Northwest Indiana Discussion

ANNUAL REPORT
The Sanitary District and Water Utility, departments of the City, annual receipts, disbursements
and balances were not included in the City's required annual report; therefore, the receipts and disbursements of the Utilities were not published as required by law.IC 5-3-1-3(a) states in part: "Within sixty (60) days after the expiration of each calendar year, the fiscal officer of each civil city and town in Indiana shall publish an annual report of the receipts and expenditures of the city or town . . ."

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. (NOW WHY WAS ONE EMPLOYEE PAID A $24,750 BONUS FROM THIS OR ANY FUND, $24,750?)

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 2009-2, 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.

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.

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. Subsequent to the 2009 Festival of the Lakes, officials were instructed these items were to be retained for audit. For the 2010 Festival of the Lakes, we expect officials to retain the proper documentation.

Concessions Agreement
The agreement between the Hammond Fire Fighters Association and the Hammond Parks and
Recreation states in part, "The Fraternal Order of Police and the Hammond Fire Fighters Association
have agreed to split 22% of the profit from the 2009 Festival of the Lakes beer concessions after product
is paid for . . ." Per the summary report, the total beer concessions were $108,275.75. The amount
remitted to the Hammond Firefighters per the ledger was $27,472.10, or approximately 25%.
Officials and employees are required to use State Board of Accounts prescribed or approved
forms in the manner prescribed. (Accounting and Uniform Compliance Guidelines Manual for Cities and
Towns, Chapter 7)

IC 5-15-6-3(f) concerning destruction of public records, states in part: "Original records may be disposed of only with the approval of the commission according to guidelines established by the commission."

Supporting documentation such as receipts, canceled checks, tickets, invoices, bills, contracts,
and other public records must be available for audit to provide supporting information for the validity and
accountability of monies disbursed. Payments without supporting documentation may be the personal
obligation of the responsible official or employee. (Accounting and Uniform Compliance Guidelines

Manual for Cities and Towns, Chapter 7)
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)

CRIME INSURANCE POLICIES
The crime insurance policies have not been filed in the office of the County Recorder as required
by IC 5-4-1-15.1(b).
IC 5-4-1-15.1 states:
"(a) Whenever it is necessary, the appropriate administrative officer of any department or
agency of the state may cover deputies or employees of the department or agency by individual
bonds, or blanket bonds, or a crime insurance policy endorsed to cover the faithful
performance of duties. The administrative officer shall determine the amount of the insurance
policy, individual bond, or blanket bond obtained under this section.
(b) An individual bond, or blanket bond, or crime insurance policy endorsed to include
faithful performance obtained under this section shall be filed and paid for in the same manner
as public official bonds.
(c) This section does not apply to officers required by law to execute and furnish individual
official bonds.
(d) The commissioner of insurance shall prescribe the form of the bonds or crime policies
required by this section."

PRIOR YEAR QUESTIONED COSTS PAID FROM TIF FUNDS

Tax Increment Funds (TIF) Funds are created from additional taxes collected once an economic
development area has been established as a TIF allocation. Expenditures from TIF funds should be used for the specific allocation area the tax was collected for.

During the 2008 audit, the U.S. Department of Housing and Urban Development (HUD)
questioned costs $1,018,630 ineligible expenditures for the Community Development Block Grant Program.
Questioned costs were repaid to HUD on May 11, 2010, from the TIF Allocation Woodmar Fund.
Documentation was not provided to ensure that the items noted as questioned costs benefited the TIF
allocation area.

IC 36-7-14-39(b) (2) states in part:
"Except as otherwise provided in this section, property tax proceeds in excess of those
described in subdivision (1) shall be allocated to the redevelopment district and, when collected,
paid into an allocation fund for that allocation area that may be used by the redevelopment
district only to do one (1) or more of the following:
(A) Pay the principal of and interest on any obligations payable solely from allocated tax
proceeds which are incurred by the redevelopment district for the purpose of financing or
refinancing the redevelopment of that allocation area.
(B) Establish, augment, or restore the debt service reserve for bonds payable solely or
in part from allocated tax proceeds in that allocation area.
(C) Pay the principal of and interest on bonds payable from allocated tax proceeds in
that allocation area and from the special tax levied under section 27 of this chapter.
(D) Pay the principal of and interest on bonds issued by the unit to pay for local public
improvements that are physically located in or physically connected to that allocation
area.
(E) Pay premiums on the redemption before maturity of bonds payable solely or in part
from allocated tax proceeds in that allocation area.

