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Willard audit notes accounting, monitoring issues

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The recent audit of the city of Willard found that the city’s Park Fund is in poor financial condition and that there have been inaccuracies in accounting records.

State Auditor Susan Montee delivered the audit Dec. 14. According to her findings, the city’s Park Fund is in poor condition because the city did not adequately plan financing costs of its aquatic center.

Specifically, the city lacks accurate financial information that would help it to effectively monitor cash balances and the financial condition of city funds. The city has had difficulty making required payments on the Certificates of Participation when they are due, and operating costs for the center’s inaugural 2009 season were higher than projected, the audit said. As a result, the city borrowed money not only from a bank, but also from the city’s general and water/sewer funds. It remains unclear when, or if, those funds will be repaid.

Montee also found inaccuracies in accounting records, budgets and financial statements, resulting in inadequately monitored account balances. As a result of poor record keeping, the city of Willard failed to make a loan payment due to Greene County. General fund checking account balances also were not monitored, resulting in the issue of 30 checks totaling $81,000 when there were not sufficient funds to cover the checks.

Other findings in the audit:
  • The city adopted a procurement policy in July 2009 but did not solicit or advertise for bids or document sole source procurement or emergency situations for several purchases in 2009 and 2010.
  • Accounting duties are not adequately segregated. Bank reconciliations are prepared, but the chief financial officer did not sufficiently investigate and resolve unidentified differences, such as comparing bank balances of certificates of deposit and money market accounts to balances in the city’s general ledger. There also is no recording of electronic transfers of payroll disbursements, taxes and employee benefits or transfers between bank accounts. The city also does not have formal policies and procedures for voided checks.
  • There are significant control procedure weaknesses tied to the utility system, resulting in less assurance that all utility monies are accounted for properly or that utility charges are set at the appropriate level.

Among the city’s responses in the audit, city leaders have said they will:
  • develop a plan to evaluate future large projects, including documentation for long-term financial planning; the Willard Board of Aldermen also will review procedures for interfund financial transfers and create a plan to reduce amounts due between the funds;
  • rewrite the purchasing policy to address bid solicitation, documentation and contracts. According to the audit, this revision already is under way;
  • enforce an existing policy that requires prior approval of purchase orders and ensure that approval is documented;
  • retain documentation for all payroll disbursements and strictly enforce city policy ensuring that employees do not work more than 40 hours a week; and
  • include a monthly report of utility amounts billed and collected, as well as delinquencies, among other reports for the board of aldermen.

The board also agrees with Montee’s recommendations to implement steps to ensure that accounting records and budgets accurately reflect the city’s financial activity and to monitor cash balances. 

Additionally, the board said in the audit that department heads are now required to maintain a current inventory of all equipment and supplies, and those inventories will be submitted quarterly to the city’s insurance carrier for reconciliation. Assets also are being tagged by the Public Works department.

Montee’s office began the audit following the submission of a citizen petition with 490 signatures from registered residents. Under state law, the city is responsible for paying the costs of the audit.

While the city hasn’t yet received the official bill, City Clerk Dale Duvall said Montee has indicated that the cost likely will be about $30,000.

The 39-page audit can be found on the auditor's Web site.
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