Northwest Indiana Discussion

xmpt Post subject: Re: final State of the City addressPosted: Thu Mar 10, 2011 8:00 pm

Joined: Tue Nov 21, 2006 7:29 am

Proof tommy you are still lacking proof. These are the same innuendo and rumors freetime started spreading years ago, also with no proof.

Section I – Summary of Auditor's Results
Financial Statements:
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
Material weaknesses identified? yes
Significant deficiencies identified that are not considered to be
material weaknesses? yes
Noncompliance material to financial statements noted? no


Federal Awards:
Internal control over major programs:
Material weaknesses identified? yes
Significant deficiencies identified that are not considered to be
material weaknesses? yes


Type of auditor's report issued on compliance for major programs: Unqualified
Any audit findings disclosed that are required to be reported in
accordance with section 510(a) of Circular A-133? yes



Identification of Major Programs:
CFDA
Number
Name of Federal Program
14.218 Community Development Block Grants/Entitlement Grants
14.239 HOME Investment Partnerships Program
16.710 Public Safety Partnership and Community Policing Grants
66.458 Capitalization Grants for Clean Water State Revolving Funds
Dollar threshold used to distinguish between Type A and Type B programs: $300,000
Auditee qualified as low-risk auditee? no

Section II – Financial Statement Findings
FINDING 2009-1, INTERNAL CONTROLS OVER BANK RECONCILEMENTS
A review of the December 2009 bank reconcilements prepared by the City noted the following
items:

1. The City did not reconcile the Redevelopment Authority Marina (Fund 409), Redevelopment
Commission 2002 Revenue Bond Debt Service (Fund 406), or the Redevelopment
Commission 2002 Revenue Bond Debt Service Reserve (Fund 407) reported fund balances
of $6,891,952.76, $2,501.51, and $123.90, respectively, to the related bank statements.
A review of the bank statements noted that the Redevelopment Authority Marina
Fund earned $314,179.74 of interest and disbursed $7,206,082.50 for the pay-off of the
defeased 1999 Lease Rental Revenue Bonds and $50 reimbursed back to the Hammond
Port Authority before the account was closed in August 2009. The $2,501.51 and
$123.90 were disbursed to the Hammond Port Authority as reimbursements and the accounts
were closed as of May 2009. Since proper reconcilements were not performed,
the City understated receipts and disbursements and overstated the cash balances at
year end by the amounts noted above. Subsequently, the City has posted the appropriate
entries to the City's financial system to close the funds. In addition, the City Controller
has approved an adjustment to the financial statements presented herein to reflect
the activity and closing of the bank statements.

2. The City's checking bank account activity included deposits and/or electronic fund
transfers (EFTs) received between May and December 2009 totaling $3,260,477.59
which was not posted to the City's ledger as of December 31, 2009. Upon Auditor's verification
of the reconcilement, $2,500,000 of the total was determined to be an actual bank
to bank transfer from September 2009 between the City's checking and investment bank
accounts not posted to the City's financial system. The Auditor then determined that a
$2,500,000 bank to bank transfer out posted to the financial system for the City's investment
account in June 2009 was not actually transferred between bank accounts.

In December 2009, the City did post an entry to the investment bank account to adjust
$500,000; however, the year end reconcilement for the City's investment account did not
identify the September $2,500,000 transfer out not posted or the $2,000,000 transfer out
posted in error as reconciling items. The checking accounting reconcilement misrepresented
the $2,500,000 as an outstanding deposit at year end. Subsequently, the City
has either posted receipts to the ledger for the remaining $760,477.59 balance of outstanding
deposits or the appropriate adjusting entries for the bank to bank transfers. The
City Controller also approved an adjustment to the financial statements presented herein
to reflect the outstanding deposits in the correct accounting period.

3. A new payroll bank account that was opened in October 2009 was not properly reconciled
as of December 31, 2009, and did not include all reconciling items.

4. Another payroll bank account reconcilement noted monthly differences between the bank
activity and the City's ledger balance without further research. The reconcilement did not
include the bank's account analysis charge, totaling $4,452.93 for the year, as a reconciling
item nor were the charges posted to the City's ledger.
Controls are not in place to ensure that all funds are reconciled, that all reconciling items are
properly identified, and that all reconciling items noted on monthly bank reconcilements are timely posted
to the City's detail of receipts and disbursements ledgers so that material over or under statements of
receipts or disbursements does not occur.

Governmental units should have internal controls in effect which provide reasonable assurance
regarding the reliability of financial information and records, effectiveness and efficiency of operations,
proper execution of management's objectives, and compliance with laws and regulations. Among other
things, segregation of duties, safeguarding controls over cash and all other assets and all forms of information
processing are necessary for proper internal control.

