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Audits find poor financial reporting

BY Carolyn Muyskens - cmuyskens@chronicle-tribune.com

Grant County's auditor's and treasurer's offices have faced persistent problems with errors and discrepancies in their financial reporting, according to the state's audit of the county's 2016 and 2017 finances.

The State Board of Accounts (SBOA) noted failed bank account reconciliations, monthly financial reports filed more than a year late and other incomplete financial records in its audit of the treasurer's office.

The state said bank account reconciliations were attempted, but not completed, for any month in 2016 or 2017.

Monthly financial reports for 2015-16 weren't filed until March 2017. When they were filed, the reports showed a bank balance that was $2 million off what the county's financial software said the county had in funds.

Former treasurer Sarah Melford resigned in 2018. Her time as head of the treasurer's office was marred by these and other issues, including the investigation into her former chief deputy Peggy Dickerson, accused of stealing thousands from the county coffers.

But according to Treasurer Tiffany Griffith, who took over for Melford in 2018, those problems are mostly in the rear-view mirror.

Griffith said taxpayers could “breathe a sigh of relief” with the changes she has implemented in the office.

“We've come a long way,” she said.

The treasurer said communication between the treasurer's and auditor's offices has been key to fixing errors and discrepancies in the county's financial reporting. Typically, Griffith said, discrepancies between the auditor's and treasurer's reports of the county's financial state arise when a transaction or adjustment in one office isn't communicated to the other office.

The audit also noted a lack of internal controls and segregation of duties in the office that allowed errors to slip through. Griffith said in response she's begun a two-person review process for financial reports.

The office has now caught up on its monthly financial reports, and the auditor and treasurer's balances are currently off by $247.71, as opposed to a difference of $102,997 between the two offices at the end of 2017, noted in the audit.

In the auditor's office, the state flagged inaccurate grant reporting and fund balances in the annual financial report that were off by a total of $2.8 million in 2016 and $1 million in 2017. It also noted a lack of controls over payroll approval and discrepancies in the county's tax sale fund reporting.

Former county auditor Roger Bainbridge, whose term expired at the end of 2018, pinned some of the errors on personnel shuffling in his office that resulted in less experienced employees handling the reports.

“Overall, it wasn't that bad,” Bainbridge said of the audit results. The findings were mostly reporting errors that the county had fixed before the state even alerted him to the issues, he said.

But current Auditor Jim McWhirt, who used to be an SBOA auditor himself, said he wouldn't have been happy with such a report from the state.

“From the perspective of is there any money missing, is there any money improperly (used), no, it's fine,” McWhirt said. “But in my other jobs if we had reports like that, I would not be feeling good about that, personally." 

While the problems weren't serious per se, in McWhirt's view, the issues, particularly when the treasurer's office wasn't turning in monthly reports, meant the county hasn't always had the most complete or accurate information when the County Council, for example, is making crucial budget decisions.

“The big picture is we need to do a better job of reporting (our finances),” McWhirt said.

Part of that strategy for the new auditor will be personally reviewing reports before they are submitted and having “more than one eye” look things over.

The County Commissioners have changed the way they approve payroll at the SBOA's request, as well. The commissioners now must approve a specified dollar amount rather than just approving payroll generally.

Commissioner Mike Burton characterized the financial reporting issues as “a few bookkeeping issues” and said he felt good about the county's performance.

“Overall I believe it was a good audit. We didn't see any really big issues,” Burton said.

The 2016 audit also briefly noted the state's special investigation into Dickerson.

The SBOA said Dickerson substituted personal checks for cash from the daily cash bank deposits in an amount of $1,634.12 in 2016. In 2015, the state reported Dickerson did the same for $9,561.72. The checks she submitted in place of the cash were returned for insufficient funds, according to the state. Dickerson has since been charged with theft and a jury trial is currently scheduled for April. 

Griffith was aware public trust in her office was damaged by the missing money. "Due to the issues with past employees,” Griffith said, she has begun a biannual personnel review process she hopes will flag employee problems in the future.

“We've made huge strides in the office, and we've done everything that we can to make sure all the money is as secure as it can be,” Griffith said.