Iola City Council members will hear Monday from an auditor who identified a “material weakness” and other “significant deficiencies” with the city’s 2011 budget.
Scot Loyd of the McPherson-based accounting firm of Swindoll, Janzen, Hawk & Loyd, LLC accounting firm will speak with council members about the 2011 audit which was handed to city officials this week.
In a report accompanying the official statement, Loyd said the “material weakness” deals with reconciling bills sent out from Iola’s ambulance department in 2009 and 2010.
When Iola started up its own ambulance service in December 2008, all billing and collections were handled by the ambulance department. However, when the billing responsibilities were shifted to the city clerk’s office in January 2011, city clerk personnel had difficulty reconciling outstanding ambulance bills. Until recently, city clerk personnel “had no access” to the 2009 and 2010 billing records.
Loyd recommended city clerk employees go back over the 2009 and 2010 ambulance billing records to reconcile as many bills as possible, even though the statute of limitations on some uncollected bills likely has passed in many cases.
“It would be extremely beneficial to get these old ambulance billing accounts receivable all reconciled and cleaned up as soon as possible,” the report said.
Loyd identified the collections issue as a “material weakness” because it did not allow management or employees “to detect or correct misstatements on a timely basis.”
‘SIGNIFICANT deficiencies” are considered less severe than a material weakness, yet important enough to merit attention by city governors.
In this case, Loyd said two bank accounts — one an Escrow account for the old IMP Boat site, the other an account to handle Community Development Block Grant funds for housing rehabilitation — were not a part of the city’s Incode General Ledger System, and thus not overseen or monitored by the City Council.
The IMP account is a private purpose trust fund, and had $20.80 worth of interest income activity in 2011.
The housing grant account had $126,440.33 worth of activity, with the city receiving the state grant funds, then dispensing those funds to private contractors for housing rehabilitation.
City Clerk Roxanne Hutton told the Register the housing grants account had been kept apart of the city’s general ledger because the city’s checking account can generate interest income. The city is prohibited from generating interest on the grant funds.
Loyd also identified the city’s lack of a purchasing policy as a significant deficiency in 2011. Council members approved a purchasing policy earlier this year.
He also recommended the city tighten other policies and procedures regarding the budget.
