Redkey audit showed various problems

REDKEY — The town has some changes to make.

Redkey Town Council approved an ordinance Tuesday establishing internal control standards and passed a resolution establishing the creation of a capital assets policy in response to a recent audit that indicated various deficiencies.

Indiana State Board of Accounts recently conducted a financial statements audit report on the town for the period from Jan. 1, 2020, through Dec. 31, 2023. The report was officially filed May 20.

A supplemental compliance report filed in connection with the audit laid out various issues with the town’s operations, specifically pointing to deficiencies in the town’s internal control system. Per the report, resulting problems included:

•Several funding overstatements and understatements that were entered on financial reporting system Indiana Gateway

•Various incorrect utility bill charges

•Failure to maintain a complete, detailed list of capital assets

•Lack of supporting documentation kept on file

•Restricted funds spent incorrectly

•Incorrectly maintained records of compensatory time and compensatory time payments not lining up with the salary ordinance

Both reports are available on the town’s new website at in.gov/towns/redkey.

Council president Brenda Beaty talked about the audit, saying the town would need to approve legislation to correct itself moving forward.

One of those changes includes implementing an internal control plan, as required by Indiana Code. (The town was unable to locate any current ordinance or policy establishing such a plan.) As approved Tuesday, the plan calls for the town to adopt internal control standards as defined by the State Board of Accounts. It addresses areas including control environment, risk assessment, control activities, information and communication and monitoring.

In addition to adopting the aforementioned standards, council must also make sure employees receive proper training, including required certifications. The clerk-treasurer is responsible for overseeing administration of the policy, training and certifications, the ordinance says.

Another change involved creating a capital assets policy. Beaty noted the last record of such a policy in Redkey dates back to 2011.

The resolution approved by council Tuesday requires the policy — it captures details on personal and real property used by a unit of government, such as land, infrastructure, buildings, land improvements, equipment and machinery, historical collections and construction work, and their estimated useful lifetimes — to be updated annually. It requires department heads to provide a current inventory list of all Redkey capital assets annually to the clerk-treasurer annually by Dec. 31, with the clerk-treasurer to update a master list with the data annually.

Beaty said the policy needs to be put in place by September.

Relatedly, council discussed concerns about compensatory time paid in past years. Beaty pointed out, per the audit report, that compensatory time records were improperly maintained and payroll payments to an employee were likely not calculated correctly.

In recent years, Beaty noted the town has also had issues with compensatory time paid to a former police officer.

She pointed out the audit only measured compensatory time inaccuracies for one year and that the town would likely need to hire someone to investigate other years. 

“The policy is very clear on how you qualify for comp time,” said Beaty. “It’s up to the town council to decide whether we want to pay somebody to come in and go back for the rest of the years so that we can claim, we can have a lawyer go after that fund, or if we just want to move forward from that.”

Discussion ensued on whether the cost would outweigh the benefit. Council member Floyd Life said the town is responsible for the inaccuracies, with Beaty saying the state determined issues in reporting from both parties.

Plans were discussed to have the town’s attorney look into the matter.

In other business, council members Jim Phillips, Jenny Staver, Floyd Life and Beaty:

•Heard Redkey Fire Department will not be hanging Christmas lights downtown this year. Firefighter Mark Leavell noted the decision made by the fire department board stemmed from an incident in December with a council member hiring a locksmith to gain access to former fire station, which is owned by the town and used by the fire department for storage.

•Approved the following: paying $180 for three signs with park rules to be placed around Morgan Park; paying $1,080 for concrete to repair streets that were cut into;  purchasing a tablet and microphones for $2,500 along with installing wifi at the park cabin in order to record meetings.

•OK’d LEAP Managed IT to conduct an assessment on Redkey at no cost to the town.

•Agreed to pay $437.50 to refurbish seven pedestrian street signs near Redkey Elementary School, with council later asking utility workers to hold off on the purchase in light of uncertainty about the elementary’s future.

•Heard Staver received a quote for various renovations to the park came in at $1.6 million. She noted she’s waiting to hear back on another cost estimate from a different company. Beaty said the town needs to look into getting a handicap-accessible swing soon.

•Donated $100 for the Steve Reynolds Memorial Scholarship fund.

•Discussed news about Valentine Feed and Supply closing. The Redkey store, which has sold in a merger acquisition with Esch Ag Supply of Fountain City, will close June 20.

•OK’d annual compliance forms for five ongoing tax abatements with Fisher Packing.

•Acknowledged former council member Dave Dudelston resigned effective May 7.

•Made $792.53 in water bill adjustments.

•Paid $130,616.30 in claims.