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State auditors check on city

September 22, 2010 | 08:55 AM
Two members of the state's nonpartisan Legislative Audit Bureau spent a couple hours with Lake Geneva officials Friday morning.

According to state auditor Jan Mueller, the auditors visited Lake Geneva to "follow up" on the city's policies, procedures and internal controls as cited in the 2009 reports from local auditing firm Deignan and Associates.

She said it's not typical for her office to send auditors to a municipality.

"Typically, we review the state," she said. "But, from time to time, we visit a local municipality."

State Rep. Samantha Kerkman (R-Powers Lake) is a member of the state's Committee on Audit. She said the bureau follows some fraud complaints and will sometimes go out to a municipality to check on what's going on. She said the village of Twin Lakes recently received a visit from the State Audit Bureau.

However, she said she was not aware of the visit to Lake Geneva or the reason for it.

"They might have received some information or are acting on an anonymous complaint," Kerkman said. "They don't tell us when their auditors are going out. We trust Jan and let her do her job."

On Monday, Mueller was quick to state that the auditors were not in Lake Geneva to perform an actual audit of the city.

"We were there to visit the city to follow up on the 2009 information," she said.

City Administrator Dennis Jordan said Monday the auditors met with him and other city staff. He said they gathered information about the city before visiting and once here looked at the city's policies and procedures and asked questions about the city's tax incremental financing district.

He said they also asked about former aldermanic candidate Barb Hartke's direct legislation effort for a comprehensive audit of the city's finances. Jordan said the auditors questioned why it wasn't put to a referendum.

He said city officials provided answers and the auditors left soon after.

Mueller said she felt "uncomfortable talking at this point" about who or how her bureau was contacted regarding the city. The bureau has a fraud hotline phone number listed on its website.

She did say that the bureau received "multiple contacts."

Mueller said there will be a report filed, but she didn't know when that would occur. She said the bureau still was waiting for the city to provide additional information before the report can be finalized.

As in previous years, the city's 2009 internal controls report cited several improvement needs with some "significant deficiencies" specifically related to segregation of duties because of a relatively small staff and preparation of financial statements not being outsourced.

Deignan and Associates, which performed the 2009 audit, noted a number of other aspects that "are opportunities for strengthening internal controls and operating efficiency." Several items were included in the management letter that have been addressed in the past several months, including parking and beach revenue collections. Others on the list included suggestions regarding segregation of duties, combining financial personnel in one department and addressing the city's petty cash policies.

Deignan and Associates weren't the only ones to perform a government-wide financial analysis. In a separate assessment of the internal controls performed in December 2009, Certified Public Accountants, Green Bay, made several suggestions to the city.

According to that 13-page document, the city could improve its "reliability and timeliness of internal and external financial reporting." The documents state that in 2008, the city did not do that and it created difficulties in managing city budgets for management. The report states that is one of the reasons the former comptroller was replaced by current comptroller Peg Pollitt.

The report also cites recommendations for receipts, revenues and accounts receivable procedures, reducing the number of separate checking accounts, and creating a policy for maintaining petty cash funds.

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