Controls over the receipting, disbursing, recording, and accounting for the financial activities are
necessary to avoid substantial risk of invalid transactions, inaccurate records and financial statements
and incorrect decision making. (Accounting and Uniform Compliance Guidelines Manual for Cities and
Towns, Chapter 7

From: Marsha Hahney <mlhahney@gmail.com>Subject: Re: XXXXXXX

To: "Little Tommie" <justcallmetommy@yahoo.com>

Date: Sunday, February 13, 2011, 1:38 AM



I will talk to them again soon. I think XXXX is interested in protecting her family. I think working with the G men would help in that regard.
I wish there was some good way to tell the voters the finance info you are posting, but it's got to be kind of simplified to get through to them. Do you agree?I really AM calling my contact at SBOA Monday and asking j why they aren't auditing College Bound.
Bet it stinks like everything McD has his mitts on!
All those "exceptions" they grant to kids who don't qualify sure opens the door for things like kickbacks.

Unfortunately they are not a law enforcement agency.

FINDING 2009-2, SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

The City prepared a Schedule of Federal Grant Receipts and Disbursements for 2009 that was
materially inaccurate. We found 6 additional grant programs with combined expenditures of $2,920,855
that were not listed on the schedule. Three of the six not included were American Recovery and Reinvestment
Act (ARRA) grants. This represents 44% of the total federal expenditures detailed on the
Schedule of Expenditures of Federal Awards. The City's grant schedule also did not include all of the
required information necessary to properly identify all federal programs and expenditures including:
CFDA title and number, award number and year, name of the Federal agency, and name of the passthrough entity.[/ color]


The [color=#800000]City did not ensure that employees had the adequate training, nor did they take advantage of
available opportunities to seek the guidance necessary, to prepare an accurate schedule of expenditures
of Federal awards. In addition, there was a lack of management oversight or approval of the schedule before it was filed with the State. Adequate internal control over reporting of Federal awards requires that employees be aware of the applicable requirements and that they have the requisite knowledge and skills
to prepare accurate schedules. In addition, adequate internal control requires sufficient supervision and
oversight by management and the governing bodies to ensure accurate reporting of Federal awards.
Circular No. A-133, Audit of States, Local Governments, and Non-Profit Organizations, Subpart
C, has the following requirements for grantees:

The auditee shall:

(a) Identify, in its accounts, all Federal awards received and expended and the Federal
programs under which they were received. Federal program and award identification
shall include, as applicable, the CFDA title and number, award number and year, name of
the Federal agency, and name of the pass-through entity. the importance of a pass thru entity is so that they can see how the money has been spent and if spent with in the performace guidelines of the funding source.

(b) Maintain internal control over Federal programs that provides reasonable assurance
that the auditee is managing Federal awards in compliance with laws, regulations, and
the provisions of contracts or grant agreements that could have a material effect on each
of its Federal programs.

(c) Comply with laws, regulations, and the provisions of contracts or grant agreements
related to each of its Federal programs.

(d) Prepare appropriate financial statements, including the schedule of expenditures of
Federal awards in accordance with §___.310.

(b) Schedule of expenditures of Federal awards. The auditee shall also prepare a schedule of
expenditures of Federal awards for the period covered by the auditee's financial statements.
While not required, the auditee may choose to provide information requested by Federal awarding
agencies and pass-through entities to make the schedule easier to use. For example, when a
Federal program has multiple award years, the auditee may list the amount of Federal awards
expended for each award year separately.

Controls over the receipting, disbursing, recording, and accounting for the financial activities are
necessary to avoid substantial risk of invalid transactions, inaccurate records and financial statements
and incorrect decision making. (Accounting and Uniform Compliance Guidelines Manual for Cities and
Towns, Chapter 7)

We recommended that officials implement procedures to adequately identify and accurately
report all Federal award programs.

Section III – Federal Award Findings and Questioned Costs
FINDING 2009-3, EQUIPMENT AND CAPITAL ASSET MANAGEMENT CONTROLS
Federal Agency: U.S. Environmental Protection Agency
Federal Program: Capitalization Grants for Clean Water State Revolving Funds
CFDA Number: 66.458
Award Number: WW0516452
Pass-Through: Indiana Department of Environmental Management
In 2007, the Hammond Sanitary District obtained a State Revolving Fund loan from the State of
Indiana's State Revolving Loan Fund. The Sanitary District, with the Indiana Department of Environmental
Managements approval, drew down the loan as needed to pay contractors. The draw downs are
36.07% federal financial assistance. The loan proceeds are to fund a listing of construction and engineering
projects, including the purchase of equipment, as approved by the Indiana Department of Environmental
Management.

