by: Diane Benjamin
David Hales loves to tout their “CLEAN AUDITS”. FYI David: Dixon Illinois had “Clean Audits” too – while they lost over $50,000,000 to an employed thief. Clean Audits mean very little, especially when the Auditor sees potential problems and the City does nothing to correct them.
From the 2010 Auditor’s letter to the City of Bloomington:
During the audit, we noted that there is no reconciliation performed between cash
collections and the number of towed cars that are released. We noted duties are
segregated within this process at the police department. However, as cash is the only
means of payment for towed vehicles, additional controls should be in place to ensure
City assets are safeguarded.
As a CPA, I will interpret that statement for you. Cash collected for towed cars can easily be pocketed because nobody is paying attention.
Here’s another one:
In gaining an understanding of the City’s internal control, we noted that all employees
with access to Springbrook, the City’s water billing system, can make adjustments in the
system. Adjustments can be made to consumption, service rates, and billings. While all
changes are tracked in Springbrook, there is no formal review of adjustments.
Interpretation: Any employee with access to the Water Billing System can make changes. Employees could cancel their billing and all their friends and nobody would ever know. They could even issue refunds!
One of my favorites:
During our audit, we noted certain City subsidiary ledgers were not in agreement with the
general ledger. Reconciliations from the subsidiary ledgers to the general ledger identify
errors and needed corrections.
Interpretation: The City books don’t balance!
More on balancing:
During our audit, we noted the bank reconciliations initially provided included bank fees
and interest income that were incorrectly included as reconciling items. After this was
brought to management’s attention they were able to correct the reconciliations. In
addition, the General fund bank reconciliation was not completed until July and upon
receipt did not reconcile to the general ledger.
This is CASH that doesn’t balance. The bank sends the City a bank statement at the end of the month and the City doesn’t make sure their balance matches the Bank? Are you kidding me?
A former employee just admitted to stealing over $20,000. Think she is the only one?
Why are these important?
Obviously because fraud and theft can be easy under lax standards. It gets worse: ALL of the above was also on the 2009 report!
Surprise! They are on the 2011 too: 2011-City Management Letter
More surprises from 2012:
- 12-1 – No reconciliation between cash collected and the number of towed cars that are released(Repeat of prior year finding 11-2 and 10-2)
- 12-2 – Inadequate segregation of duties over water receipts and billing (Repeat of prior year findings: 11-4, 10-5, 09-6, and 08-9) FY12 – Final Single Audit Report
All of the above are from reports to the MAYOR, CITY MANAGER, and CITY COUNCIL.
Stockton was Mayor, Hales was and still is the City Manager – and he has received BIG raises for the wonderful job he is doing. (cough, cough). This letter went to the potted plants on the City Council. Obviously they think mismanagement and theft should be rewarded. Council: You are David Hales boss! You didn’t think it was important to tell him to FIX the problems?
You were never suppose to see these reports. I received them under the Freedom of Information Act.
If you believe only $20,000 has been stolen from the City, please re-read. When an Auditor points out where theft and fraud can easily be accomplished, and City Management does nothing – the City is complicit when a theft occurs.
Why do you think the latest theft didn’t go to trial and the defendant was offered a sweet plea deal? Trials expose secrets the City wants to keep.