GREENWOOD – Many of the errors found in the state’s audit of the Village of Greenwood have already been corrected, according to village officials.
“A lot of what was talked about in here I’ve already fixed,” said Village Clerk Cheris Cadwell at the June 12 meeting of the Greenwood Village Board of Trustees.
The State Auditor of Public Accounts (APA) released its attestation report for the Village of Greenwood on June 7. The report scrutinized financial accounts for the village dating from Oct. 1, 2017 to Sept. 30, 2018.
The attestation report was done because the APA had found issues with the village’s financial accounts dating back to September 2017, and also because the village failed to file an annual audit, the APA said in the attestation report.
The village’s written response to the report was: “The Village of Greenwood respectfully accepts the findings in your report. We appreciate the oversight and welcome your suggestions on ways we can improve. We have started taking corrective action and hope to have the mentioned issues resolved soon.”
The APA found material weaknesses in in four areas, significant deficiencies in three areas and material noncompliance in two areas, according to the report.
Material weaknesses were found in four areas during the attestation study. The APA defines a material weakness as a deficiency, or a combination of deficiencies in internal control, where there is a reasonable possibility that a material misstatement of the village’s financial statements will not be prevented, or detected and corrected, on a timely basis.
A number of issues were noted in the village’s internal control, the report said, that resulted in a finding of material weakness and material noncompliance.
These include a lack of documentation supporting how expenses were allocated between funds, incorrectly recording revenues and bond/debt payments, bank reconciliation issues, inaccurate accounting entries, incorrectly recording motor vehicle taxes and inappropriate general journal entry.
Cadwell said they have already corrected many of these issues, including properly recording bond funds received from the county for water and street funds. The village began making daily deposits last summer, which corrects the issue of depositing checks received from the county in a timely manner.
“We’re going every day so we’ve got that problem handled,” said Village Board Chairperson Don Wilken.
The APA had several recommendations to the village to correct issues with internal control, including having a board member review monthly bank statements, a review to ensure the amounts paid agree with the claim amounts approved by the board, updating authorized signers, depositing all checks within a week of receipt and making sure a fixed asset policy and procedures is in place.
Lack of documentation also brought a finding of material weakness and material noncompliance for the village. The APA tested 18 payments to vendors and found there was not proper documentation to support each one, including failure to publish claims in a legal newspaper and failure to provide contracts or invoices to support expenses.
The APA also said the village failed to maintain proper documentation regarding the sale of public land for $50,000 and did not pass an ordinance on the sale in a timely manner.
The four significant deficiencies found by the APA were in the areas of customer utility account testing, payroll and use of tax increment financing (TIF) funds.
The APA defines a significant deficiency as a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention.
For the report, the APA tested 10 utility customers, including two village board members, out of the 291 total in the village. They found issues with each customer tested. The main issues included incorrect amounts billed or the billing was not properly supported, the report said.
“Based on the testing completed by the APA, the Village failed to bill all 10 customers tested appropriately, resulting in almost $1,700 in unsupported, uncollected, or inadequately documented utility charges, when compared with the utility ordinances provided,” the report stated.
Documentation of payroll was also determined to be a significant deficiency by the APA. The report said the village did not have adequate documentation for certain payroll expenses when paying a temporary employee and for reimbursement to an employee.
The village also did not properly allocate payroll costs of employees between street, water, electric and sewer funds, the APA determined. There were also issues with the failure to pre-approve overtime payments in accordance with the village’s policies and paying an unauthorized cell phone stipend.
The village’s TIF usage was also questioned in the report. Greenwood has two TIF projects – the Greenwood Village Project and the Norma Jean Redevelopment Project.
The Greenwood Village Project was created to acquire and clear property, install infrastructure to prepare sites for redevelopment and make additional repairs, improvements, replacements and do any construction necessary for the project.
The village used money from TIF revenues generated by the Greenwood Village Project to pay for general municipal projects and to pay off a loan for the playground in the village park. TIF was also used to pay a loan for community center improvements.
These payments do not agree with the general purpose of the village’s TIF agreements or the description of the project, the report said. The APA recommends the village board reviews the TIF agreements and consults the village attorney to make sure TIF funds can be used for municipal infrastructure improvements in the future.
Wilken said many of the issues noted in the report were simply accounting errors.
“It wasn’t really that we’re doing anything wrong, it’s just that we’re putting them in the wrong accounts,” he said.
Wilken also said that 80 percent of the errors were made before Cadwell was hired last June. Even so, Cadwell said she asked the state to perform the village’s audit again next year to ensure the village continues to operate according to the APA’s standards.
“I want to do it the correct way,” she said.
Several of the board members commented that the report turned out better than expected.
“I’ll be honest, I didn’t think it was that bad,” said Board Member Megan Piehl.
Earlier in the meeting, the board discussed two matters that were connected to the attestation report.
The board approved a motion to designate motor vehicle tax revenues for the street fund and also discussed whether or not village employees should be paid a stipend to use their personal cell phones or be issued a cell phone from the village. The item was tabled to get quotes on purchasing cell phones for employees.