Northwest Indiana Discussion

There are a number of issues surrounding payroll, i will address those later

[color=#800000]http://www.in.gov/sboa/WebReports/B41655.pdf page 60


VENDOR DISBURSEMENTS AND TRANSFERS
On December 12, 2011, the City Council adopted Ordinance 9122 - An Ordinance Authorizing the
City Controller to Transfer Funds from One Line Item to Another within Various City 2011 Budgets. This
ordinance essentially allows the City Controller to "provide the account reductions and account appropriations
below and the following transfer be and is hereby made from one line item to another as follows:
Transfer From: 008-43900-43902-0900 Demolition $28,000 . . .
Transfer To: 011-43900-43900-0007 Graffiti Removal $28,000"


The above transfer was not within the same fund as authorized by statute. Fund 008 is the
Demolition Fund, and Fund 011 is the Graffiti Removal Fund.

Indiana Code 6-1.1-18-6 states:
"(a) The proper officers of a political subdivision may transfer money from one major budget
classification to another within a department or office if:
(1) they determine that the transfer is necessary;
(2) the transfer does not require the expenditure of more money than the total amount
set out in the budget as finally determined under this article; and
(3) the transfer is made at a regular public meeting and by proper ordinance or
resolution.
(b) A transfer may be made under this section without notice and without the approval of the
Department of Local Government Finance."

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http://www.in.gov/sboa/WebReports/B41655.pdf page 60



Indiana Code 6-1.1-18-6 states:
"(a) The proper officers of a political subdivision may transfer money from one major budget
classification to another within a department or office if:
(1) they determine that the transfer is necessary;
(2) the transfer does not require the expenditure of more money than the total amount
set out in the budget as finally determined under this article; and
(3) the transfer is made at a regular public meeting and by proper ordinance or
resolution.
(b) A transfer may be made under this section without notice and without the approval of the
Department of Local Government Finance."


Also, the following wording is included in Ordinance 9122:
"BE IT FURTHER ORDAINED that the City Controller upon recommendation of the State Board
of Accounts is hereby authorized to make any cash and appropriation transfers which are
necessary for bookkeeping adjustments at year end."
[b]The City Controller transferred $1,834,152.35 in disbursements for gas and electric bills originally
approved for payment from, and posted as paid from, the General Fund. These disbursements were transferred
to the Engineering Fund.

Ordinance 9122 was provided as justification for the transfer.
The State Board of Accounts did not make any recommendations for cash transfers at year end. Any
adjustments recommended by the State Board of Accounts would be provided at the completion of the audit.

http://www.in.gov/sboa/WebReports/B41655.pdf page 62 & 63

PAYROLL EXPENDITURES AS VENDORS

The City contracts with various promoters for events held at the Civic Center. The contracts generally
allow for the promoter to retain the ticket sale revenue, while the Civic Center is paid a facility rental fee, and
expenses. The expenses include amounts to compensate individuals for working security, the box office,
ticket takers, ushers, maintenance, emergency standby services, etc.

For these events, the Civic Center is responsible for employing, determining the rate of compensation,
and remitting wages to the event workers. All are paid in cash. The wages paid are not accumulated for reporting to the Internal Revenue Service or the Indiana Department of Revenue in accordance with Federal and State laws.

Some of the individuals working at the events are also employed by the City on either a full-time or
part-time basis for various departments in the City, including the Park and Recreation, Police, and Fire
Departments. The compensation paid for working these events does not agree to the amounts approved in
the Salary Ordinance as compensation for their other employment positions.
-63-


Some promoters may request that the Civic Center provide staff, but the promoter pays the staff
directly. In these instances, the Civic Center will generally determine the rate of pay; however, since the
promoter is paying the staff directly, it is not clear who would be responsible for the reporting of the wages to
the Internal Revenue Service or the Indiana Department of Revenue.


The City also employs individuals to work at the Festival of the Lakes, a Park Department sponsored
event. These individuals are paid in accordance with rates established in the Salary Ordinance for part-time
employees; however, they are not paid through payroll. These individuals are paid on a vendor claim.
A vendor check is issued to the commission members of the Human Rights Commission. The
amount paid to each is $50 per attendance at each Commission meeting. This compensation is not
addressed in the salary ordinance, and they are not paid through payroll.

