 7 1 . 3 9 1 :
§ 3 7 5 .1 8 , su bd . 1 c
A .
N o
W ork pap er Ref e ren c e
3 .
1 .
2 .
Part V I. Electronic Funds Transfer For Counties and School Districts
______________
5 6
§§ 471.38, subds. 3 & 3a & 385.071
1 .
2 .
e.
d .
c .
b .
a.
Yes
B.
C.
D .
N o
W ork pap er Ref e ren c e
6 .
5 .
3 .
4 .
v e n d o r p a y m e n t s ; an d
a c la im f o r p ay m e n t f r o m a n i m p r es t p a y r o ll b an k ac c ou nt o r in v est m e nt o f ex c ess m o n ey ;
Did t he co unt y o r scho ol dist rict use elect ronic f und s t ransf ers on ly f or t he ab ov e enu m erat ed t ransac t ion s?
In t he c ase of a co un t y , d id t he c ou nt y bo ard est ablish po licies a n d p ro c e d u re s f o r i n v es t m e n t a n d e x p en d i t u r e t r a n sa c t i o n s b y elect ronic t ransf er?
In t h e c as e o f a sc h o o l d is t ri c t , d id t h e sc h o o l d is t ri c t en ac t a p l an c o n t a i n in g t h e f o l l o w i n g p ol ic y c o n t r o ls re q u ir in g :
p a y m e n t o f c o n t r i b u t i o n s t o a p en s io n o r re t i re m e n t f u n d ;
pay m ent of bo nd prin cip al, b on d in t erest , an d a f iscal a g en t s e rv i c e c h ar g e f r o m t h e d eb t r e d em p t i o n f u n d .
a list of t ransac t ion s t o b e sub m it t ed t o t he sc ho ol b oard at t h e n e x t r e g ul ar m e et i n g a f t e r t h e t r an s ac t i o n ?
ident if icat ion of t he init iato r of each elect ronic t ransf er?
t h e i n it i a t o r t o d o c u m e n t t h e r eq u e st a n d o b t a i n a p p ro v a l f o r each t ransf er fro m t he designat ed business adm inistrat or, p r io r t o t h e t r a n sa c t i o n ?
w rit t en c on f irm at ion of each t ransac t ion w it hin on e bu siness d ay ?
a n n u al d el eg a t i o n o f a u t h o r it y t o m a k e e le c t r o n ic f u n d s t ransf ers to a designat ed business adm inistrat or?
A c o u n t y m a y u s e e le c t r o n ic f u n d s t r an s f e rs f o r in v e st m e n t pu rpo ses and f or all c ou nt y ex pen dit ures.
C LA I M S A N D D I SBU RS EM EN T S
A scho ol dist rict m ay m ake elect ronic f und s t ransf ers fo r:
pay m ent of t ax or aid ant icip at ion cert if icat es;
1 1 / 0 3
t h e d i sb u r si n g b an k t o k e ep a c er t i f i ed c o p y o f d e le g at i o n o f au t h orit y ?
M inn . St at . S ec t i o n
Coun t ies and sc hoo l distric t s may m ake elect ronic f und s t ransf ers un der c ert ain c on dit ion s.
A .
1 .
2 .
M inn . St at . S ec t i o n
§ 3 7 5 . 1 7 1
§ 3 7 5 . 1 7
§ 4 7 1 . 3 8 2
1 1 / 0 3
A .
B.
C.
A .
B.
C LA I M S A N D D I SBU RS EM EN T S
Part V II. Credit Card Purchases For Counties
If a c o u n t y o f f i c er o r e m p l o y ee m a d e a p ur c h as e o n b eh a lf o f t h e c o u n t y b y c r e d it c a rd ;
1 .
2 .
3 .
Had t he co unt y b oard aut horized t he use of t he credit card b y t h e of f i c er or em p l oy e e,
W as t he o f f icer or em plo y ee ot herw ise aut ho rized t o m ake a p u r c h as e o n b eh a lf o f t h e c o u n t y , a n d
Did t he p urc hase o t herw ise co m ply w it h all st at ut es, ru les, or c ou nt y po licies ap plic able t o c ou nt y pu rc hases?
If a c oun t y o f f icer or em ploy ee made a purc hase by c redit card t h a t w a s n o t a p p r o v ed b y t h e c o u n t y b o a r d, w a s t h e o f f i c er o r em plo y ee held perso nally liable f or t he am ou nt of t he p urc hase?
If p ublishing of disbursem ent w as required, w ere act ual vend ors p r o v i di n g g oo d s an d s er v i c es t o t h e p u b l ic e n t i t y i d e n t i f i ed a n d n ot j ust t h e c red it c ard c om p an y ?
Part V III. Paym ents W ith Credit C ards For Cities and Tow ns
If a cit y or t ow n o f f icer or em plo y ee m ade a p urc hase o n b ehalf o f t h e c it y o r t o w n b y c r e d it c a rd :
1 .
2 .
3 .
H a d t h e c i t y c o u n c i l o r t o w n b o a rd a u t h o r iz ed t h e u s e o f t h e cr edit card by t he o f f icer or em plo y ee,
W as t he o f f icer or em plo y ee ot herw ise aut ho rized t o m ake a p u r c h as e o n b eh a lf o f t h e c i t y o r t o w n , a n d
Did t he p urc hase o t herw ise co m ply w it h all st at ut es, ru les, a n d c it y o r t o w n p o l ic i es ap p l ic a b le t o c i t y o r t o w n pu rc hases?
If a cit y or t ow n o f f icer or em plo y ee m ade a p urc hase b y cr edit c a rd t h a t w a s n o t a p p r o v ed b y t h e c it y c o u n c i l o r t o w n b o a rd , w a s t h e o f f i c er o r e m p l o y ee h el d p er so n a ll y li ab l e f o r t h e a m o u n t of t he p urc hase?
5 7
Yes
N o
W ork pap er Ref e ren c e
