The City of Minden has received an unqualified opinion following its annual audit of financial statements and operations.
Kristine Cole from the local accounting firm of Wise, Martin and Cole, LLC, who compiled the report presented during Monday’s city council meeting, said an unqualified opinion is given when the finances are fairly stated in accordance to general accounting principles.
Two findings of non-compliance were found during the city’s annual audit.
Click here to view the city’s annual audit.
Auditors discovered three instances where the city did not comply with Louisiana’s public bid law, a non-compliance item also listed in the 2014 audit.
In March 2015, the city paid $14,996 for a ball field scoreboard and no quotes were found for the purchase, auditors said.
Also in that month, auditors said the city purchased a water screen for $135,000 and used city labor for the installation. The city considered this project to be a public works project under the $150,000, however, no estimates of labor costs to install the screen were reported. Auditors said they were unable to determine if the city complied with public bid law for the purchase.
In May 2015, auditors said the city paid $15,884 for chemicals for the water plant and no quotes were found for the purchase.
According to law, public works projects that exceed $150,000 are required to be bid and purchases of $10,000 or more, but less than $30,000, are required to have at least three quotes.
In response to auditors, the city said the department supervisors were made aware of the public bid law. They also said the May 2015 purchase included emailed quotes, but were not permanently secured and made part of the purchase process, and considered it to be a public works project.
The second area of non-compliance focused on the payroll for civil service employees.
During an internal audit by the city, overpayments and underpayments were discovered being made to some employees in the police and fire departments, the report states.
Auditor’s also noted that employees of the departments received holiday pay for holidays that fell on employees’ days off. Auditors said they were unable to determine if that was a violation of the civil service rules, state law and/or city policy.
According to the report, the overpayments to employees may be a prohibited donation of public funds and a violation of state constitution.
Auditors recommended the city develop internal controls to ensure compensation is being calculated correctly and public funds are being spent within the law.
They also recommended the city seek legal counsel to determine if the city should pay employees holiday pay when the holiday falls on the employees’ day off and to determine the compliance to the constitution concerning overpayments.
In response, the city said, payroll personnel have received additional training and additional measures have been put in place to ensure the accuracy of payroll as well as the city attorney providing legal counsel on the matter.
While reviewing documents, auditors noted four items that represent immaterial deviations and compliance and suggestions for improved controls and listed them in a management letter.
The firm questioned the control over the utility billings and said the city was not following cut-off policy designed to ensure all delinquent accounts are collected on a timely basis or services are discontinued.
Auditors pointed out multiple items concerning the process which included a council member with a commercial business account whose utility usage appears to be incorrectly calculated; 14 city employees and a council member who had overdue utility accounts during the year and were not cutoff, according to city policy; four current city employees that had utility accounts that were closed and overdue balances were never collected; and one instance where a water department employee recorded her own payment into the city’s system.
Auditors said the lack of collection of payments for city utility services might be considered a donation of public assets, which violates Louisiana Constitution Article VII, Section 14.
They recommended the city develop controls over utility billings to address enforcement of cutoff procedures and collection policies.
“The city concurs with the findings and has instructed the department supervisor, verbally and in writing, relentlessly to enforce the city’s policy to disconnect the utility service if payments are not received at the requested time,” Minden Mayor Tommy Davis said in his response to auditors.
In the case of the wrongful calculation of a council member’s commercial account, Davis said the mistake was corrected and the city is making efforts to collect the lost revenue. He also said the utility department employee had been advised that employees cannot enter their own payment. There was no response in regards to the four city employees’ accounts that overdue balances were not collected after closed in the mayor’s letter.
The report also pointed out several capital assets purchased during the year were not added to the capital asset list maintained by city, as required by law.
The report goes on to say failure to maintain the list opens the city up for possible loss, theft and misuse of assets.
“The city will instruct, by memorandum, each department again to carefully and correctly execute this requirement,” Davis said. “Furthermore, the accounting department was advised to ensure, that all capital asset purchases are listed on the year end inventory list.”
Another area of question focused on the process over supplemental pay.
The audit pointed out the city is required to certify the number of full-time commissioned officers the city employees to the state treasurer.
“When certifying the number of full-time officers employed by the city, the city failed to remove a police officer who left the employment of the city on Sept. 2, 2013, from the supplemental pay warrants submitted to the state treasurer,” the report states.
The audit also pointed out that because of the oversight, the city had to reimburse the Louisiana Department of Public Safety and Corrections $8,647 for the overpayments made to the former police officer and has set up a payment plan to recoup the money from that ex-employee.
Auditors recommended the city implement a process to ensure supplemental pay warrants are updated with the correct information and to make efforts to ensure the full amount is collected from the former employee.
Davis said the city employee in charge of supplemental pay was made aware of the problem and consequences and added an additional layer of oversight by having the assistance city clerk check the payroll against the supplemental pay warrants.
The final area of concern was in the enforcement of agreements, which could lead to a prohibited donation of public assets and a violation of the state constitution, auditors said.
The city entered into a seven-month agreement in April of 2015 with Party Express Catering to provide concessions during sporting events at the recreation center with a monthly rental fee.
According to the agreement, should Party Express Catering fail to pay the monthly fee and continues to be in default 10 days after written notice by the city, the city has the option to cancel the lease or request all rent due for the unexpired term of the lease be paid.
The audit points out the city only received three payments from Party Express catering and no written notice was provided to Party Express Catering to exercise the option to cancel or collect.
Auditors suggested the city enforce the terms of the agreement.
“The city has not enforced collections of its commercial lease because of overlooking the agreement,” Davis said. “It is an agreement we have never had before and for the first three months, the lessee satisfied his portion of the contract.”
Davis said City Clerk Michael Fluhr contacted Party Express Catering in writing and requested the outstanding rental fees be paid on a payment plan.
According to the letter, Fluhr requested the $3,428 owed to the city be paid back in monthly payments of $500 dollars as well as the six percent of profits over a certain amount as stated in the agreement.
By the Numbers
The city’s net position decreased by $1 million as a result the year’s operations.
During the year, the city had a total revenues of $30.3 million compared to $31 million last year, a decrease of roughly $825,000.
Total expenses for the year were $31.3 million, compared to $32.8 million in the prior year, a decrease of roughly $1.5 million.
Cole said the audit was submitted to the Louisiana Auditor’s Office, as required by law. The auditor’s office rated the audit with a C grade.
In other business, the council:
Adopted the minutes from the April 4 meeting.
Condemned property located at 626 Sunset Lane.
Appointed Guy Mandino to the Minden Municipal Fire & Police Civil Service Board filling the unexpired term of Andrew Myles, who resigned after being injured in an accident. The term is set to expire on July 29, 2017.
Reappointed Janet LaBruyere and Theron Winzer to the Minden Municipal Fire & Police Civil Service Board as college list board members. Their terms expire on July 29, 2017.
Declared certain city property as surplus.
Heard and accepted the monthly police report.
Click here to view the city’s audit.