Colfax 2018 audit report recommends IT plan and budget comparisons
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By LeAnn R. Ralph
COLFAX — The 2018 audit report for the Village of Colfax is recommending a strategic plan for information technology and that the village board regularly review budget comparisons to avoid over-expenditures.
The lack of control over information technology, such as computers and computer software, has been a significant deficiency for Colfax in the audit letter for the past several years, said Jennifer Homeyer of Baumann Associates at the Colfax Village Board’s August 26 meeting.
The village should have a strategic plan for IT, and “a written policy is a good thing,” she said.
“Significant deficiencies” are less severe than “material weaknesses” but still merit attention, Homeyer noted.
A strategic IT plan would include policies on computer and network security, back-ups of information and replacement schedules for computers and software.
The village board also should regularly review budget comparisons to avoid over-expenditures, Homeyer said.
In 2018, the village’s budget had several over-expenditures.
After the end of the budget year, the village board should be reviewing the budget and then reallocating sections of the budget to prevent significant overages, Homeyer said.
Over-expenditures on a municipality’s budget is a violation of state law, she pointed out.
Colfax also had two material weaknesses, although the same two material weaknesses are present for 99.9 percent of the municipalities for which Baumann conducts audits, Homeyer said.
The first material weakness is a lack of segregation of duties among office staff, and the second is that Baumann Associates, as the village’s auditor, prepares the audit report on behalf of the village.
A small village administrator-clerk-treasurer’s office with only two employees makes it difficult to segregate duties to ensure adequate checks and balances, Homeyer said.
“Board involvement will help for material weaknesses,” she said.
Village Trustee Margaret Burcham wondered if quarterly reports of budget comparisons would help.
The village’s Workhorse software can help provide information for the village board, and some boards review monthly reports of the budget to the actual amount spent to date, Homeyer said.
The village board reviewing budget comparisons regularly also will help for developing the next year’s budget and will help to avoid over-expenditures, she said.
In 2017, the village had a third material weakness related to the reconciliation process for the Colfax Rescue Squad’s accounts receivable, which has since been removed as a material weakness, Homeyer said.
Regarding the second material weakness, Baumann prepares the audit report for almost all of the company’s clients, she said.
Baumann Associates has issued an “unmodified clean opinion” regarding the 2018 audit of the Village of Colfax’s finances, which is the highest opinion that can be issued, Homeyer said.
Rescue squad
Every year, the Colfax Rescue Squad’s budget contains a certain amount of accounts receivable that have not been paid.
How do other municipalities approach recoverable debt for their ambulance services? asked Scott Gunnufson, village president.
The problem of how to address being paid for ambulance service accounts receivable “is a common issue,” Homeyer said.
Homeyer commended Colfax for using the state’s Tax Refund Intercept Program (TRIP).
Under the TRIP program, municipalities submit a debt that is owed, and when the person who owes the debt is in a position to receive a tax refund from the state, the tax refund is diverted to the municipality to help cover the debt.
Homeyer said she also was aware of a state debt collection program and that she would send information about it to Lynn Niggemann, village administrator-clerk-treasurer.
Other municipalities that are Baumann Associates clients “have seen some success,” Homeyer said.
Over time, the Colfax Rescue Squad’s accounts receivable has gotten better, she said.
Unassigned
The village’s unassigned fund balance in the 2018 audit is $655,586.
Money in the unassigned fund balance can be thought of as the village’s savings account or as a contingency fund available to cover any unexpected items or emergency repairs.
Assigned
The village’s assigned fund balance in the 2018 audit is $592,784.
Money in the assigned fund balance has been set aside for the following:
• Spreading garden or fencing at the Colfax Evergreen Cemetery — $2,363.
• Major equipment replacement — $171,017.
• Library operations — $29,419.
• Street improvements — $284,878.
• Holiday decorations — $3,230.
• Future improvements to the village hall — $81,877.
Restricted
The village’s restricted fund balance in the 2018 audit is $345,585.
Money put into the restricted fund can only be used for the stated purpose and includes the following:
• Perpetual care of Colfax Evergreen Cemetery — $28,500.
• Future library operations — $18,343.
• Future improvements to the village hall, including donations and grants — $77,912.
• Future Tax Increment Finance (TIF) fund activities — $172,032 for TIF No. 3, and $9,514 for TIF No. 4.
• Debt service expenditure — $39,009.
