Northwest Indiana Discussion

PAYROLL DEFICIENCIES


1. The City's salaried employees are paid bi-weekly on Friday based on "Payroll Earnings
Forecast" submitted by the departments to the City Controller's office on the previous
Friday. The pay period for the salaried employees is the week of pay day and the week
before pay day. The "Payroll Earnings Forecasts," which are signed by each department
head, states in part: "I, hereby certify . . . that each employee has performed the services
for which the salary or compensation is paid; . . ." However, since the "Payroll Earnings
Forecasts" are delivered to the Controller's office usually by Monday or Tuesday of pay
week, salaried employees have not yet completely performed the service for which
department heads certify. The certified forecasts received by the Controller's office are
for the pay period ending the day after the pay date. Thus, salaried employees receive
their pay a day before the last day of the pay period which results in salaried employees
being compensated in advance of service.


Indiana Code 5-7-3-1 states in part: "Public officers may not draw or receive their salaries in
advance . . ."

ACCOUNTS PAYABLE VOUCHERS

Use of Credit Cards

Payments made by the City for the Mayor's American Express Card were not always supported by detailed receipts. From April 22, 2010 through March 8, 2011, the Mayor charged a total of $3,916.85
to the American Express Card. The accounts payable vouchers for the American Express Card payments
did not provide the proper supporting detail invoices for 50 percent of the charges as detailed below:



Vendor Amount
American Airlines $ 553.40
AT&T 4 64.28
Giovannis Restaurant 1 79.60
Indiana Newspapers 1 76.06
Sixers 73, Marathon Petroleum, Lukes 1 47.18
Embassy Suites 1 33.49
Oil Express 1 34.79
MobileMe Apple 1 05.93
Enterprise Rent-a-Car 72.14
Total with no detail invoices $ 1,966.87

Tom, your an attorney the rule reads as follows:

The State Board of Accounts will not take exception to the use of credit cards by a governmental
unit provided the following criteria are observed: . . .

7. Payment should not be made on the basis of a statement or a credit card slip only.
Procedures for payments should be no different than for any other claim. Supporting
documents such as paid bills and receipts must be available. Additionally, any interest or
penalty incurred due to late filing or furnishing of documentation by an officer or employee
should be the responsibility of that officer or employee. (Accounting and Uniform
Compliance Guidelines Manual for Cities and Towns, Chapter 7)


All claims, invoices, receipts, accounts payable vouchers, including those presented to the governing
body for approval in accordance with IC 5-11-10, should contain adequate detailed documentation.
All claims, invoices, receipts, and accounts payable vouchers regarding reimbursement for meals and expenses
for individuals must have specific detailed information of the names of all individuals for which
amounts are claimed, including the nature, name, and purpose of the business meeting, to enable the
governing body to authorize payment. Payments which do not have proper itemization showing the business
nature of the claim may be the personal obligation of the responsible official, employee or other
person for whom the claim is made. (Accounting and Uniform Compliance Guidelines Manual for Cities
and Towns, Chapter 7)

Advance Payments – Redevelopment

Four Redevelopment Commissioners were advanced $252 each for hotel costs for the ReCon
Convention held in Las Vegas, Nevada, on May 23-25, 2010. Three of the advance checks were dated
April 22, 2010, and the other check was dated May 10, 2010. The accounts payable vouchers included
the hotel confirmations attached which detailed the arrival and departure dates and the related nightly
room rates. The $252 was calculated by using the nightly room rates for May 22, 23, and 24 plus
applicable taxes.


Compensation and any other payments for goods and services should not be paid in advance of
receipt of the goods or services unless specifically authorized by statute. Payments made for goods or
services which are not received may be the personal obligation of the responsible official or employee.
(Accounting and Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7)

VENDING SERVICES

As a convenience to City employees and the public while conducting business at a City facility,
the City provides several vending services such as Automated Teller Machines (ATM), snack machines,
drink machines, newspaper machines, and pay telephones. On the advice of the City attorney the City does not engage in any contractual agreement with any of the vendors for these types of convenience
services since there is no consideration exchanged. ,Instead, the City provides "letters of permission" to
place their machine at the requested locations. However, these "letters of permission" are not approved
by the Board of Public Works and Safety.

Indiana Code 36-9-6-3 states:
"(a) Unless otherwise provided by statute or ordinance, the works board has custody of and
may maintain all real and personal property of the city.
(b) A city works board may design, order, contract for, and execute:
(1) all work required to improve or repair any real or personal property that belongs to
or is used by the city; and
(2) the erection of all buildings and other structures needed for any public purpose."

