(Spirit Lake)– State Auditor David Vaught Friday released the findings of a reaudit his office conducted on the city of Spirit Lake’s finances.
The re-audit covers the period of July 1st, 2001 through June 30th, 2003, along with selected transactions and information from December 31st, 1997 through June 30th, 2001, and the year ended June 30th, 2004.
The reaudit is the result of a petition filed with the state by a group of citizens and at the request of the city council.
Specifically, the report sites a 162,460-dollar expense in Tax Increment Finance money in the year ended June 30th, 2004 for the purchase of excavator equipment. The report says the disbursement “may not be allowable per the city’s urban renewal plan or chapter 403 of the Code of Iowa”. In its response, the city says Iowa Code grants it the right to construct various utilities and that while city crews do that work, it was necessary to purchase the excavator equipment. In his conclusion, the State Auditor writes that although the purchase of equipment used solely for TIF projects may be acceptable, the city should establish policies and procedures to ensure future use of the equipment is restricted to TIF projects and the TIF funds are properly reimbursed if the equipment is used outside the TIF project.
The report also makes reference to what’s described as “unauthorized checking accounts” in the Police Department. It says numerous checks were written to discount and hardware stores, grocery stores, restaurants, convenience stores, individuals and other vendors. It states that due to a lack of documentation, the type of service or product provided could not be identified. In its response, the city agreed with the lack of documentation, saying it too is unable to determine if the expenses were proper. The report says bank statements, deposit slips and cancelled checks weren’t available, and the transactions and balances weren’t recorded in the City Clerk’s records. The report recommends the city develop procedures and policies to ensure bank accounts are authorized and bank statements are properly maintained and reported.
Also called into question is payments to former Police Chief Dan Thomsen who resigned in 2002. The report says the former Chief was paid 6,542-dollars during a period he was not rendering any services to the city. It also says the former chief was overpaid 383-dollars for accrued vacation time. It says neither payment was authorized by the city council. In its response, the city maintains the council didn’t have to act on the matter since there were impending matters in which the former chief was involved and that an agreement had been reached between the Mayor and former chief. In conclusion the State Auditor sites a chapter of state Code that allows the Mayor to appoint and dismiss a Police Chief, however it must be subject to approval by the city council. As a result, the report says the council, not the Mayor, should have authorized and approved the payments.
The report says the city needs to adopt a written policy regulating use of city-owned credit cards. It makes reference to a credit card charge to Payless Cashways in the amount of $74.20 for ten russet pad bar stools to be reimbursed by the Okoboji Lutheran Bible Camp. The report states “we were unable to determine the purpose for this charge or whether reimbursement was in fact received by the city”.
The report refers to a three dollar meter rental fee the city of Spirit Lake started charging the city of Orleans in March, 2000, of which $2.50 a month was to be paid to the city of Orleans for meter maintenance and other infrastructure expenses. The report states that the remittances from the city of Spirit Lake to the city of Orleans for the meter rental fee for March, 2000 through September, 2003 weren’t made until September, 2003. It says when the rental fee was submitted, the payment wasn’t based on the actual number of meters and was calculated starting in June, 2000 rather than March 2000 when the charge originated. As a result, the report says the amount that should have been paid to Orleans was incorrect. The report doesn’t say how much is owed for that period, but it does say for the period October, 2003 through December, 2003 Orleans was underpaid 487-dollars. In response, the city states it will formalize the agreement with the city of Orleans, and that it will reimburse Orleans for the underpayment and remit the balance due on a quarterly basis.
The report also says city employees should be required to keep time cards. In its response, the city says the current policy of salaried employees only keeping track of sick and vacation times is sufficient to document the amount of time they work. In its conclusion, the report states that city employees should still be required to fill out time sheets that can be reviewed and approved by a supervisor or independent official. The report also states that the city council should approve merit increases or changes in pay, contrary to the city’s current policy that allows supervisors to do that based on performance reviews.
A copy of the report has been filed with Dickinson County Attorney Rosalise Olsen for review and possible action.
Mayor Eric Nielsen declined immediate comment, saying he hasn’t had a chance to look at the report yet.
The report can be seen in detail on the State Auditor’s website at http://www.state.ia.us/government/auditor/reports
