Audit not good enough for trustee
July 28, 2010 - Independence Township Auditors Plante & Moran may give the township's money handling a passing grade, but Trustee David Lohmeier would only give it a "C."
"We're having some trouble reconciling our checkbook, we didn't realize we had the trouble, which is another strike against us and we really don't have a plan of how we're going to fix it," Lohmeier said at the July 20 township board meeting. "I'm not real impressed with our performance here on a basic level. This isn't rocket science this is end of the month reconciliation stuff."
According to the 2009 audit, while performing testing of cash bank reconciliations, Plante Moran noted an un-reconciled difference of approximately $11,000 as well as a reconciling item of approximately $150,000 for which management (the township) was unable to provide supporting detail.
Finance Director Susan Hendricks said they had an outstanding checklist from the old computer system they had prior to 2005 and last year were able to give the auditors that list last year.
"We were trying to get to where we could contact the people, find out if we should write the check, give the right people the money, send it to Lansing, whatever we needed to do," Hendricks said. "Somehow in that process the file was corrupted. I've got to go back to some long ago files and try and recreate that listing. I don't know if there would have been a hard copy of that. Unfortunately the person who was working on it is not available for us to ask."
Auditors also noted under internal control "material weaknesses," the general fund was $116,000 higher than ledgers indicated. Finance director identified $100,000 of it, but $16,000 remains unidentified. Auditors also found the general fund's accounts payable account was $21,000 higher than reported.
"I'm gratified that there is a small list of items, but this is really disappointing. I can go back for the last decade and tell you every check I've written and what ones were not cashed on Quicken," Lohmeier said. "The township should be able to do a similar exercise. This isn't something we should be very proud of tonight."
Trustee Neil Wallace said the board needs to fix weaknesses and deficiencies.
"What I'm suggesting is we formally resolve as a group," Wallace said. "If it means we need to find the manpower to get it done, if that's the issue, then we need to find a way to get that done."
Other areas of "material weaknesses" included adjusting journal entries related to interfunds, capital assets, net assets, and customer receivables and revenue "for financial statements to be materially correct." Auditors also recommended segregation of access to the financial applications.
"Finance people have administrative access to financial applications. We would suggest that's an incompatible function for the finance department because the finance department is the one that keeps the records," said Les Pulver, a representative with Plante & Moran. "Administrator access is the one that can go in and change the records of the computer. That shouldn't be financial people. That should be somebody who's not involved in collecting cash, writing checks, approving disbursements, and reconciling the accounts."
Pulver said computers keep a log when an administrator makes changes, and those logs should be reviewed by the finance people, because they know "where people would have to go in order to cover things up."
Plante & Moran's graphs showed township's unreserved general fund dropped from $3 million in 2008 to $2 million in 2009 and that expenditures were greater than revenues.
"When we started 2009 our original budget called for revenues 7.3 million and quickly amended it and ratcheted it down to 6.2 million," Lohmeier said. "When you look at the performance charts and our expenditures versus revenue, doesn't really tell the story of how we performed the budget and what we had to do during the year."
Auditors were also asked to look at extra areas at the beginning of the audit by members of the board including a purchasing policy, conflict of interest policy and capital asset policy. After looking at current township practices, auditors recommended formally adopting each of the policies.
Trevor graduated with degrees in English and communications from Rochester College. He wrote for his college and LA View newspapers before joining The Clarkston News in May 2007.