City Officials Vow To Address Audit Findings
City of Glenwood officials say shortcomings identified in an audit report for the city’s 2013-2014 fiscal year are being taken seriously and will be addressed.
The audit report findings were the focus of discussion at a March 24 meeting of the city council’s budget and finance committee. The meeting was facilitated by city attorney Matt Woods.
“The main thrust of the report that I gave to the city council is that we have deficiencies and they have to be remedied,” Woods said. “They need to be addressed. I do not like the idea of having the same deficiencies identified in back-to-back audits, so it really needs to be rectified. We need to gain the trust back of our public.”
The audit, conducted by Hamilton Associates P.C., a tax and accounting firm in Council Bluffs, revealed a deficit of $296,967 in the city’s general fund balance for the fiscal year ending June 30, 2014, and also identified nine specific deficiencies, including three “material weaknesses” which are considered to be the most-significant issues. Many of the “material weaknesses” and “significant deficiencies” were repeat findings identified in a previous city audit for the 2012-2013 fiscal year, also conducted by Hamilton Associates P.C.
The following material weaknesses were identified:
Financial reporting – auditors identified a material amount of receipts that were directly deposited into the bank and not recorded in the books, including $399,015 in Local Option Sales Tax from the state and $2,789 in interest income.
Cash reconciliation process - auditors said the city isn’t reconciling its accounts to determine that fund balances match up with bank balances.
Clerk’s report and transfers - the city clerk’s monthly report to the city council doesn’t contain all fund balances, but only specifically requested balances, according to the auditors.
Woods stressed to council members that the material weaknesses are the most significant issues that must be rectified immediately. Woods also agrees with auditor findings on three of the six significant deficiencies.
“After talking with the city administrator on various occasions, with various council members, with the mayor, reviewing the audit reports and reviewing the law, it is my opinion that no doubt six of the deficiencies that were alleged are admitted deficiencies that need to be corrected,” Woods said. “Three of them, I think we have a good-faith dispute as to whether or not they actually count as deficiencies. The deficiencies I dispute, I would certainly like to give Hamilton and Associates an opportunity to convince me otherwise, which they very well may be able to do.”
The three deficiencies disputed by Woods involve the filing of reports and paperwork involving Tax Increment Financing, Urban Renewal and amendments to the city budget.
Woods and other city leaders have a desire to sit down with the Hamilton auditor who conducted the Glenwood audit to further discuss the findings, but that meeting has been delayed because the Hamilton employee is on maternity leave.
“I would really like it for Hamilton and Associates to have a meeting with the administrator, the mayor, myself and council members who want to be present to go through the audit in more detailed fashion for really the primary purpose of assisting the city administration in knowing what needs to be done so these deficiencies are taken care of,” Woods said.
City administrator Brian Kissel said some changes have already been implemented to improve the city’s financial reporting and cash reconciliation processes, while elected city leaders have vowed to become better educated on the budget process and spend more time discussing and monitoring the city’s financial practices.
“We are taking these matters seriously,” mayor Kim Clark said. “We want there to be complete compliance in next year’s audit.”
Council member Jessie Lundvall said the city’s audit reports from the last two years are eye-opening.
“To me, when we have repetitive deficiencies year after year, that in itself is a red flag. It shouldn’t take our city attorney to set us down and say this is a big issue,” Lundvall said. “I think with the lack of certainty of the numbers, there’s still a lot of questions out there as to where the monies in some of these accounts or line items are.
“We want to take the opportunity to look at the whole picture and sit down with the auditor and ask questions.”
Lundvall said everyone at City Hall needs to get on the same page with an understanding of the budget and the need to correct past financial shortcomings.
“I would like to believe that this is a huge wake-up call because we can’t continue with this hands-off approach that’s been allowed to go on,” Lundvall said. “We have to make sure we do everything we can with the best resources that we have and make sure we get this thing straightened out.”