area under section 25.2 of this chapter.
(G) Reimburse the unit for expenditures made by it for local public improvements (which
include buildings, parking facilities, and other items described in section 25.1(a) of this
chapter) that are physically located in or physically connected to that allocation area.
(H) Reimburse the unit for rentals paid by it for a building or parking facility that is
physically located in or physically connected to that allocation area under any lease
entered into under Indiana Code 36-1-10.
(I) For property taxes first due and payable before January 1, 2009, pay all or a part of
a property tax replacement credit to taxpayers in an allocation area as determined by the
redevelopment commission. This credit equals the amount determined under the
following STEPS for each taxpayer in a taxing district (as defined in IC 6-1.1-1-20) that
contains all or part of the allocation area.
(J) Pay expenses incurred by the redevelopment commission for local public improvements
that are in the allocation area or serving the allocation area. Public improvements
include buildings, parking facilities, and other items described in section 25.1(a) of this
chapter.
(K) Reimburse public and private entities for expenses incurred in training employees of
industrial facilities that are located: (i) in the allocation area; and (ii) on a parcel of real
property that has been classified as industrial property under the rules of the department

EMPLOYEE SERVICE RECORDS
Employee service records are maintained on all employees of the City by each department.
Many do not have proper leave balances maintained, and they do not record leave time earned or used.For example, an employee service record may show a beginning balance which includes the leave earned for that year instead of showing the leave earned in the "earn" column of the record. For personal leave, some departments are showing the leave and balances, while others are not accounting for it at all.
Thus, we were unable to determine compliance with leave policies for all employees. Additionally, service records reviewed from the Fire Department were not on prescribed or approved forms.
This form (Employee Service Record No. 99A) must be kept by each office or department for
each employee in order to properly prepare "Payroll Schedule and Voucher, General Form No. 99." It
records the hours or days worked, sick leave, vacation and days lost. It may also be used to comply with
the requirements of IC 5-11-9-4 regarding recording hours worked each day by an employee. It is suggested
that these be arranged alphabetically in a binder. (Accounting and Uniform Compliance Guidelines
Manual for Cities and Towns, Chapter 4)
Officials and employees are required to use State Board of Accounts prescribed or approved
forms in the manner prescribed.

DISBURSEMENTS EXCEED APPROPRIATIONS
The City's disbursements exceeded appropriations for the following funds:
Disbursements in Excess of Approved Fund Appropriations



General $ 4,566,828
Motor Vehicle Highway 1,249,875
Redevelopment Commission Operating 88,471
Water Hydrant Rental 1 95,888
Police Pension 1 91,533
Fire Pension 2 39,540


Total $ 6,532,135


IC 6-1.1-18-4 states in part: ". . . the proper officers of a political subdivision shall appropriate
funds in such a manner that the expenditures for a year do not exceed its budget for that year as finally
determined under this article."
IC 6-1.1-18-5 states in part:
"(a) If the proper officers of a political subdivision desire to appropriate more money for a
particular year than the amount prescribed in the budget for that year as finally determined
under this article, they shall give notice of their proposed additional appropriation. The notice
shall state the time and place at which a public hearing will be held on the proposal.

Freedom Fighter Post subject: The Depths Of Corruption.Posted: Wed Aug 04, 2010 8:05 am


Senior Member


Joined: Sat Aug 16, 2008 8:13 am
Posts: 396 I was requested to post this. The person with this information knows the retribution will be quite severe for this revelation. FYI, the Times has had this story, but has not published it as yet for reasons unknown.

There are numerous cash station machines located on various city owned/affiliated properties. The locations include, but are not limited to, City Hall, the Jean Shepard Center, the Marina, the Golf Course, and Festival Of The Lakes grounds. These machines, which turn a profit for the owner, are owned by Bobbi Lendi, the Hammond City Controller. Mr. Lendi is also on The Board Of Works, which would have the final say-so over the placement/contract for these machines on city owned property. Generally speaking, the owners of ATM machines generally pay rent for the use of space for their machines as part of their contractural agreement. Were there not bids for the placement of these machines by various vendors, or was this another "Friends & Family" plan by the most corrupt mayor to ever set foot in City Hall? Confirmation of the ownership of these various ATM's can be easily obtained. Google "Illiana ATM". The address that comes back for these machines is registered to Mr. Lendi, according to the Assessors web site. Comments?

OVERDRAWN CASH BALANCES
The cash balances of the following funds were overdrawn as of December 31, 2009:
The cash balance of any fund may not be reduced below zero. Routinely overdrawn funds could be an indicator of serious financial problems which should be investigated by the governmental unit.(Accounting and Uniform Compliance Guidelines Manual for Cities and Towns, Chapter 7)
Fund Type/Name Amount
Major Fund:
General $ 21,261,681
Other Governmental Funds:
Motor Vehicle Highway 2 14,129
Transit 7 04,227
Parks and Recreation 1,439,229
Vehicle Release 848
Task Force 232,633
Redevelopment Commission Operating 2 94,191
Water Hydrant Rental 1 96,444
Title V Permits 4
Homelessness Prevention and Rapid Re-Housing Program (HPRP) 65,456
Neighborhood Stabilization Program (NSP) 44,903
Corporation Bond 124,073
Lost Marsh Golf Course 244,270
Internal Service Funds:
Centrex 13,034
Unemployment 1 54,625
Pension Trust Fund:
1925 Police Pension 3 16,331

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.

Also, 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 $760,477.59 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.