Where’s the Money?

That has been the question on everybody’s mind lately, and June Barron CPA, CFE Deputy legislative auditor and her committee may have answered some of those questions Tuesday night in a special session prior to the Helena-West Helena City Council meeting. 

 

By MELISSA MARTINEZ
The Daily World

Where’s the Money?
That has been the question on everybody’s mind lately, and June Barron CPA, CFE Deputy legislative auditor and her committee may have answered some of those questions Tuesday night in a special session prior to the Helena-West Helena City Council meeting. 
The Legislative Joint Auditing Committee performed the H-WH audit based on total financial statements of the general fund, street fund and other funds in the for the years ended Dec. 31, 2009 and 2008. The official audit report was issued Oct. 5. 
In planning and performing the audit, the city’s internal control over financial reporting was assessed in which the audit identified certain deficiencies that were sought to be a material weakness.  The deficiency exists when the design or operation does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. 
In the audit, some of the financial transactions appear to conflict with state laws, city ordinances, and/or proper accounting procedures. 
Barron stressed that because the funds were not departmentalized in each account, some deficiencies may have been overlooked and may reflect old amounts before the cities were combined. 
Barron told the council and the large audience in attendance that of some of the unauthorized disbursements including funds totaling $20,424 were improperly disbursed to elected officials, employees, vendors, and other organizations primarily for the period of July 1, 2009 through June 21, 2010. Some of the disbursements consisted of but not limited to: hotel room service charges, undocumented travel expenses, inadequately documented travel disbursements, excess travel reimbursements and undocumented cash advances.
Barron explained that Mayor James Valley tried to reimburse some of the money back into an account. Two checks, totaling $3,666, were returned for insufficient funds and remain uncollected. 
A total of  $68,797 was paid to various hotels, restaurants, businesses, organizations, and individuals without adequate documentation or business purpose.  It was also reported that the majority of the invoices were signed but turned in with no reason of business. Another $543 was paid for parties, and $180,215 was paid by a debit card rather than pre-numbered checks in conflict with state regulations. 
The majority of the debit card account activity was reported as not being recorded in the city’s ledger.  Barron said that $10,491 was paid for videotaping city council meetings and copying videos after the city council voted to discontinue paying for video-related expenditures. 
Valley claimed that the motion was vetoed. However, this was not reported in the minutes. 
The use of the city’s Walmart card was also addressed. According to Barron, $3,800 was used to buy merchandise after it was reported stolen in December 2006. Further disbursements for overnight travel were reported, having not been approved by the city council as required by Ordinance 29-2009 dated Sept. 22, 2009. 
Valley responded stating that he would begin an investigation into these expenses to determine whether funds are due to the city or additional documentation can be produced to better justify the expenses.
The audit also established that the multiple bank accounts were not reconciled monthly. The ending account balances were not identified with receipts issued for cases not yet processed through court, county fines collected by the city were not receipted, deposited, and disbursed by check to the county and warrants were not always issued, nor was the District Court judge always notified when individuals failed to pay fines and costs timely. 
With the failure to pay such fines or costs, warrants were not always issued. Several deficiencies in the city’s records and procedures relating to the Police Bond and Fine Account were noted, thus allowing funds to be misappropriated without detection.  Police Chief Fred Fielder did not respond. District Court Clerk Linda Danley stated that she would work diligently with the police department to correct all deficiencies. 

The audit also shows misappropriated funds that were not properly transferred to the Street Fund Bank Account. Property taxes were transferred to the General Fund bank account to the Street Fund, Police Pension Fund, and Fire Pension Fund.
City Clerk Sandi Ramsey commenter that street expenses were paid from the General Fund and that a transfer was not necessary.  However, documentation was not provided to support this. 
At one point, counter checks were used to buy cashier checks to pay vendors. As required by law, bank accounts were not properly reconciled at the end of each month and all bank statements were not retained for an audit. 
Barron said this was determined to be a reoccurring issue with the combined cities. However there was a reduction in Street Fund deficiencies. 
It was reported that the General Fund did not transfer funds to fire pensions, which were to be made monthly.  There were reports of numerous receipts and disbursements not being posted, lack-of-year-to-date totals, numerous posting errors, including duplications, improper classifications, previous and subsequent year transactions included in the audit as well. 
General ledgers also were not prepared timely. Monthly bank reconciliations were not presented to the city council, six-month financial statements were not prepared or published, and accounting records were not auditable at the engagement start date, causing the delay of the auditing process. 
“There have been some improvements recognized since the last audit,” said Barron.
City Treasurer Michael Boone did not respond to any findings. Boone was not in attendance.  The auditing committee reported that some errors were found in improper postings, unrecorded certificate of deposits, and misclassification of transfers. Password controls were not in place to secure access to the financial applications, a report of theft from a safe located in the police department, and unauthorized personnel signing of disbursements were outlined as well in H-WH city audit. 

To view the complete audit visit www.legaudit.state.ar.us