Columbus – Auditor of State Keith Faber’s Office released the 2017-2018 financial audit of the Village of Spencerville in Allen County which included multiple red flags.
A finding for recovery is issued by the Auditor of State when public property has been misspent or misappropriated. The Village’s audit issued three findings for recovery and 31 other findings.
Due to the lack of procedures in place to timely pay liabilities and for monitoring expenditures made, the Village paid penalties and interest totaling $3,434 during 2018 and $1,955 during 2017 for the late remittance of pension and payroll withholdings and contribution liabilities, the late payment of utility bills, the late payment of debt obligations, and late payment of various vendors invoices for goods and services. In addition, the Village paid sales tax on purchases totaling $211 in 2018 and $68 in 2017. Penalties, late fees and interest for failing to properly pay federal income taxes, retirement withholdings, timely pay invoices, and the payment of sales taxes are not considered a proper public purpose.
A finding for recovery was issued against Lori Och, Clerk-Treasurer, and her bonding company, Ohio Risk Management Plan Inc., in the amount of $5,668, in favor of the Village of Spencerville’s General, Street Construction and Maintenance, Permissive Motor Vehicle License Tax, Police Enforcement, Water, Sewer and Swimming Pool Funds, in the amounts of $4,901, $94, $8, $250, $206, $47, and $162 respectively.
The lack of procedures in place to properly calculate wages and not having monitoring procedures in place for expenditures resulted in the Village incorrectly paying several employees during the audit period. The Council approved Lori Och, Clerk/Treasurer, will be compensated at a rate of $11,400 per year for Clerk/Treasurer position and $11,500 per year for Income Tax Administrator position for a total of $22,900 annually. Ms. Och was paid $23,171 in 2017 and $23,171 in 2018, resulting in an overpayment of $542.
The Council also approved for the period February 16, 2016 to May 5, 2017 that Sean Chapman, Village Administrator, would be compensated at $59,037 annually, from May 6, 2017 to May 18, 2018 he would be compensated at $60,808 annually and starting May 19, 2018 $62,024 annually. Mr. Chapman was paid $60,807 in 2017 and $62,024 in 2018, meaning he was overpaid $1,195.
A finding for recovery was issued against the Clerk/Treasurer, Lori Och, and her bonding company, Ohio Risk Plan Management, in the amount of $542, in favor of the Village of Spencerville’s General Fund in the amount of $80 and the Village’s Income Tax Fund in the amount of $462 and against Village Administrator, Sean Chapman, in the amount of $1,195, in favor of the Village of Spencerville’s Water Fund.
Since Clerk/Treasurer Lori Och, signed the warrants resulting in the $1,195 of improper payments to Sean Chapman, she will be jointly and severally liable in favor of the Water Fund in the amount of $1,195 to the extent that recovery of restitution is not obtained from the Village Administrator Sean Chapman.
Additionally, the Village issued a duplicate payment to Wright Refuse Inc. in the amount of $10,857 for April 2018 services rendered. A finding for recovery was issued against Wright Refuse Inc., in the amount of $10,857, in favor of the Village of Spencerville’s Refuse Fund. Lori Och, Clerk-Treasurer, is jointly and severally liable for the $10,857.
On November 19, 2020, Wright Consolidation issued a check for $10,857 to the Village of Spencerville, which was deposited into a Village bank account on November 23, 2020. This finding is considered repaid under audit.
The numerous other findings included:
- Noncompliance due to the fact that the Clerk-Treasurer failed to attend required continuing education programs;
- Noncompliance for not informing employees of the Ohio fraud-reporting system and means of reporting fraud;
- Noncompliance because the Village did not issue 1099’s to contractors during the audit period;
- Noncompliance for not issuing 1099G’s when the Village paid income tax refunds;
- Noncompliance as a result of entering executive session without providing a purpose;
- Noncompliance because the Village did not have an acknowledgement of receipt of the public records policy by the records custodian or records manager, did not have an approved records retention schedule on file as required, and all of the Village’s elected officials with terms ending in 2018, did not, during their term of office, attend a required Certified Public Records Training or have an appropriate designee attend a training;
- Noncompliance for failing to monitor the Ohio Pooled Collateral System amounts in relation to the deposits of the Village;
- Noncompliance after being unable to provide meeting minutes for auditors to review;
- Noncompliance due to having four checks outstanding longer than 90 days totaling $1,638;
- Noncompliance for purchasing gift cards without proper documentation;
- Noncompliance because the Village did not obtain a certificate of estimated resources from the Budget Commission in 2018 for all funds required to be budgeted;
- Noncompliance due to inadequate policies and procedures in approving and reviewing budget versus actual information, the Village had expenditures in excess of appropriations;
- Noncompliance because withholdings for pension were not properly or timely remitted to the Ohio police and fire pension fund in 2018 and 2017 and other incorrect rate calculations;
- Noncompliance for the lack of monitoring procedures performed by management of the remittance of the withholdings and contributions made by the Clerk-Treasurer, employee withholdings and employer contributions were not properly or timely remitted to the Ohio Public Employees Retirement System in 2018 or 2017;
- Noncompliance because the remittance of the withholdings made by the Clerk-Treasurer, the Form 941 quarterly reports and related federal withholdings were not properly filed or remitted as required by the IRS in a timely manner – as of December 31, 2018, the Village had not paid all of the federal withholdings as required;
- Noncompliance for maintaining failing to certify funds available for expenditure and for funds having negative balances;
- Noncompliance due to the failure to file annual financial reports for 2018 and 2017 by the required due dates;
- Noncompliance for the use of a debit card, increasing risk related to improper use of funds;
- Internal Control Deficiency because monthly bank to book reconciliations were not prepared or reviewed;
- Internal Control Deficiency for not maintaining all income tax returns and proper documentation;
- Internal Control Deficiency because one individual performed multiple duties without supervisory review;
- Internal Control Deficiency due to the lack of procedures to properly record leave time accrual amounts;
- Internal Control Deficiency for not performing a monthly bank reconciliation for Mayor’s Court activity and not timely remitting required disbursements to the Village and the State;
- Internal Control Deficiency as a result of utilizing cashier’s checks to correct activity for the utility department on four occasions in 2018;
- Internal Control Deficiency because the Village did not have procedures in place to accurately post authorized budgetary measurers to the accounting system and did not properly post appropriations and amendments approved by Council;
- Internal Control Deficiency for not having support for annual salary amounts paid to the Mayor and Council members;
- Internal Control Deficiency because the Village did not properly classify various receipt and disbursement transactions due to lack of proper procedures in place for recording activity and the lack of properly reviewing and monitoring procedures of financial information;
- Internal Control Deficiency due to the lack of review over daily admission collections and concessions sales revenue at the Village pool during the summer months;
- Internal Control Deficiency for lacking procedures to be used for the continuation of recording and monitoring financial activity in the Village’s disaster recovery plan;
- Internal Control Deficiency for omissions noted between the receipts per the Municipal Income Tax System reports and the receipts posted to the Uniform Accounting Network System; and
- Internal Control Deficiency again for the lack of segregation of duties for the Income Tax Administrator/Clerk-Treasurer.