Concession Agreement


The agreement between the Hammond Fire Fighters Association and the Hammond Parks and
Recreation states in part, "The Hammond Fire Fighters Association have agreed to split 18% of the profit
from the 2010 Festival of the Lakes beer concessions after product is paid for . . ." Per the summary
report, the total beer concessions collected were $89,208 and per the claim to reimburse the Hammond
Fire Fighters Association, the product cost were $4,908.50. Thus, the beer concession profit was
$84,299.50. Based on the agreement, 18 percent of the $84,299.50 profit was $15,173.91. The amount
remitted to the Hammond Firefighters Association per the ledger was $16,057.44. The Hammond
Firefighters Association was paid an additional $883.53 over the terms of the contract. The Hammond
Firefighters Association reimbursed the City $883.53 on May 24, 2011, for the overpayment. A similar
comment appeared in the prior report.Payments made or received for contractual services should be supported by a written contract.

Each governmental unit is responsible for complying with the provisions of its contracts. (Accounting and
Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7)

Ho Hum

Use of Credit Cards

Payments made by the City for the Mayor's American Express Card were not always supported by detailed receipts. From April 22, 2010 through March 8, 2011, the Mayor charged a total of $3,916.85
to the American Express Card.

SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS

The City prepared a Schedule of Federal Grant Receipts and Disbursements for 2010 that was
materially inaccurate. The City's grant schedule did not include the proper Catalog of Federal Domestic Assistance (CFDA) titles and numbers for the following grants:




Program Title Per City CFDA#
CDBG - Entitlement Grants Custer - Neighborhood Stabilization Program 14.859 14.218
ARRA Community Development Block Grant ARRA Entitlement Grants (CDBG-R) -- 14.253
Emergency Shelter Grants Program 14.218 14.231
HOME Investment Partnerships Program 14.403 14.239
ARRA Homelessness Prevention and Rapid Re-Housing Program 14.235 14.257
Fair Housing Assistance Program - State and Local 14.403 14.401
Federal Equity Sharing -- 16.xxx
ARRA Federal Transit - Formula Grants -- 20.507
State and Community Highway Safety 20.604 20.600
Alcohol Traffic Safety and Drunk Driving Prevention Incentive Grants 20.604 20.601
Capitalization Grants for Clean Water State Revolving Funds -- 66.458
ARRA Capitalization Grants for Drinking Water State Revolving Funds -- 66.468
ARRA Energy Efficiency and Conservation Block Grant Program (EECBG) -- 81.128
In addition, grants awarded through the American Recovery and Reinvestment Act of 2009
(ARRA) were not identified on the City's grant schedule. The following grants were determined to be


ARRA funded grants:
CFDA # Program Title Expended
14.253 ARRA Community Development Block Grant ARRA Entitlement Grants (CDBG-R) $ 549,779
14.257 ARRA Homelessness Prevention and Rapid Re-Housing Program 8 64,720
20.205 ARRA Highway Planning and Construction 58,484
20.507 ARRA Federal Transit - Formula Grants 2 09,378
66.468 ARRA Capitalization Grants for Drinking Water State Revolving Funds 1,072,682
81.128 ARRA Energy Efficiency and Conservation Block Grant Program (EECBG) 3 36,337

The 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.

(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.
§___.310 Financial statements.

(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."

......
http://www.in.gov/sboa/WebReports/B39219.pdf pages 46 and 48

CRIME INSURANCE POLICIES
The crime insurance policies have not been filed in the office of the County Recorder as required
by Indiana Code 5-4-1-15.1(b).

COUNTY'S SHARE OF COURT COSTS
Monthly distributions for court costs are made from the Court Cost Fund 503 to the Lake County
Auditor. The County's share of court costs should be distributed to the county auditor once a month. The
City distributed the January through April 2010 monthly distributions together in May 2010. The distributions
for April through July 2010 were distributed all together in July 2010. The April 2010 collections of
$13,638 were included in both the May and July 2010 distribution, resulting in an overpayment to the
County without the City resolving the overpayment as of May 2011. No distributions were made to the
County in November or December 2010.

CAPITAL ASSETS


The City records capital asset additions for completed infrastructure projects; however, the cost of
the original infrastructure that was replaced is not being deleted. In addition, properties acquired by the City's Department of Planning and Development were not added to the City's capital asset records in
2010.

Every governmental unit should have a complete inventory of all capital assets owned which
reflect their acquisition value. Such inventory should be recorded in the Capital Assets Ledger. A complete
inventory should be taken every year for good internal control and for verifying account balances
carried in the accounting records. (Accounting and Uniform Compliance Guidelines Manual for Cities and
Towns, Chapter 7)

Seems to be a lot of accounting errors made. Hmmmm.

Hey JCMT ! Isn't the Controller supposed to be the official city book cooker???

Section I – Summary of Auditor's Results
Financial Statement(s):
Type of auditor's report issued: Unqualified
Internal control over financial reporting:
Material weaknesses identified? yes
Significant deficiency identified? none re