The Sanitary District does not maintain adequate financial records for capital assets, including
construction in progress. A report titled "Bond Issue Actual/Budget" was presented as the detail for construction
in progress. The report listed each project that was to be financed by the State Revolving Fund
Loan, the budget for each project, the expenditures for each project as of December 31, 2009, and the
remaining budget balance for each project. A comparison of the report's expenditures as of December
31, 2009, to the Trial Balance (the control) construction in progress accounts noted material differences.
The detail report balance exceeded the control balance by $1,094,980.
Internal controls were not in place to reconcile the general ledger accounts (the control) to the
Bond Issue Actual/Budget report presented as the supporting detail of construction in progress. Failure to
accurately track additions to construction in progress accounts during the construction period of a project
could materially affect the reliability that all costs associated with each project will be captured when
transferring the project costs to the appropriate capital asset account, such as equipment or improvements,
upon completion of the project.


40 CFR 31.32(d) states in part:
"Procedures for managing equipment (including replacement equipment), whether acquired
in whole or in part with grant funds, until disposition takes place will, as a minimum, meet the
following requirements:
(1) Property records must be maintained that include a description of the property, a serial
number or other identification number, the source of property, who holds title, the acquisition
date, and cost of the property, percentage of Federal participation in the cost of the
property, the location, use and condition of the property, and any ultimate disposition data
including the date of disposal and sale price of the property.
(2) A physical inventory of the property must be taken and the results reconciled with the
property records at least once every two years."
We recommended that officials establish procedures to ensure that assets purchased

FINDING 2009-4, REPORTING

Federal Agency: U.S. Department of Housing and Urban Development
Federal Programs: Community Development Block Grants/Entitlement Grants,

HOME Investment Partnerships Program
CFDA Numbers: 14.218, 14.239
Award Numbers: B-08-MC-18-0006, M-08-MC-18-0204

Quarterly reports are required by the U.S. Department of Housing and Urban Development.
When reviewing the Community Development Block Grant and the HOME Investment Partnership Program
quarterly reports, it was noted that City's ledger was not used to complete the reports.
A comparison of the quarterly reports to the City's ledger noted differences for the beginning cash
balance, receipts, disbursements, and ending cash balance reported on the Federal Cash Transactions
Report for the two grants as noted below.


Per Federal
Cash Transaction City's
Report Ledger Difference
Beginning cash balance $ (212,116) $ 405,018 $ (617,134)

Receipts (including program income) 1,512,182 1,639,810 (127,628)
Disbursements 1,643,518 2,161,055 (517,537)
Ending cash balance $ (343,452) $ (116,227) $ (227,225) it appears there was no accounting for how Nearly $2.1Million dollars was spent.

Community Development Block Grant



HOME Investment Partnerships Program

Per Federal
Cash Transaction City's
Report Ledger Difference
Beginning cash balance $ 2 9,982 $ 196,043 $ (166,061)
Receipts (including program income) 627,164 671,554 (44,390)
Disbursements 7 77,213 777,214 (1)
Ending cash balance $ (120,067) $ 90,383 $ (210,450)

The U.S. Department of Housing and Urban Development cannot adequately monitor the grant
funds, or adequately assess their needs if reports are incorrectly completed.
City officials could not identify the differences noted above. No attempt was made to reconcile
the City's receipts, disbursements, and balances ledger to the quarterly reports. Internal controls are not
in place to ensure the amounts reported agree to the City's ledger.

24 CFR 85.20 states in part:
"(b) The financial management systems of other grantees and subgrantees must meet the
following standards:

(1) Financial reporting. Accurate, current, and complete disclosure of the financial
results of financially assisted activities must be made in accordance with the financial
reporting requirements of the grant or subgrant.

(2) Accounting records. Grantees and subgrantees must maintain records which adequately
identify the source and application of funds provided for financially-assisted
activities. These records must contain information pertaining to grant or subgrant
awards and authorizations, obligations, unobligated balances, assets, liabilities, outlays
or expenditures, and income.

(3) Internal control. Effective control and accountability must be maintained for all grant
and subgrant cash, real and personal property, and other assets. Grantees and subgrantees
must adequately safeguard all such property and must assure that it is used
solely for authorized purposes.

(4) Budget control. Actual expenditures or outlays must be compared with budgeted
amounts for each grant or subgrant. Financial information must be related to performance
or productivity data, including the development of unit cost information
whenever appropriate or specifically required in the grant or subgrant agreement. If
unit cost data are required, estimates based on available documentation will be accepted
whenever possible."

