Auditors find issues with Seneca County finances
By DAVID L. SHAW email@example.com 1 hr ago
WATERLOO — Using accounts payable as a “dumping ground,” a lack of accounts being reconciled and poor accountability for grant money are some of the “discrepancies” auditors from Bonadio Co. have found so far in an audit of Seneca County general fund finances for 2017 and 2018.
The Board of Supervisors Tuesday heard a verbal report from Randy Shepard and Ken Pink of Bonadio, hired for the audit.
They promised to keep in close contact with Finance Offcer Michael Reynolds, R-Covert, and the full board as the audit work continues and more discrepancies are uncovered and dealt with. A written report will be produced when the audit is done.
“This report will not be favorable,” predicted outgoing County Manager John Sheppard, whose last day will be Sept. 4.
Randy Shepard said when he began looking at the financial records in mid-June, County Finance Director Brandi Deeds had resigned.
“I found discrepancies and we’ve worked to reconcile them. There were issues with accounts payable and the grant money received by the county was not being reconciled back to January 2017,” he said. He said state and federal governments require such reconciliation.
The months of January and February 2017 have been reconciled and auditors are moving forward month by month, working with the Finance Department staff.
“It’s unfortunate, but I’ve done this before. We’re looking at a deadline of Sept. 30 to get much of this done. We may not meet it and I can’t promise we will, but we will try. The county may lose funding if it files too late,” Shepard said.
“We’re also looking for malfeasance and red flags. We haven’t identified any yet, but we will keep looking,” Shepard said. Pink said auditors have removed opportunities for malfeasance and believe the risk of finding it are greatly reduced.
Reynolds asked how much past the Sept. 30 deadline the work may take.
“We will put the resources here to meet the deadline. It’s hard to say when we’ll be done after we get the information assembled. The audit team will work to reconcile these accounts, training your staff at the same time,” Shepard said.
“What do you need to reconcile? Cash accounts? Accounts payable?,” asked Lisa Hochadel, D-Waterloo, a finance committee member.
“All accounts. We want go make sure all expenditures are properly recorded in accounts where they should be,” Shepard said.
Supervisor Cindy Lorenzetti, D-Fayette, said when the 2017 and 2018 discrepancies were found, she asked Shepard why the attorney general or state comptroller were not notified. Shepard said the process calls for them to notify the county manager of the problems first. “If there is evidence of fraud or malfeasance, then we would go higher up,” he said.
Lorenzetti asked if the county would be fined for not filing the audit by Sept. 30. Shepard said no, but said state and federal governments could withhold funds for not meeting guidelines. She also asked how the county was paying for the additional audit work being done by Bonadio.
Sheppard said about $60,000 was budgeted for the audit, but there is more funding available in the finance department budget because of unfilled vacancies.
“What has happened since the end of 2016 to cause this chaos?,” asked board chairman Bob Shipley, R-Waterloo.
Shepard said procedures the county has been using were outdated and ineffective, with little internal controls in place. “But were they adequate in 2016?” Shipley asked.
Shepard said Bonadio had a baseline of data for 2016 to do an audit, but did not look beneath those numbers. He said they are looking beneath the basic data for 2017 and 2018.
Shepard said information for the 2016 audit was reliable “even if it is ineffcient.” “But why did we do okay in 2016? What changed for 2017?” Lorenzetti asked.
She did not get an answer. Hochadel said Bonadio should work with the board to make changes “so this doesn’t happen again.”
In other action, the board went into executive session to discuss the “medical, financial, credit or employment history of a particular person or corporation or matters leading to the appointment, employment, promotion, demotion, discipline, dismissal, suspension or removal of a particular person or corporation.”
Sheppard’s resignation was the topic. The board met alone for about 35 minutes and then called in Personnel Director Kathy Corona, County Attorney Frank Fisher and Assistant County Attorney Christopher Folk. That closed-door session lasted another 23 minutes.
The board adjourned without taking any action, but Shipley said an interim county manager may be announced at a special board meeting Tuesday.
Board members Greg Lazzaro and Lee Davidson were absent.