Good news/bad news for council
By Jan White
CROCKETT – During the March 21 meeting of the Crockett City Council, members covered a packed agenda that began on a positive note but quickly digressed to concern over a portion of its annual audit report.
The first item of business was a presentation by Boy Scout Joseph Tuggle. For his Eagle Scout project, Tuggle elected to build seating for the disc golf course located at Davy Crockett Park. Tuggle gave board members a start-to-finish slideshow presentation of his project. With some help from fellow scouts and his scoutmaster, Tuggle constructed six wood and metal benches which he then placed in various areas throughout the disc golf course. At the end of the presentation, Tuggle thanked the donors whose funds helped supply materials for the benches and City Administrator John Angerstein for his assistance with the project.
Molly Abele from Axley and Rode, auditors for the city, presented the audit report for 2021. She stated that the firm was issuing an unmodified opinion which means that the financial report met the requirements demanded by regulations and they were prepared in accordance with accounting principles, criteria, and standards. Abele pointed out a few other changes in the audit, which were still comparable to prior years. The only significant changes were grant funds still in reserve, for instance, some funding for the new swimming pool and Covid Relief money.
The city has a couple of years to spend those funds – but they can only be spent for those purposes. Most of the information provided by Abele was fundamental or explanative.
Since the CEIDC is under the umbrella of the city, its financials are required to be reported. Abele noted that were changes in the balance sheet total revenues were comparable, but total expenditures increased by over $250k from the prior year, primarily due to incentive expenditures. She then addressed a few findings from the previous year’s audit, stating that one was with the city and three were with the Economic Development. The one with the city was corrected for the year. Two with the CEIDC were fully corrected, but the item with the pre-signed checks was only partially corrected. The CEIDC had added all board members to the signature card for check signing abilities over the concern that there was an availability problem for those allowed to sign checks. Although that portion was remediated, the auditor reported that there is still a problem with checks being signed before being filled out, which they consider to be an internal control issue. Abele stated that their position was that whoever is in charge of the oversight of those checks should have a policy of not signing any checks until they know what the checks are being written for.
Following her statement, a lengthy discussion took place between the board, Abele, and James Gentry, Executive Director of the CEIDC. Mayor Pro-tem Mike Marsh asked Gentry if they were still pre-signing checks. Gentry said no, but the auditor indicated that she was informed that pre-signed checks still existed. The auditors consider signing a check as authorizing a payment in which the entity is aware of what the check was written for and who it was written to.
Crockett mayor Dr. Ianthia Fisher said “Signatures are going on blank checks and then being filled in. So we are still out of compliance.”
Marsh added “This is the second year in a row that we’ve been penalized for this.” Since the CEIDC is under the umbrella of the city, the city is also affected by the report. “Now it’s put the funding that we’re getting from other state entities and put the city in the position that they’re not going to give us our money,” Fisher concluded.
When asked if the city had lost any funding so far from the first audit, City Administrator John Angerstein said that they were able to regain the reimbursement, but they froze all of our accounts until we submitted our corrective action plan.” Angerstein was then asked if he had any idea of what would happen when this goes through. Angerstein’s response was “Not yet.”
Fisher interjected, “What they have the power to do is not only freeze but to not deliver future funding grants.” Marsh then made the motion to accept the audit but have a special called meeting to address and correct this problem and that any of the pre-signed checks be placed on hold until the issue is resolved.
The council also heard from Police Chief Clayton Smith, who spoke on the serious topic of local check fraud. He stated that several months ago, the mail drop boxes outside the post office had been vandalized.
Their theory is that the suspects had taken the checks and utilized the names, addresses, and account numbers on the checks and duplicated them on fake checks, and attempt to cash them on mobile apps and taking them into other banks outside of Crockett.
“This is a federal offense,” Smith added. “Some of the amounts were $30k $25k, one case was $80k. They were pretty significant amounts. In most cases, the checks were stopped, but there were a few that were not.”
Other business items on the agenda for the council included:
• Ben Rosenberg, financial advisor with the U.S. Capital Advisor reported the sale summary for the Certificates of Obligation, Series 2022, for the Texas Water Development Board’s Drinking Water State Revolving Fund. The City will receive $1.7M of principal forgiveness and a $1.7M loan at zero interest related to city water and sewer improvement.
• Approval of the designation of Selena Eleby and John Angerstein as Deputy Early Voting Clerks.
• Approval of purchase of a sewer camera using funds from sanitary sewer overflow revenue.
• Approval to elect the standard allowance available under the Revenue Loss Provision of the American Rescue Plan in the amount of $1,582,113 to be used for the General Provision of Government Services.
• Approval to change the speed limits surrounding Davy Crockett Memorial Park to 25 MPH on roads surrounding the radius of the park and 10MPH within the park itself.
• Approval of the job description of the Fire Marshal.
Editor’s Note: In response to Mayor Pro Tem Mike Marsh’s motion, the City Council held a special called meeting on March 28 at 6 p.m. to address and take action on the CEIDC audit findings for 2020 and 2021. Discussion on the topic lasted well over an hour as city council members; the CEIDC Executive Director James Gentry and the CEIDC board president presented information regarding the problem with compliance as determined by City auditors, Axley and Rode. During the 2021 audit, it was discovered that some checks were being pre-signed, with the body of the check to be filled in later as needed. The same issue was reported in 2020 and affected the City’s ability to receive certain grants until corrective actions were taken. Although Gentry presented the extenuating circumstances for the 2021 pre-signed checks, the action was determined by Axley and Rode to be a repeat of the previous year’s internal control issue.
The dialogue became heated at times, but the council and Gentry eventually agreed that a procedural policy would be drafted explaining the specific order of steps to be taken when issuing a check. After submitting the policy to the council for approval, the corrective action will be sent to auditors Axley and Rode.
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