Problems found in audit (02/27/2009)

DUNKIRK - An Indiana State Board of Accounts audit report, pointing out several deficiencies, is being scrutinized by city officials.

The audit report for 2007, filed with the State Board of Accounts at the end of 2008, also indicates that some of these deficiencies were reported in previous audits, but never corrected.

Dunkirk city clerk-treasurer Jane Kesler said she is working on resolving the auditors' concerns which she described as mainly relating to bookkeeping and accounting procedures.

Dunkirk Mayor Ron Hunt said he is interested in seeing that corrections requested by the auditors are made as soon as possible.

The first-term mayor said that some of these concerns were raised in previous audit reports, dating back several years, but were never corrected. Hunt is in his second year in office.

The mayor said he and council members Craig Faulkner and Judy Garr were present for the State Board of Accounts exit conference in November when preliminary results from the audit review were discussed with Kesler.

Hunt said since that meeting, he has been waiting to see a copy of the auditor's final written report to review the situation further.

That report was filed on Dec. 30, 2008, in Indianapolis, but Hunt said he didn't realize it existed until this month.

The mayor said he was reading an article in The Commercial Review on Feb. 11, 2009, about a State Board of Accounts audit in Bryant and noticed there was a Web site where he could check about the status of state audit reports.

The mayor said he went online and downloaded a copy of the Dunkirk report - a report he said he was not given by Kesler. "She never made me a copy," Hunt said.

Serving her second four-year term as clerk-treasurer, Kesler said, "These are a lot of bookkeeping type things."

Kesler said there was no intentional wrongdoing. "If we made mistakes, it's just because of human error."

Kesler said she has already taken action to correct some of the problems, and plans to introduce measures at future council meetings, starting with the next one on March 9 to address other concerns expressed in the detailed state audit report.

"She needs to explain why the report is like it is," the mayor said, adding that he had concerns about several areas - including overpayments to a retired police officer totaling more than $8,000, dating back to 2005, which have never been reimbursed to the city.

The most recent audit report states that this discrepancy was discovered in a previous audit and city officials hired a private Certified Public Accounting firm to review the situation.

"The CPA firm concluded that the pensioner had been overpaid by $8,422. The overpayment has not been collected," the 2008 report states.

The former officer is still receiving a pension, but that payment is now the corrected amount.

Review of the most recent audit indicates that several of the problems date back at least three years, Hunt said. "It seems like she would have fixed these things," the mayor said.

Council members Garr and Faulkner said they have also been reviewing the audit report in recent days and expect things to be corrected.

The auditors more or less placed their concerns in the laps of the council, Faulkner said. "But we're not the clerk. She's an elected official. It's up to her to straighten this out."

Among other things, the 15-page report questions:

•Why penalties and interest totaling more than $900 were paid to the Internal Revenue Service by the city in 2007 for late payment of payroll withholding taxes.

•Why some of the detailed customer deposit records did not balance properly or in a timely fashion.

•Why the city is not collecting interest on a rehabilitation loan to the Dunkirk American Legion. Prior to Hunt taking office, the council approved this loan for $20,000 for a period of five years at an interest rate of 4 percent. The loan agreement was signed on Jan. 3, 2006, but a payment schedule for interest and principal was never established.

Since that time the Legion has made two payments: $2,000 on Jan. 4, 2007, and $2,000 on Jan. 8, 2008. Also state auditors pointed out, "In the text of the terms of loan section the interest rate is zero percent, not 4 percent as approved by the council."

•Why various city receipts were not deposited on the next business day, and in some cases records were not sufficient to determine if customer payments had been made by check or cash.

•Why bank account records did not always balance exactly with city financial records.[[In-content Ad]]