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Audit issues were known in August

By Staff | Feb 19, 2014

New information has come to light regarding flawed budget reports that the City of Sistersville’s CSSI program had been printing and council had been approving.

While the city was reportedly made aware as early as August 2013 that the State Auditor’s Office (SAO) was refusing to perform the 2012-13 audit using the submitted financial reports, two councilmen with ties to the Finance Committee are stating they were not informed of these issues until January, after newly appointed Councilman and Finance Committee Member Mark Klages established contact with the SAO.

Former Finance Committee Member Bill Rice and Present Finance Committee Member Mitch Corley have gone on the record that other city officials did not bring these problems to their attention. How many and which city officials knew about the SAO’s determination in August remains unclear, but Rice and Corley said they were also unaware until recently that the city had contacted a “third party” Certified Public Accountant in the fall to get the budgets in order.

Rice’s statements coincide with his assertion at the Sept. 9 council meeting, when he resigned from the Finance Committee.

“I’d like you to take me off that (the Finance Committee) tonight and put someone else on it,” he said at the time. “I do not feel that I get enough information as to where the city stands or where the departments stand, how much money’s left in them, what’s been spent and everything else.”

Following his resignation from the Finance Committee, he openly questioned the budget report at the Nov. 12 regular meeting, and former Recorder Julie Schleier told him that he was not understanding how to read the report.

“This (CSSI) was the budget program that was on the computer when I came here,” she said at the time. “I’m not the one that chose the CSSI budget program software package. I’m just the one who has implemented it.”

Although the city was reportedly made aware of the audit issues in August and Rice questioned the budget printouts at the Nov. 12 regular meeting, there was no mention at the meeting of the SAO refusing to do the audit based on CSSI budget reports submitted by the city.

Since January Rice has sat in on Finance Committee meetings, which are posted and open to the public. At the Feb. 6 meeting, the city discussed audit options regarding city finances and city officials.

Mayor Ann Doig said that the SAO has since canceled the third party audit due to an ongoing fraud investigation; said “fraud investigation” was in reference to an incident regarding missing city funds and does not relate to the audit situation.

“The state is doing our audit this year,” she said. “The accountant in Moundsville has to do a financial statement on our general fund only, because the State Auditor’s Office does not do the financial statement. They’re doing it due to the fact that there’s still the investigation on fraud and to make sure everything is right.”

Because municipal audits are typically bid out, the city will be looking at the possibility of accepting audit bids for the 2013-14 fiscal year, unless the state mandates otherwise.

Klages said that Debbie Price of the West Virginia Municipal League has advised them to bid out a closing audit on former Recorder Schleier.

“Why are we having a closing audit on Julie?” asked Doig. “We didn’t have a closing audit on Diana (Mace) when she left. We won’t be having a closing audit when Brenda leaves.”

“According to the municipal league, Brenda is a different circumstance because she’s a temporary employee, only here for a couple of months,” he said. “Their point is ‘how much damage can she do in two months?’ I can’t answer as to why a closeout audit wasn’t done when Diana left.”

Doig said that if anything is wrong, the state will find it when they do their audit.

“I’m not saying we need to do an audit because there’s wrong we need to find,” said Klages, stating that he agreed with the municipal league’s advisement. “They’re telling us we need to do an audit to close the books. When you have a business and a CEO leaves, you close the books. Typically when the mayor changes out, you should close the books. Any time someone with the ability to impact the finances in a major way departs, you should close that out so you can start fresh. It’s good business practice.”

He said that bidding out any audits, including closeout audits, was ultimately council’s decision. Regarding the erroneous budget reports that brought about these issues, he said solving problems with the CSSI system from which those reports are generated is a top priority. As of the Feb. 6 meeting, the company had not responded to the city’s questions about the program.

“We can’t just keep adding garbage on top of garbage,” he said. “We’ve got to get it fixed now, so going into the future the people have confidence in our financial accounting system.”

Corley reported that there was not a book regarding CSSI; Mayor Doig said that was because the company did not have a manual finished.

“Some of the questions that I’ve had regarding payroll, I’ve been able to work through on the phone,” said interim Recorder Brenda Weekly, stating that she now had better information on how to look at transaction details. “I actually printed the income statement. That looks a little better, but the balance sheet is still out of whack.”

“We can’t work on a ‘get well’ plan because they didn’t answer from CSSI,” said Klages, stating that their questions about the program were sent two weeks prior to the meeting.

He mentioned the possibility that the issue may be caused by “faulty coding” in the program. The city determined to contact other municipalities that use the same budgeting system.

According to city officials, the CSSI software has a way to close out the year, but the problem was derived in part because none of the months have been closed out. While that would allow numbers during those months to be changed, Weekly noted that the system has an “audit trail.”

She also noted that different entities are in need of the city’s correct monthly financial statements.

Other options included getting advice from other municipalities that use the same CSSI program, using another system as a comparison to pinpoint the problem, and paying for an on-site visit from the company services if need be.

Recent estimates for water bills were also discussed. The weather, with temperatures cold enough to cause some meters to burst, was cited as the reason for estimating. They plan to return to exact readings in the near future.

Under discussion of city bills, Weekly reported that the city’s purchase cards were not used during the month of January because they had been shut down for a time period. No reason was given as to why the p-cards were temporarily shut down.

They also discussed the possibility of switching to a small business plan for their WiFi because the city is not using the current amount of bandwidth for which they are paying. That plan might save them $70 a month.

While it was noted that money should be coming to the ferry through the development authority, they discussed their concern that the past due “grace period” for the ferry’s insurance would expire before the funding arrived. They considered other legal methods of paying for it, such as using the city’s contingency fund, which would then have to be reimbursed as soon as possible. It was noted that some of the ferry’s funding has stipulations on it and can only be spent for certain aspects of operation. The ferry insurance reportedly costs $4,100 quarterly.

Before adjourning, they discussed the need to establish city budgets prior to the March 28 deadline.