By LeAnn R. Ralph
COLFAX — After the turnover in the village clerk’s office for the past couple of years, according to an audit report, the village’s financial statements needed numerous adjustments, and the village board should consider making procedural changes.
Eric Davidson, a certified public accountant with Bauman Associates for 19 years, presented the audit report for 2011 to the Colfax Village Board at the January 14 meeting.
As is the case with all small municipalities, Colfax does not have enough administrative staff to segregate responsibilities for handling the village’s finances, Davidson said.
“You can only do so much with two (employees),” he said.
The clerk’s office employs the administrator-clerk-treasurer and the deputy clerk.
The audit report notes that the village’s accounting software, Peachtree, has many known internal control deficiencies because a user can alter transactions after the transactions have been approved.
The village clerk’s office will be converting to Workhorse software this year, which will eliminate the software control deficiencies.
“We went without a clerk so long, and we’ve had so many different people in the office, but it will be a smoother operation this year,” said Gary Stene, village president.
“I am confident this place is running much better,” he said.
John Jahr, who had been the clerk-treasurer for more than 30 years, died in November of 2010.
Davidson noted that during the audit, auditors made numerous adjustments to the general fund, rescue squad fund, and water and sewer funds.
Adjustments are not typically part of an audit and should be completed by an administrator or a clerk-treasurer before the audit, he said.
Jackie Ponto, the administrator clerk-treasurer, began working for the village toward the end of the summer in 2012, and the audit was for 2011.
During the audit, auditors spent significant time reconciling interfund balances between the general, rescue squad and water and sewer funds.
The audit report recommends that the village reconcile the fund balances on a monthly basis.
The audit report recommends that the rescue squad’s monthly billings and receivables be reconciled to the general ledger monthly.
And instead of writing off rescue squad accounts once a year that have not been paid, Bauman Associates is recommending the write-offs be done twice a year after making all reasonable collection efforts.
Sewer and water
The audit points out that the sewer and water utility billings for the third and fourth quarter in 2011 were not done correctly.
A rate increase of 24 percent did not go into effect during these quarters as scheduled.
The auditors discussed the situation with the person who had been the billing clerk at the time and realized that the update was not processed correctly by the software and was not double-checked prior to issuing the billings, Davidson said.
The audit report recommends that test bills be run for future rate increases to make sure that the rates are being updated as approved by the village board.
Village personnel should contact the billing software’s support department to make sure the updates are done correctly, the report says.
The audit report notes that the general fund budget adopted by the village board for 2011 requires a comparison between the expenditures and the budgeted amount.
The problem is that the general fund contained over-expenditures, Davidson said.
The over-expenditures were a violation of Wisconsin Statute 65.90(s)(a) which requires a two-thirds vote to amend budget line item amounts, he said.
The violation of state law does not carry a monetary fine, but Davidson said he recommended a review of the budget and the actual amounts spent.
The village board should formally amend the budget to keep spending within the budgeted amounts, he said.
During the audit, it was also discovered that the village’s deposits at Dairy State Bank exceed the amount covered by the Federal Deposit Insurance Corporation (FDIC) and the State Guarantee Fund.
The auditors are recommending that the village request a pledge of securities from Dairy State Bank as collateral for all village deposits in excess of the FDIC and State Guarantee Fund Coverage so that in the event of a bank failure, the village’s deposits would be covered, Davidson said.
During the audit, it was discovered as well that the timecard for the clerk-treasurer is not approved.
The auditors are recommending that a village board member review and approve the timecard to strengthen internal control over monitoring the duties performed by the clerk-treasurer, Davidson said.
Sewer and water
The audit reports notes, too, that the village’s sewer and water utilities operated at a loss in 2010 and 2011.
The total loss for the sewer and water utility in 2010 was nearly $40,000, and in 2011, the loss was nearly $75,000.
Rate increases were approved during 2011 for the sewer and water utilities, and Davidson said the auditors are hoping that the increases will reduce or eliminate the losses.