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Auditors call for more oversight



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February 06, 2013 - A city audit recommended Clarkston stop amending its budget after the fact, but City Council is still doing it.

Council voted unanimously to approve a $31,238 budget amendment, Jan. 28. The amendment accounts for salary increases approved at the Jan. 14 council meeting.

For former City Councilman Richard Bisio, this is another example of poor financial management.

"Spending the money first and then amending the budget is the exact opposite of what state budgeting law requires and is also an irresponsible handling of the taxpayers' money," Bisio said.

City Manager Dennis Ritter said it's just a matter of paperwork.

"Oftentimes it's a matter of making an incorrect journal entry," Ritter said.

Mayor Joe Luginski did not return calls for comment.

In a letter dated Nov. 29, 2012 accompanying the city's audit for fiscal year 2012, Janz and Knight P.L.C. referred to the Michigan Uniform Budgeting and Accounting Act, which mandates "balanced budgets be adopted and that those budgets be amended before expenditures exceed the budgeted amounts."

Under the audit's "Stewardship, Compliance, and Accountability" section, the auditors state, according to Public Act 2 of 1968, "a local unit shall not incur expenditures in excess of the amount appropriated in budget resolutions of the governing body."

In addition, the auditors noted, "despite the amendments, expenditures exceeded budgeted amounts in various activities," and they labeled this a "significant deficiency."

One disbursement in a list of "budget overruns" the auditors compiled showed the city appropriated $121,903 in its budget for a city hall and grounds expense, but ended up spending $129,636, an overrun of $7,733.

Upon review of their latest audit received in late November, Ritter noted, "the audit identifies deficiencies and efficiencies."

In addition to notes about the city amending the budget after spending, the audit stated the city's fund balance (previous years' surpluses) is 52 percent of the city's total general fund expenditures for the year.

The city's current fund balance rests at $282,102; it was previously $321,719.

Before the meeting, Bisio said, "the proposed amendment that will be adopted on Jan. 28 will increase the operating deficit to $39,616."

"The fund balance will be depleted by that amount. As of the end of last fiscal year, the fund balance was 52 percent of expenses. With this amendment, it will fall to 40 percent of expenses," he added.

Although the auditors discovered significant deficiencies that they feel, "merit attention by those charged with governance," the city council has yet to put the audit on a regular meeting agenda for discussion.

Ritter said he would suggest adding the audit to the council's next meeting agenda for Feb. 11 at 7 p.m.

The council will meet at the Village Hall on Depot Road. View their audit on www.michigan.gov/treasury.

Clarkston News reporter
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