March 27, 2008

Lind council addresses audit findings

By Jennifer Larsen

News editor

Lind Town Council members met for a special work session with Toni Nelson, Small Cities Specialist with the Washington State Auditor’s Office, on March 14 at the town hall.

According to an article published in the Jan. 31, 2008, issue of the Ritzville Adams County Journal, state audit of the town’s financial records from Jan. 1, 2005, to Dec. 31, 2006, identified deficiencies in internal controls and financial reporting.

“According to the report, the town clerk receipts and handles cash, records cash receipts and adjustments and conducts other financial transactions without that work being reviewed by someone who is independent of those duties.

“Additionally the state found that the clerk’s posting of utility payments is also not reviewed. “The clerk-treasurer’s work is not reviewed to ensure utility payments posted to the subsidiary ledger represent actual cash deposits.”

“Finally, the state noted that the town’s financial statements, supplemental schedules and footnotes to the financial statements are prepared by the clerk-treasurer without an independent review for accuracy.

“The audit report didn’t indicate that any criminal activity had occurred.”

The council requested meeting with Nelson to ask questions about how the town is addressing those deficiencies.

Councilman D.J. Williamson started the work session by asking Nelson if the self audit procedures implemented since the audit report, such as having Mayor Larry Koch and Williamson checking the deposits, are enough.

Nelson was pleased to hear that the town was proactive in addressing the audit findings. She also recommended forming a finance committee, which the town has already established.

“It’s a one man shop here, so it’s very difficult,” she said. “The Town of Lind isn’t the only one being hit over the head with the ominous words ‘internal controls.’ Everyone’s suffering from the same issues and trying to figure out what to do.”

She noted that monthly procedures needed to be done, whether by committee or even by sharing with another town, to ensure that there are adequate internal controls in place.

“My canned response for cash receipting is you don’t want the same person to take care of a transaction from beginning to end,” Nelson said.

As an explanation, she said that if Phillips accepts a utility payment, someone else should make the bank deposit.

Or if Clerk/Treasurer Patty Phillips is the one who picks up the mail, someone else should open the mail. Phillips could also make a list and take a count of the mail received, and have someone else ‘sign off’ on what was received.

The responsibility internal control falls not only to the town clerk/treasurer, but to the council as well. Nelson advised that council minutes should include when a council member asks a question about different vendors or strange amounts to show that the council is aware of the town’s financial status.

The council must also review the mayor’s budget every year as mandated by state law “so you truly understand where you’re at fiscally before you make budgetary decisions,” Nelson said.

“I know I learned a lot last year because Patty and I did the budget,” Koch said. “I realized it was a lot of work, but I didn’t know how much pressure Patty was under.”