A $150,000 error in financial statements is a result of a city accounting system deficiency described by auditors Monday to city council.
Jodi Baerg and Bill Glazner of Adams, Brown, Beran & Ball reported the results of a financial audit for 2011.
“We do have a material weakness in accounts payable,” Baerg said.
The oversight occurred, Baerg said, because expenses incurred in December 2011 that should have been booked at that time were not logged into the city’s system until invoices were received and paid in the 2012 fiscal year.
Glazner said, “Last year’s supplies that were ordered, fuel that was purchased last year, even though the invoice didn’t come until January 15 for that, if the purchase was made in December, then it’s a payable for last year.”
Baerg and Glazner recommended month-end spreadsheets of unpaid invoices be replaced with a formal accounts receivable and encumberance system.
Baerg said the city lacks the number of personnel necessary for meeting internal control standards, a common situation for small cities. She said the council should continue to provide oversight and independent review of financial affairs.
The city has fully implemented 11 of 15 recommendations from the prior audit report, Baerg said. Work remains to complete an inventory system, train department heads in internal control policies, and publish financial statements within 30 days as required by law. A solution described by City Clerk Angela Lange for investing city funds was an acceptable alternative for the final item, Baerg said.
Lloyd Meyers appeared to discuss a disputed road easement encroaching on land he owns at 202 Grant in Jex Addition. A portion of Arbor Street crosses a lot indicated in Meyers’ deed as belonging to him, but the city claims an existing easement was left out of the property description more than 50 years ago.
The discussion was more conciliatory than the contentious exchange July 23 between Meyers and City Administrator Doug Kjellin.
“That street that is supposedly on my property, which I believe it is, has been there since 1960,” Meyers said. “It’s not Doug’s fault, it’s not the council’s fault, it’s not the mayor’s fault. It never was recorded in the register of deeds since 1960.”
Meyers said property taxes have been collected on the entire lot since that time, from previous owner Robert Smith, and since 2003 by Meyers.
“So far I’ve paid over $300 in taxes on that property which I can’t use and which the city has been using as a street,” Myers said.
Meyers said whatever option the city chooses to resolve the issue, his property value will suffer.
“I’d either like to have you buy an easement or buy my north lot. If you do either one, it has done nothing but devalue my property — I’m losing my frontage.
“I have people wanting to buy that property and I can’t sell it until I get this settled.”
City Attorney Susan Robson said she would work on resolving the issue.
In other business:
- The council set a hearing date of Aug. 20 to determine the fate of a dilapidated house at 700 N. Cedar St. Building inspector Marty Fredrickson recommended demolition of the house after following up on a petition signed by 10 neighborhood residents complaining about the vacant structure.
- Police chief Tyler Mermis introduced Mark Stone as a new full-time officer, which gives the department five full-time patrolmen. Stone was formerly chief in Florence.
- The council approved ordinances adopting the standard traffic ordinance and uniform public offense code.
- The council directed Kjellin to determine if surplus asphalt millings can be used by the city, and authorized sale of any excess millings to the public for $10 per bucket.
The next scheduled council meeting is Aug. 20.