Published: October 31, 2009 05:20 pm      

State audit raises questions about New Albany’s bookkeeping

England wants a new system, Coffey demands another audit

New Albany should implement better record-keeping measures for its financial books after a state audit released Thursday found discrepancies in some city funds.

The audit — performed by the Indiana State Board of Accounts — reviewed the city’s basic financial statements for 2008. It’s intended to provide direction for the City Council and city administration.

Charles Pride, supervisor of the State Board of Accounts, said there was no money believed to be missing.

But the report states the audit was “unable to verify the accuracy of the cash and investment balances because monthly bank and record balances were not always investigated or investigated timely so that the discrepancies could be identified and corrected in a timely manner.”

Financial records presented for the audit were incomplete and did not include all of the financial transactions of the city, the report states. There was $9,125,523 in revenue and $2,527,446 in disbursements not recorded in the city’s records for 2008.

The audit was unable to determine the accuracy of several journal entries for expenditures due to lack of supporting documentation, including reimbursements for travel expenses without original receipts attached to the claims.

The study found deficiencies in the condition of records, including $527,826 more in unidentified cash recorded than being held in city bank accounts.

At the end of 2008, the general fund had cash and investment balance deficits of $4.1 million, according to the audit. The deficit is a violation of state statute.

The audit states that cash and investment deficits arose primarily from disbursements exceeding receipts and the shortfall should be repaid with future revenue.

The fire pension fund was also overdrawn by $596,125 last year.

But the deficits were related to lack of property tax receipts being paid on time to the city, administration officials said.

There were overpayments made of $324,045 to various vendors in 2008. As of Sept. 29 the audit states $61,134 had yet to be refunded. That money is owed by Coffman Construction for sewer construction work.

The overpayments angered Council President Dan Coffey, who said the $61,134 could go towards hiring a police officer. He said the state’s audit is not thorough enough, and would like to see a private audit administered.

“When you’re talking about that kind of money, talking about layoffs and those types of things, we need an audit,” Coffey said.

The purchase of the Baptist Tabernacle building along East Fourth Street was also purchased outside of proper procedure, the audit states.

The church was purchased for $98,000 at a sheriff’s auction sale without the approval of the council. According to the audit, the council should have passed a resolution indicating its intent to buy the building and two appraisals should have been obtained to determine fair market value.

“They’re trying to find ways of working around the system instead of working through the system,” Coffey said of the administration.

The audit also called for the city to start maintaining a log of its cell phones and cars that are distributed to employees to determine how they are being used. The audit states the log should differentiate business use from private use.

Pride said a better control system is needed to manage money coming and being spent in the city.

“I’m not saying it’s common everywhere, but it’s one of the more common findings that you’ll see,” Pride said. “If there is a finding in a city report, it will be on internal controls.”

Enhanced technology and more employees in the city controller’s office would help, Pride said.

Mayor Doug England said the administration may ask the council to fund a new computer system for City Controller Kay Garry.

“We have to reconcile the books, make sure there’s checks and balances and get all the journal entries right,” he said. “[The computer] we have is just an old clanker.”

But Coffey said he would against spending more money on employees or computers until there’s more accountability.

“I’m tired of spending taxpayers’ money on things that don’t work,” he said.

In her corrective action plan submitted to the state, Garry said the controller’s office is aware of the condition of the 2008 records and that the books will be more closely monitored in the future.

She added department heads have been instructed to double check any documentation for accuracy before recording a claim. The same has been asked of the controller’s staff as it relates to paying vendors to ensure double payments aren’t being made.

Garry said changes to how the 2008 audit was administered caused disruption and was hard to manage with the size of her staff.

She disagreed with some of the deficiencies found in the audit report.

“There has been no monies missing in my 15 years as controller, but I must tell you the system we are working with is not a good financial system,” wrote Garry, who has been praised by the current administration as well as former mayor James Garner for her ability to handle the city’s finances.

She said the current system cost the city more than $700,000 from 2002 through February of 2004. Garry believes reports were duplicated which led to the recent audit finding of unaccounted for money.

Additionally, $3 million in 2008 taxes were not paid until June of 2009, which signified the large overdrawn cash balance in the 2008 general fund, Garry said.

The late payments by the state of tax receipts also explained the fire pension deficit, Garry stated.

England said the audit does not point to overspending, but Coffey disagrees. He said a private, full-scale audit of the city’s finances will tell exactly what shape the city is in.

“The administration cannot sit there and spend the way they’ve been spending and keep the information hidden from the council because it’s our job to make sure we have a balanced budget,” he said.



SEE FOR YOURSELF

• The state audit is accessible by visiting the Web site www.in.gov/sboa