Northwest Indiana Discussion

You figure $400 is the going rate for a dumpster. If I'd have ordered 80, I think a volume discount would be called for. Does anyone really know if 80 dumpsters were placed and picked up? Does the city have pick-up receipts/tickets for 80 dumpsters? Or because it's "discretionary" gambling money, is O'Pea's O'kay O'kay to pay? Does the service provider have receipts from where they dumped 80 containers? How many dumpsters are in this contractors inventory? Would O'Pea care if 40 dumpsters were serviced but 80 billed for? Hypothetical..."someone" agrees to overpay, because "someone" isn't paying, "someone else" is. Happens all the time. It is the MO of a majority of kickback routines.

FINANCIAL REPORT OPINION MODIFICATIONS

The Sanitary District (District) did not provide supporting documentation that management
approved adjusting entries or provide any documentation to support all adjusting entries posted to the
2010 ledger as described further in the comment entitled "Internal Controls Over Financial Transactions."
Therefore, the State Board of Accounts was unable to provide an unqualified opinion on the Independent
Auditors' Report for the financial statements due to insufficient evidential matter.
Accounting records and other public records must be maintained in a manner that will support
accurate financial statements. Anything other than an unqualified opinion on the Independent Auditors'
Report on the financial statements may have adverse financial consequences with the possibility of an
increase in interest rate cost to the taxpayers of the governmental unit. (Accounting and Uniform
Compliance Guidelines Manual for Cities and Towns, Chapter 7)

INTERNAL CONTROLS OVER FINANCIAL TRANSACTIONS

The Sanitary District (District) maintains their records on the accrual basis of accounting as
required. As communicated to management during the entrance conference, the financial statements are
management's responsibility. Management also has responsibility for adopting sound accounting policies
and for establishing and maintaining internal controls that will, among other things, initiate, authorize,
record, process, and report transactions (as well as events and conditions) consistent with management's
assertions embodied in the financial statements. The entity's transactions and the related assets, liabilities,
and equity are within the direct knowledge and control of management.
We noted several weaknesses in the internal control system of the District related to financial
transactions. The District did not have proper internal controls in place in order to provide reasonable
assurance that the financial information and records were in compliance with laws and regulations.
Additionally, proper internal controls were not in place to mitigate the risk of improper activities either due
to error or fraud. We have the following concerns as described below:

1. District management was notified in February 2011 that the auditors initiated start of the
audit of the City. Preliminary meetings were held with the City Controller, the Water
Utility executive director, and the District's business manager to review the expectations
of management's completion of their financial presentations. The audit of the District
began on April 18, 2011. At that time, the District had not completed posting all year
end entries in order to present their financial statements in conformity with generally
accepted accounting principles.

2. The District continually revised their trial balance during the audit because adjusting
entries continued to be recorded to the ledgers during the course of the audit resulting in
account balances to change. In addition, in November and December 2010, the District
re-opened the 2009 ledger to record audit adjustments after the completion of the 2009
audit. The audit adjustments for 2009 totaled $2,495,919; however, the District
recorded adjustments totaling $6,427,317. The District could not provide sufficient
documentation of the difference in adjustments.

3. An entry in the amount of $1,000,000 was recorded to correct the construction in
progress account for the period ending December 31, 2007. However, after our
research of the 2007 records we found that the $1,000,000 was already capitalized by
the District and the $1,000,000 adjusting entry was not necessary. The District
subsequently reversed the adjusting entry. The arbitrary recording of such transactions
indicates management's lack of expertise or familiarity of historical transactions.

4. A final trial balance, per the financial consultant, was provided to us on May 17, 2011.
We also obtained reports which detailed all the adjusting entries made by the District to
the 2010 ledgers. Adjusting entries totaling $7,010,716 were recorded by the financial
consultant to Company SP6. Company SP6 is the fund that is used to account for the
financial transactions relating to Federal State Revolving Loan Fund. In order to perform
certain audit procedures to determine if the adjusting entries were required, we requested
the District's business manager and financial consultant for the supporting
documentation for the adjusting entries. We were told by the financial consultant that he
may have some reports to back up the entries but that the descriptions of the entries
were detail enough. Some of the descriptions noted on the adjusting entries were: "to
balance," "adj bal," and "adj entry." Since the adjusting entries could not be audited
because of the lack of sufficient evidential matter to determine if the entries made were
proper, we qualified the Independent Accountant's Opinion.

5. The District's ledgers are set up with accounts numbers that aid in the identification of
account types. For example, the 1000 number series of accounts are considered asset
accounts, 2000 number series accounts are receivables, 3000 number series accounts
are equity, 4000 number series accounts are income, and 5000 number series accounts
are expenses. It is common practice that at year end, the income and expense related
accounts are "closed" to the equity accounts.
Historically, the District would expense ongoing improvement projects throughout the
year rather then record the transactions to a construction in progress account. District
officials were instructed that construction in progress account, an asset account, should
to be used to record these transactions in accordance with generally accepted accounting
practice. The District however, opted to reset certain 5000 expense accounts in the
computer system not close to equity accounts at year end. This unorthodox method
makes it difficult to determine which expense accounts should be capitalized in the construction
in progress accounts or reported as current operating expenses.
The District did not reset these 5000 expense accounts in Company R at the end of
2009; therefore, expenses totaling $3,230,630 which should have been capitalized
closed to the equity account. This was not corrected until May 2011.

6. The District recorded additional adjusting entries to cash accounts after the District's
year end bank reconcilements were completed. The District did not update the year end
bank reconcilements to include the adjustments posted to cash accounts. The District's
bank reconcilements did not agree to the ending cash balances per the ledgers.
Between November 2010 and March 2011, the computer system at the Sanitary District
allowed users to issue multiple checks with the same check number. It is evident that
the computer software lacks sufficient controls over the issuing of checks.

The District's failure to record 2008 and 2009 audit adjustments to the records in a timely manner
results in management relying on inaccurate information when making financial decisions .


This was from the last Sanitary District Audit....http://www.in.gov/sboa/WebReports/B39221.pdf, page 24-27, The contents of this report were discussed on June 8, 2011, with Robert Lendi, CPA, Controller; Alan
M. Arendt, CPA, Business Manager; William Biller, Financial Consultant; and Stanley J. Dostatni, President
of the Board of Sanitary Commissioners.

who did the design of this site,Woody? It's so cartoonish that kids in grade school would be ashamed of it.

The more dumpsters the better. Just take a drive through Gary. Garbage all over the alleys and then there is the stench of openly piled garbage.

That blog looks like it was made by some kid during study hall at Morton.

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