City of Wyaconda Audit Completed
City of Wyaconda Audit Completed
Last year, residents of the City of Wyaconda petitioned State Auditor Susan Montee to perform an audit of the city. That audit report was released by Montee last week.
The objectives of the audit were:
1. Obtain an understanding of the petitioners’ concerns and perform various procedures to determine their validity and significance.
2. Evaluate the city’s internal controls over significant management and financial functions.
3. Evaluate the city’s compliance with certain legal provisions.
Montee’s office highlights findings on the “Yellow Sheet” at the beginning of the audit report. Those findings included:
Budgets, Audits, and Financial Reporting
The annual budget prepared for the year ended December 31, 2010, does not contain a budget message, actual receipts and disbursements for the 2 preceding years, or beginning and ending cash balances, as required by state law. The budget only includes budgeted receipts and disbursements for 2010 and 2009, and actual receipts and disbursements for 2009. Actual disbursements exceeded budgeted disbursements for the General, Water and Sewer, and Street Funds for the year ended December 31, 2009. In addition, the city does not obtain annual audits of its sewer system as required by state law, and it did not submit an annual financial report to the State Auditor’s office for the year ended December 31, 2008.
The Auditor recommend that the city:
–Prepare annual budgets which contain all information required by state law.
–Prepare budget amendments prior to incurring the related disbursements.
–Obtain annual audits of the sewer system as required by state law.
–Submit an annual financial report to the State Auditor’s office as required by state law.
Controls and Procedures
Proper segregation of duties is not possible because the City Clerk is the only employee in the office; however, there is no independent or supervisory oversight of her work. In addition, the former City Clerk’s daughter was employed as her mother’s deputy, which prevented proper segregation of duties due to their close relationship. The city does not have a written bid policy and did not solicit bids for the clearing of brush from around the city lagoon costing $15,930, nor did it retain bid documentation for the lease purchase of a $14,050 tractor. Further, the Board of Aldermen approved and paid bonuses of $200 to the City Clerk and $25 to the contracted Wastewater Operator in December 2009. Also, there is no documentation of hours worked to support payments made to the former Deputy City Clerk from January 2009 to May 2009 and the rate of pay varied with no apparent justification for the variation. The city considered the Deputy Clerk a contracted employee and payroll taxes were not withheld, nor were the payments reported on an Internal Revenue Service W-2 Form.
The Auditor recommend that the city:
–Ensure there is a documented review of city accounting records by someone independent of the City Clerk. Any unusual items or discrepancies should be investigated. In addition, a written related party policy should be adopted.
–Establish formal bidding policies and procedures, including documentation requirements regarding the bids or quotes received and justification for the bid selected.
–Discontinue granting bonuses to employees.
–Maintain adequate supporting documentation for all wages paid. In addition, the Board should ensure all compensation paid to employees is subject to payroll taxes and properly reported on W-2 forms.
Meeting Minutes and Candidacy Ordinance
Reasons for closing meetings and the corresponding vote to close the meeting are sometimes not documented and there were no minutes for the June 8, 2009, closed meeting. In addition, City Ordinance No. 342, passed by the Board of Aldermen in 2007, appears to be in violation of state law in that it requires citizens to “obtain ownership of residence for one full year prior to filing declaration of candidacy” and adds further restrictions beyond state law by requiring candidates to obtain city utility services and be registered voters of the city and county for one year prior to filing for office.
The Auditor recommend that the city:
–Ensure meeting minutes document the vote to go into closed meetings and state the reasons for going into closed meetings. In addition, minutes should be prepared and maintained for all closed meetings.
–Consult with legal counsel regarding this ordinance and take appropriate action to ensure it is in compliance with state law.
The city, in its responses to the audit findings, reported that it is addressing the problems found in the audit.
To view the complete audit report, visit www.nemonews.net.
