Sec. 2-51. Municipal materiality/irregular variances, losses, and shortages.
(a) Purpose. There is hereby established the municipal statement on materiality and standards of conduct related to encounters of irregular variances, losses, and shortages. This section is intended to comply with the provisions of IC 5-11-1-27(j) and State Examiner Directive 2015-6 issued November 18, 2015, amended April 7, 2016, and each as currently in effect, or amended hereafter from time to time.
(b) Materiality Threshold.
(1) There are hereby established materiality thresholds for the purposes of reporting irregular variances, losses, shortages and thefts.
(2) The materiality thresholds to determine the necessity of reporting by the Town shall be determined by the activity as follows:
a. For governmental activities, which include all activities that are not associated with the Department of Waterworks or the Department of Public Sanitation and Sanitary District, the materiality threshold shall be fourteen thousand dollars ($14,000.00);
b. For activities associated with the Department of Waterworks, the materiality threshold shall be seven thousand dollars ($7,000.00);
c. For activities associated with the Department of Public Sanitation and Sanitary District, the materiality threshold shall be ten thousand dollars ($10,000.00).
(3) If the irregular variance, loss or shortage is not cash or a cash-equivalent, the value of the item at the time of the variance, loss or shortage shall be used to determine whether the materiality threshold has been met.
(4) All irregular variances, losses or shortages exceeding the above thresholds shall be reported upon completion of the bank reconciliations or within thirty (30) days of the monthly accounting period closing, whichever occurs first, to the State of Indiana Board of Accounts. In addition, irregular variances, losses or shortages which occur more often than four (4) times in a month and which in the aggregate total the amounts indicated above shall be reported immediately to the State of Indiana Board of Accounts.
(5) Any theft of public funds or assets of any value upon discovery shall be immediately reported to the State of Indiana Board of Accounts and the Office of the Lake County Prosecuting Attorney. Materiality does not apply.
(c) Duties of Public Officers with Knowledge of Misappropriation. A public officer who has knowledge of or reasonable cause to believe that there has been a misappropriation and/or theft of public funds or assets of the public office shall immediately send written notice of the misappropriation and/or theft to the State of Indiana Board of Accounts and the Office of the Lake County Prosecuting Attorney, all pursuant to IC 5-11-1-27(1).
(d) Maintenance of Documentation. The Town shall maintain records and documentation concerning irregular variances, losses, shortages and thefts in accordance with the required minimum internal control standards established as required by the State of Indiana Board of Accounts.
(e) Resolution of Incidents Not Meeting the Materiality Threshold.
(1) The Town shall immediately, upon discovery, investigate all irregular variances, losses, or shortages regardless of whether such meet the materiality threshold established by this chapter.
(2) Upon conclusion of each such investigation, the Town shall:
a. Implement procedures designed to prevent the recurrence of such incidents; and
b. Take appropriate action toward the employee(s)/Town Official(s) responsible for the incident, which may include additional training, instruction, or disciplinary action.
(f) Periodic Review of the Thresholds. The materiality thresholds fixed in this chapter shall be periodically reviewed for sufficiency by the Office of the Clerk-Treasurer. When appropriate, the Office of the Clerk-Treasurer shall recommend to the Town Council such amendments as may be desirable or necessary to further perfect the sufficiency of the thresholds.