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OTHER OBSERVATIONS AND RECOMMENDATIONS <br />Land Held for Resale <br />The City currently holds a material amount of land for resale, which management reports at the lower of <br />cost or acquisition value. City staff has also prepared a schedule comparing the current carrying value of <br />these properties to estimated fair values provided by Anoka County to support these values. We recognize <br />the City is working on an ongoing basis to utilize these assets in the best interest of the City. We <br />recommend that the City continue to review these property values and related internal loans on an <br />ongoing basis to ensure a proper reporting of city assets and financial activity between funds is accurately <br />presented. <br />Electronic Funds Transfers Fraud <br />As the use of electronic funds transfers and payment methods has become more prevalent, we have seen <br />increases in both the incidences of fraud related to these transactions and the dollar amounts involved. <br />Operational changes related to the COVID-19 pandemic, including greater reliance on technology and <br />more employees working remotely, have tended to increase risk in this area. We urge cities to carefully <br />review controls over these transactions, and consider best practices to address these risks, such as: <br />• Ensuring segregation of duties over these transactions by involving more than one employee in <br />the process. <br />• Requiring multi -factor authentication of requests for electronic payments from new vendors or for <br />changes in wiring instructions for existing vendors. It is recommended that changes for existing <br />vendors be verified through trusted contact information used previously for that vendor, not as <br />provided in the change request, to verify the accuracy of the change. <br />• Educate employees on the controls in place to protect the organization's financial assets and <br />ensure management is supportive and accepting of the processes in place. Attempted fraudulent <br />transactions are often initiated using the profile of a supervisor. Employees must be comfortable <br />questioning unusual transactions or requests, and instructed not to circumvent internal control <br />procedures regardless of whom they believe initiated the transaction. <br />• Recommended cyber security measures, such as limiting network access and requiring robust <br />passwords that are changed regularly, should be implemented and followed by all city employees, <br />not just those directly involved with financial transactions. <br />• Review insurance policies to understand the coverage provided for financial losses due to <br />cybersecurity risks and evaluate whether they provide adequate coverage based on management's <br />assessment of these risks. <br />Uniform Guidance Written Controls and Micro -Purchase Threshold <br />Federal Uniform Guidance requires that nonfederal entities must have and use documented procurement <br />procedures consistent with 2CFR § 200.317-320 for the acquisition of property or services required under <br />a federal award or subaward. Effective August 31, 2020, the federal micro -purchase threshold, which is <br />the threshold that allows for procurements without soliciting competitive price or rate quotations given <br />certain conditions, was increased from $3,500 to $10,000 in the Federal Acquisition Regulations (FAR). <br />Effective November 12, 2020, the Uniform Guidance was also revised to allow nonfederal entities to <br />establish a micro -purchase threshold higher than the $10,000 threshold established in the FAR under <br />certain circumstances. The nonfederal entity may self -certify a micro -purchase threshold up to $50,000 if <br />the requirements in 2CFR § 200.320(a)(1)(iv) are followed. Requirements include an annual <br />self -certification and clear documentation of the justification to support the increase in the threshold. <br />-2- <br />