24 CFR 92.508 states in part:
"(a) General. Each participating jurisdiction must establish and maintain sufficient records to
enable HUD to determine whether the participating jurisdiction has met the requirements of
this part. At a minimum, the following records are needed:

(iv) Records demonstrating adequate budget control, in accordance with 24 CFR 85.20,
including evidence of periodic account reconciliations."
We recommended the City establish procedures to ensure the City's ledger is used when preparing
the required reports as they are the City's official record.

FINDING 2009-5, HOME ALLOWABLE ACTIVITIES
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: HOME Investing Partnership Program
CFDA Number: 14.239
Award Number: M-06-MC-18-0204

In 2008, the City offered an early, voluntary retirement incentive package to its employees if the
employee retired by December 31, 2008. The incentive package included awarding the employee $750
for each year of employment completed with the City. One Department of Planning and Development
employee retired as of December 31, 2008, and was paid $24,750 on January 5, 2009, in accordance
with the retirement package.

Even though the employee's salary for 2008 was paid from the City's Redevelopment Commission
Operating Fund, the $24,750 incentive benefit was paid from the City's Affordable Housing Fund (Fund #285). The Affordable Housing Fund receipts and disburses the City's HOME Investing Partnership
Grant Program. City officials provided documentation that the employee's incentive package payment
would be paid from the HOME grant funds due to lack of funds in the Redevelopment budget.
The $24,750 is considered to be a question cost of the HOME Investment Partnership Program
grant since the retirement package payment was paid from HOME grant funds even though the employee
was not paid from HOME grant funds throughout the year.

24 CFR 92.504(a) states in part:
"The participating jurisdiction is responsible for managing the day to day operations of its
HOME program, ensuring that HOME funds are used in accordance with all program requirements
and written agreements, and taking appropriate action when performance problems
arise. The use of State recipients, subrecipients, or contractors does not relieve the participating
jurisdiction of this responsibility. The performance of each contractor and subrecipient
must be reviewed at least annually."

We recommended the City establish internal controls to verify the disbursements paid from grant
funds are for allowable activities of the grant.

FINDING 2009-6, HOME PERIOD OF AVAILABILITY
Federal Agency: U.S. Department of Housing and Urban Development
Federal Program: HOME Investment Partnerships Program
CFDA Number: 14.239
Award Number: M-02-MC-18-0204

The City requests federal funds from U.S. Department of Housing and Urban Development (HUD)
through the Integrated Disbursement & Information Services (IDIS) system. The IDIS system requires an
activity number and an amount in order to complete a drawdown. The activity number is specific to each
grant year and allowable activity as established by the City at the beginning of each year.
The grant requires that awarded funds be committed within two years of authorizing and expended
within five years of awarding. In 2009, the City drew down and expended $40,000 from the 2002
grant year. An approved extension of the grant period was not provided for audit.


24 CFR 85.23(a) states:
"Where a funding period is specified, a grantee may charge to the award only costs resulting
from obligations of the funding period unless carryover of unobligated balances is permitted,
in which case the carryover balances may be charged for costs resulting from obligations of
the subsequent funding period."
We recommended the City establish controls to ensure all grant funds are obligated and disbursed
within the period of availability.

DISBURSEMENTS NOT COUNCIL APPROVED


The City budgets the Gaming Revenues Fund to allow for the Mayor and each Council Member
to have "discretionary" funds. In other words, the Mayor and each Council Member can decide how to
spend their specific allotment. Some of the funds are used to pay for street paving, and purchases of
vehicles for the street department.

In these instances, the vendor is paid directly and the claim is submitted
to the Council for approval. In other instances, the Mayor or Council Member may decide to
donate funds to other City departments. For example, funds are donated to the "Festival of the Lakes" or
to the "Henry Unit." In these examples, a claim is prepared; however, it is not submitted to the Council for
approval. These donations account for a significant dollar amount of the expenditures made from the
Gaming Funds.

IC 5-11-10-1.6 (c) states:
"The fiscal officer of a governmental entity may not draw a warrant or check for payment of a
claim unless: . . .
(5) payment of the claim is allowed by the governmental entity's legislative body or the
board or official having jurisdiction over allowance of payment of the claim.

FESTIVAL OF THE LAKES
Parking and Concessions

Tickets were sold for parking and beer concessions; however, the tickets were not retained for
audit. Ticket sales reports were prepared, but report totals did not always agree to the cash collected.
Furthermore, non-prescribed receipts were issued by controller's office employees for collections made at
various times during the event. [color=#800000]Subsequent to the 2009 Festival of the Lakes, officials were instructed
these items were to be retained for audit.[/color] For the 2010 Festival of the Lakes, we expect officials to retain the proper documentation.