With auditors suggesting more oversight and the state asking for a Corrective Action Plan (CAP), Clarkston City Council is taking action.
‘All departments will be reviewed closer to ensure all expenses are anticipated and recorded,? said Treasurer Sandra Barlass.
She prepared a CAP and sent it to Lansing on Feb. 8. Council members reviewed the plan, as well as a letter from the state, at their Feb. 25 meeting.
The Department of Treasury in Lansing sent the letter, Jan. 9, in response to Clarkston’s 2012 audit. It outlines four violations of state statute or deficiencies possibly causing noncompliance with Michigan laws.
One violation the state identified was ‘actual expenditures exceeded the amounts authorized in the budget.? Another was ‘a budget was not adopted for all required funds.? Other violations had been reported in audits in previous years; they were deficiencies in the city’s investment policy and a lack of segregation of duties.
The letter insisted the City respond with a CAP within 30 days or else they could lose the ability to borrow money or would be subjected to another audit, which would be performed by the Department of Treasury at the City’s expense.
The CAP prepared by Barlass calls for the city treasurer and finance committee to ‘limit overruns to the budget by reviewing the financials on a monthly basis.?
The most significant budget overrun the auditors identified was $7,733 for a City Hall and Grounds expense. According to Barlass, ‘the majority of this variance ($6,388) was due to a difference in classification of expenses.? The CAP stated, ‘our auditors reclassified the expenses.?
In response to the state statute violation requiring a budget for all funds, the City adopted a budget for the Mill Pond Improvement Board on Jan. 28.
Regarding deficiencies from previous years, the City’s CAP states ‘the investment policy was updated in February 2012 and reviewed by our auditor without incident.?
Additionally, the City intends to improve the lack of segregation of duties by using a temporary employment staffing company ‘in the event a key employee is not available,? Barlass wrote in the CAP.
According to City Manager Dennis Ritter, the city has never used a staffing company before and none has been chosen yet.
Ritter also said, the City may choose another auditing service in the future. They currently use Janz and Knight PLC. New auditing services would be discussed at the City’s next Finance Committee meeting on March 11.
The City Council will meet again on March 11 at 7 p.m. at the Village Hall on Depot Road.