All compensation and benefits paid to officials and employees must be included in the salary ordinance
adopted by the legislative body unless otherwise authorized by statute. Compensation should be
made in a manner that will facilitate compliance with state and federal reporting requirements. (Accounting
and Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7)

[url]Each governmental unit is responsible for compliance with all rules, regulations, guidelines, and
directives of the Internal Revenue Service and the Indiana Department of Revenue.[/url] All questions concerning
taxes should be directed to these agencies. (Accounting and Uniform Compliance Guidelines for Cities and
Towns, Chapter 7)



Sweet! The city intentionally violating IRS regulations!

http://www.in.gov/sboa/WebReports/B41655.pdf page 65

PORT AUTHORITY BOARD APPROVAL REQUIRED
Retention Allowance

A one-time retention allowance payment of $2,000 was paid to all full-time employees with over one
year of service in December 2011. Authorization from the Port Authority Board of Directors was not noted in the records of the Port Authority before the payment was made to full-time employees. Subsequent approval
was also not noted by the Board of Directors.

Furthermore, the retention allowance was not included in the salary resolution approved by the Board
of Directors.

http://www.in.gov/sboa/WebReports/B41655.pdfpage 71

Internal Control Over Compliance

Management of the City is responsible for establishing and maintaining effective internal control over
compliance with requirements of laws, regulations, contracts, and grants applicable to federal programs. In
planning and performing our audit, we considered the City's internal control over compliance with requirements
that could have a direct and material effect on a major federal program to determine our auditing
procedures for the purpose of expressing our opinion on compliance and to test and report on internal control
over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on
the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the
effectiveness of the City's internal control over compliance.

Our consideration of internal control over compliance was for the limited purpose described in the
preceding paragraph and was not designed to identify all deficiencies in internal control over compliance that
might be significant deficiencies or material weaknesses and therefore, there is no assurance that all
deficiencies, significant deficiencies, or material weaknesses have been identified. However, as discussed
below, we identified certain deficiencies in internal control over compliance that we consider to be material
weaknesses.

A deficiency in internal control over compliance exists when the design or operation of a control does
not allow management or employees, in the normal course of performing their assigned functions, to prevent,
or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely
basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies,
in internal control over compliance, such that there is a reasonable possibility that material noncompliance
with a type of compliance requirement of a federal program will not be prevented, or detected and corrected,
on a timely basis. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as items 2011-6 and 2011-7 to be material weaknesses.

A significant deficiency in internal control over compliance is a deficiency, or combination of deficiencies,
in internal control over compliance with a type of compliance requirement of a federal program that
is less severe than a material weakness in internal control over compliance, yet important enough to merit
attention by those charged with governance. We consider the deficiency in internal control over compliance described in the accompanying Schedule of Findings and Questioned Costs as item 2011-8 to be a significant
deficiency.

http://www.in.gov/sboa/WebReports/B41655.pdf page 76

Section I – Summary of Auditor's Results
Financial Statement:

Type of auditor's report issued: Adverse as to GAAP;
Unqualified as to Regulatory Basis

Internal control over financial reporting:
Material weaknesses identified? yes

Significant deficiency identified? none reported

Noncompliance material to financial statement noted? yes


Federal Awards:

Internal control over major programs:

Material weaknesses identified? yes

Significant deficiency identified? yes

Type of auditor's report issued on compliance for
major programs: Unqualified, except for

Community Development Block Grants/Entitlement Grants, which was qualified.
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 or Cluster
CDBG – Entitlement Grants Cluster
14.239 HOME Investment Partnerships Program
Highway Planning and Construction Cluster
Dollar threshold used to distinguish between Type A and Type B programs: $300,000

Auditee qualified as low-risk auditee? no

McDermott talking about the NIRPC's appointment of their executive director. McDermott intended to leave Hammond after spending $160,000,000 into LONG TERM DEBT to take the NIRPC's post. See Tom put his hat in the ring for the job and when he was stiffed did something he does so well, cry about the injustice......In a phone call to Bill Nagle, Tom called to chide Nagle about the column and to argue he had done the right thing. “It’s just a common courtesy to know the guy’s background,” he said. After all, as mayor McDermott represents some 80,000 plus people and needs to be certain the right person is being hired.

“This is a shady deal,” he told me “There are others locally that are qualified. I don’t know this guy from Kansas.”