Item 5 - Ord./City Expenditures - Laserfiche WebLink

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The language in the City Code does not recognize that payments may be made in a variety of ways other than by physical check and that signatures on checks are now frequently done by facsimile or electronically instead of by physical signature. In order to clarify that other forms of payment and signature are allowed, City Code needs to be changed to reflect these technological advances. In addition, in order to efficiently operate City business, payments can be made throughout the organization rather than all payments being made centrally out of the Finance Division, which means that the number of people that should have authority to make payments has been increased. The proposed ordinance amends the City Code to allow the Finance Officer to make all payments in connection with City business, upon the signature or authorization of the City Manager or the City Manager's designee. The payments could be made in a variety of forms, including checks, electronic funds transfers, wire transfers, and other types of payment methods. The City Manager will have the authority to designate in writing for other appropriate people to authorize and make payments. The City Code change also deletes the current sections of code that refer to payments. In making these payment delegations, staff ensures that proper internal controls are maintained. Currently, nearly all City vendor payments are made via the "main" accounts payable checking account. These payments are initiated by department staff, through a request for a purchase order. These requests are approved by supervisory staff within the department with an electronic signature. The payment requests are forwarded, by business software, to Finance staff. Payment is made after central Finance staff enter the vendor invoices, verify that proper purchasing rules have been followed, ensure that the goods or services have been received, that there's sufficient budget authority to make the payment, and the payment has been properly approved. Although staff issues vendor checks from the central Finance office weekly, there are situations where this process is not efficient for a variety of reasons. In some cases, there is a high volume of checks written to non-standard vendors for a very small amount of money (like jury duty payments or library book refunds). In another case, payment has to be made immediately and cannot wait for the weekly accounts payable check run (like payment to Hult Center performers). For those limited purposes, the central Finance office permits department staff to have separate departmental checking accounts to meet those limited, identified needs. This practice has been used for a number of years, and Finance staff recently realized that City Code needed to be updated to allow for this practice. Although the process for authorizing payment from those departmental checking accounts differs from the payments made centrally, Finance staff developed procedures to ensure adequate internal controls over the use of those accounts. Central Finance staff will continue to be responsible for authorizing the use of those separate accounts. As part of the authorization process, Central Finance staff authorizes individual departmental staff to be signers on those accounts, and authorizes different staff to be responsible for reconciling the accounts on a monthly basis. This ensures a separation of the signing and reconciling duties. Each month, a request for payment to replenish the departmental checking accounts from the main account is made. The requests to replenish the accounts are approved by appropriate supervisory department staff and submitted to Finance for processing through the centralized accounts payable process. In addition to the monthly submission for reimbursement, on a daily basis by a link with the bank, Finance staff review the activity in every checking account for unusual transactions. L:\CMO\2005 Council Agendas\M050110\S0501105.doc