The City & County Audits

By Bonnie Davidson

The Courier

Crunching numbers is part of the annual tradition of audits for city and counties nationwide. It's part of the process to keep governments in check and to ensure that tax dollars are being used properly. While it might not be the most sexy topic, it a very important part of the checks and balances in the country.

Both Valley County and the city of Glasgow audits were completed and the findings received in the last month. Documents and financial statements from the fiscal year ending on June 30, 2013, were reviewed.

Glasgow Audit

Glasgow city audit was presented to the city council on April 7. Sheila Doll from CHMS came to explain to the city council and others present at the meeting what the audit report found. She explained that most of the findings were minor, and many of the issues had been addressed by Glasgow City Clerk-Treasurer Stacey Amundson.

Some cause for concern involved minutes from the fire department not being kept correctly according to Montana Codes (MCA 2-3-212). Amundson explained at the meeting that the Glasgow fire chief had already been informed of the error and had made plans to remedy the situation.

Another issue with the fire department was the Fire Department Relief Assosiation wasn't being funded in accordance with another Montana Code (MCA 19-18-503). The code requires that disability and pension funds to be funded and maintained at a certain level. Due to the increase in assessed value of taxable property, the funding requirements had increased. CHMS recommended that the city council continue monitoring the assets balance and make changes accordingly.

In a letter to CHMS from the city, Amundson agreed to levy 11 mills in the upcoming fiscal year to comply with the code. The relief association had also agreed to lower the retirement premiums in the fiscal year to help the city come into compliance and that in the future the fund could be fully funded.

Other issues that were brought up included exceeding funds for the solid waste fund due to budgeted expenditures being less than what was actually spent in the fiscal year. This issue was a software issue that Amundson found and fixed in order to stay in compliance.

The Bulletproof Vest Fund also caused an issue when the grant that was received couldn't be spent in time to obtain the equipment and had to be returned. Doll explained that this along with a deficiency in the internal control structure design were minor issues. With the city staff being so small, it is actually flagged as a high risk for possible fraud, error or abuse to happen.

Valley County Audit

The Valley County audit had some of the same issues that were flagged in the 2012 report. Olness & Associates, P.C., out of Billings finished the audit for the county. Just as with the city, the small staff was considered a higher risk in fraudulent issues.

Issues with the capital assets were highlighted. Inventory that was started by a third-party in 2010 had not been completed. All physical inventory for the county-owned assets were not completed. Detail lists were sent to department heads and had not been finished. A listing of land, buildings and improvement was also not available for the auditors.

Another issue flagged for Valley County was that while the year-end physical count of materials and supplies for the road and bridge department was done, the breakdown in the funds was not provided. Year-end inventories of the weed and mosquito departments were also not performed.

The Justice of Peace for the county had also not been performing a monthly time pay account reconciliation. The cause was unknown to the auditors but they explained in their report that errors could occur from the issue.

The refuse district had a few items flagged for problems. Accounts receivable had not been recorded in the general ledger. The errors could accumulate and not be identified and attributed to a particular period. The auditors recommended that billing, collection and accounts receivable reports should be done on a monthly basis.

The refuse district also did not have formal documented accounting policies and procedures to help with such issues. The report said that the lack of procedures could expose the government to risk of loss or theft.

Bid advertisements were flagged as an issue, as they didn't contain required bid language on the landfill road overlay project. The bid was not received and it put the county in non-compliance with state law. The auditors recommended that any advertisement, request, or solicitation for bids contain the required security language.

The performance and payment bonds were not received due to road overlay project, which caused non-compliance with state law. When the commissioners contract a person or corporation to do work, they should require that person or corporation to deliver good or sufficient performance and payment bonds to follow the state codes (MCA 18-2-201).

The final flag for the road overlay project was that the project did not contain required state prevailing wage rate language, which could relieve the contractor from the obligation to pay the standard prevailing wage rate and place the obligation on the public contracting agency, which is state code (MCA 18-2-403).

After the report was submitted to the commissioners, a corrective action plan was sent. Commissioners stated that they would complete the list of land, buildings and improvement and finish inventory.

The refuse board had been notified on errors, and it will now be following the required monthly billing and provide records for the clerk and recorder's office. They have a goal to finish policies and procedures for accounting by the end of the fiscal year.

Commissioners responded to issues with the road overlay project as well, saying that they would advertise properly. They also said they would ensure that they included language for contractors to fulfill payment bonds.

While commissioners did not have an overall presentation on the audit, they all received and had time to respond to issues that came up.